Fenimore Asset Management, an investment management company, recently released its Q4 2025 investor letter, providing insights into the stock market’s performance and their investment strategies. The market in 2025 was solid yet volatile, with investors navigating through AI enthusiasm, economic uncertainty, and monetary policy concerns. The summer rally was driven by AI-related spending and economic resilience, while the fourth quarter saw increased market volatility due to valuation pressures and macro uncertainty. Stocks from the large-cap technology and communication services sectors led the market, with the S&P 500 Index posting a 2.66% gain.
Fenimore Small Cap Strategy returned -4.12% in Q4 2025, trailing its benchmark, the Russell 2000 Index, which returned 2.19%. The underperformance was attributed to the underweight exposure to low-quality stocks. Similarly, Fenimore Dividend Focus Strategy declined -4.41% in the fourth quarter, compared to the Russell Midcap Index’s 0.16% return. Investments in the financial and industrial sectors led to the relative underperformance of the strategy. Fenimore Value Strategy also declined -1.17% in Q4, compared to the Russell Midcap Index’s 0.16% return. The firm anticipates mixed market conditions in 2026, with various AI-related stocks appearing expensive while high-quality companies offer attractive opportunities.
In their investor letter, Fenimore Asset Management highlighted CDW Corporation (NASDAQ: CDW) as one of the detractors to their Dividend Focus Strategy’s performance. CDW Corporation is a leading information technology solutions provider based in Vernon Hills, Illinois. The stock closed at $132.29 per share on January 15, 2026, with a one-month return of -5.94% and a 29.91% decline over the past 52 weeks. The company has a market capitalization of $17.338 billion.
Fenimore Asset Management noted in their letter that CDW Corporation was the second-worst performer in their portfolio. Despite solid growth in all business lines except for education, the IT industry continued to face challenges from the pull forward of spending during COVID. The firm highlighted the Windows 11 refresh as a potential catalyst for CDW Corporation, although overall earnings growth only showed modest improvement.
While CDW Corporation is not among the 30 most popular stocks among hedge funds, 48 hedge fund portfolios held the stock at the end of the third quarter of 2025. The company reported consolidated net sales of $5.7 billion in Q3 2025, up 4% from the same period in 2024. Fenimore Asset Management acknowledges the potential of CDW Corporation as an investment but believes that certain AI stocks offer greater upside potential with less downside risk.
For more insights on CDW Corporation and other investment opportunities, readers can explore additional articles on the subject. The firm’s investor letter provides valuable information on their investment strategies and performance in the challenging market conditions of 2025.
