<div id="readability-page-1">Headwaters Capital Management, an investment management company, released its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. Smaller businesses, which are thought to be more susceptible to economic downturns, faced a challenging combination of economic and policy uncertainties in the quarter. It was not unexpected that small-cap equities led the market lower given the economic conditions that prevailed in Q1. In this environment, the fund returned -9.0% (-9.2% net) in the quarter compared to a -3.4% return for the Russell Mid Cap Index. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025. In its first quarter 2025 investor letter, Headwaters Capital Management emphasized stocks such as Brown &amp; Brown, Inc. (NYSE:BRO). Headquartered in Daytona Beach, Florida, Brown &amp; Brown, Inc. (NYSE:BRO) provides insurance products and services. The one-month return of Brown &amp; Brown, Inc. (NYSE:BRO) was -1.04%, and its shares gained 41.13% of their value over the last 52 weeks. On April 9, 2025, Brown &amp; Brown, Inc. (NYSE:BRO) stock closed at $116.64 per share with a market capitalization of $33.432 billion. Headwaters Capital Management stated the following regarding Brown &amp; Brown, Inc. (NYSE:BRO) in its Q1 2025 investor letter: <blockquote> “Top Contributor: Brown &amp; Brown, Inc. (NYSE:BRO) +22%. BRO was a stand-out performer during the quarter and is a perfect example of the market rotation that occurred in Q1. Fundamental results remained strong, but were largely in line with expectations. However, the stock was a beneficiary of multiple expansion as investors viewed BRO’s P&amp;C brokerage business as a safe haven in a tumultuous market. BRO’s multiple expanded from 18x EBITDA at the beginning of the quarter to 21x by the end of the quarter. While I continue to expect BRO to post strong results from a combination of pricing, volume and M&amp;A, the stock is trading at a peak multiple on what is likely near peak P&amp;C rates given the prolonged strong pricing environment over the last 4 years. Given the significant outperformance during the quarter and elevated valuation, I significantly reduced the position size as I saw better opportunities in other parts of the market. The addition of CBIZ was funded with proceeds from the partial sale of BRO, which had grown to be the largest position in the portfolio. BRO has been a core holding in the HCM portfolio since launch and has been a meaningful outperformer (+170% gain, or a 26% IRR) thanks to a hard market in P&amp;C pricing and disciplined capital deployment through accretive M&amp;A. BRO’s multiple has expanded in conjunction with these strong results, which has also contributed to stock price performance. Today, BRO is trading at an all-time high multiple and it’s hard for me to envision a stronger P&amp;C pricing market than what we just experienced. Additionally, given BRO’s current size, tuck-in acquisitions no longer contribute as significantly to earnings growth. Larger M&amp;A transactions are more competitive and carry higher multiples, which mutes EPS accretion and comes with increased execution risk. Given that BRO was also the beneficiary of a “risk-off” trade during Q1, it was an opportunistic time to reallocate proceeds into CBZ, which was temporarily caught up in the small cap sell-off.” </blockquote> <div id="attachment_1228770"><img src="https://imageproxy.pbkrs.com/https://imonkey-blog.imgix.net/blog/wp-content/uploads/2023/11/26014748/CIA-insidermonkey-1700981266392-768x430.jpg/query-YXV0bz1mb3J0bWF0JmV4cGlyZXM9MTc3NTc3OTIwMCZmaXQ9Y2xpcCZoZWlnaHQ9MjY5JndpZHRoPTQ4MA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="830" height="465" original-src="https://imageproxy.pbkrs.com/https://imonkey-blog.imgix.net/blog/wp-content/uploads/2023/11/26014748/CIA-insidermonkey-1700981266392-768x430.jpg/query-YXV0bz1mb3J0bWF0JmV4cGlyZXM9MTc3NTc3OTIwMCZmaXQ9Y2xpcCZoZWlnaHQ9MjY5JndpZHRoPTQ4MA"/>A close-up of a life insurance policy with a middle-and lower-income family in the background.</div> Brown &amp; Brown, Inc. (NYSE:BRO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 39 hedge fund portfolios held Brown &amp; Brown, Inc. (NYSE:BRO) at the end of the fourth quarter compared to 35 in the third quarter. In the fourth quarter of 2024, Brown &amp; Brown, Inc. (NYSE:BRO) reported revenues of $1.2 billion, representing an increase of 15% in total and 14% organically over Q4 of 2023. While we acknowledge the potential of Brown &amp; Brown, Inc. (NYSE:BRO) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. We covered Brown &amp; Brown, Inc. (NYSE:BRO) in another article, where we shared the list of pro-life companies to invest in. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks. Disclosure: None. This article is originally published at Insider Monkey.Artificial intelligence is the greatest investment opportunity of our lifetime. The time to invest in groundbreaking AI is now, and this stock is a steal! My #1 AI stock pick delivered solid gains since the beginning of 2025 while popular AI stocks like NVDA and AVGO lost around 25%. The numbers speak for themselves: while giants of the AI world bleed, our AI pick delivers, showcasing the power of our research and the immense opportunity waiting to be seized. The whispers are turning into roars. Artificial intelligence isn’t science fiction anymore. It’s the revolution reshaping every industry on the planet. 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英伟达财报，一站看懂！

Headwaters Capital Management 2025 年第一季度投资者信函强调了 Brown & Brown, Inc. (NYSE:BRO) 作为主要贡献者，股票价值增长了 22%。尽管经济环境严峻，BRO 的表现得益于其财产与意外保险经纪业务，EBITDA 的倍数从 18 倍扩展至 21 倍。该基金在第一季度回报为 -9.0%，表现不及罗素中型股指数。信函虽然承认 BRO 的强劲基本面，但指出战略性减少持仓规模，以寻求市场中更好的机会

Headwaters Capital Management 第一季度的最大贡献者：Brown & Brown (BRO)