Mairs & Power, an investment advisor, released the fourth-quarter 2025 investor letter for the “Mairs & Power Small Cap Fund.” A copy of the letter can be downloaded here. In 2025, artificial intelligence (AI) and market concentration dominated the market. Increased investment in technology and AI infrastructure drove rising valuations and corporate spending, leading to bubble-like tendencies. However, easing inflation, a Federal Reserve rate cut in Q4, and resilient corporate earnings provided some optimism. In this environment, the Fund returned 3.98% in 2025, trailing the Russell 2000 Total Return (TR) Index’s 12.81% gain, the S&P Small Cap 600 TR’s 6.02% return, and the Morningstar U.S. Fund Small Blend’s 7.68% gain. Macro headwinds affected smaller companies in 2025, but the second half of the year saw small-cap stocks gain as the labor market softened. Stock selection notably impacted performance, especially in Health Care, Information Technology, and Materials. While sector allocation positively contributed. Looking ahead to 2026, the Fund remains optimistic about small-cap stocks, which are expected to grow at or above the S&P 500’s rate. In addition, please check the Fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Mairs & Power Small Cap Fund stocks such as Inspire Medical Systems, Inc. (NYSE:INSP). Inspire Medical Systems, Inc. (NYSE:INSP) is a medical technology company that focuses on the development and commercialization of minimally invasive solutions for patients with obstructive sleep apnea. On April 2, 2026, Inspire Medical Systems, Inc. (NYSE:INSP) closed at $54.98 per share. One-month return of Inspire Medical Systems, Inc. (NYSE:INSP) was -12.70%, and its shares lost 61.26% over the past 52 weeks. Inspire Medical Systems, Inc. (NYSE:INSP) has a market capitalization of $1.57 billion.
Mairs & Power Small Cap Fund stated the following regarding Inspire Medical Systems, Inc. (NYSE:INSP) in its fourth quarter 2025 investor letter:
“Notable detractors from relative performance during the period were Inspire Medical Systems, Inc. (NYSE:INSP), CVRx, and MGP Ingredients. Inspire Medical had a difficult first three quarters of the year due to challenges rolling out a new version of their product, and delays setting up reimbursement codes and billing software. The stock rebounded somewhat in the fourth quarter, but it wasn’t enough to overcome the weakness earlier in the year. Inspire’s product offering and differentiation in the market is still a strength, and supportive of continued leadership in a large addressable market, which is why we have stuck with the stock.”
