It was 180 levels off the recent commerce on Wall Road.
Snub Nvidia Corp., the hovering king of synthetic intelligence chips. Embrace Adobe Inc., a sinking casualty of AI disruption. Polen Capital did simply that, and extra, till it was too late. Now, executives are struggling to comprise the harm.
Primarily based in Boca Raton, Florida, Polen is on nobody’s checklist of trade behemoths. However the almost half-century-old agency provides a first-rate instance of how lacking one huge winner can swing fortunes within the AI growth. In simply 4 years, its belongings have plunged by 60%, or nearly $50 billion. They now whole about $33 billion.
The stakes in AI are climbing for buyers in all places. Now that SpaceX has gone public, Anthropic and OpenAI are hurtling towards large preliminary choices of their very own. The dangers have been rising in non-public markets, too, the place different asset managers have solid large bets on software program firms that buyers now fear would possibly get upended by AI.
“This shift is greater than cellular, greater than dot-com,” Eric Jackson, founding father of EMJ Capital and a longtime expertise investor, mentioned of funding alternatives in AI. “Anyone attempting to place a price investor’s lens on this and analyze these shares is lacking the purpose.”
Stan Moss, an accountant by coaching, turned chief govt officer at Polen in 2012, following the dying of founder David Polen. Insiders credit score him and the flagship technique’s two funding leads, Dan Davidowitz and Damon Ficklin, with initially reworking the agency from a small, sleepy outfit right into a vibrant money-maker. It’s nonetheless far greater than it was once they took over, when it commanded round $2 billion of belongings.
However a nasty name at Polen could be pricey. Its six fairness mutual funds principally purchase and maintain a comparatively small variety of progress shares. The flagship Polen Progress Fund owns fewer than 30. As an alternative of shopping for Nvidia, the fund caught with software program shares like Adobe, Salesforce Inc. and ServiceNow Inc.
“We consider just about all of the upside alternatives we will at present see for the corporate are already priced in,” Polen wrote to purchasers, referring to Nvidia, in June 2023. The inventory went on to soar nearly 400% from there. The BVP Nasdaq Rising Cloud Index, which tracks rising firms primarily targeted on cloud-based software program, fell 3% throughout that interval.
The end result seems like a stock-picker’s nightmare.
As we speak, the flagship fund’s investments are down 45% from the 2021 peak, regardless of the historic bull market. Its belongings have dwindled to lower than $2 billion from about $14 billion – a decline of almost 86%, in accordance with knowledge compiled by Bloomberg.
The fund is available in at a lowly 243rd out of a area of 249 comparable funds, Morningstar Inc. figures from the tip of April present. Morgan Stanley, which for years really helpful a model of the fund’s technique to its wealth purchasers, has eliminated it from its checklist of prime picks.
Polen holds the overwhelming majority of its belongings in non-public mandates for which knowledge isn’t obtainable, so the expansion fund solely provides a glimpse into the drop in firmwide belongings below administration. These figures don’t embody some belongings which can be managed in credit score methods or by the UK and Hong Kong models, which have been largely steady lately. After some modifications over the previous 12 months, the Polen Progress Fund’s prime holdings as of March have been Microsoft Corp., Eli Lilly & Co. and Broadcom Inc.
The harm is piling up. Shoppers have bolted, together with a slew of senior workers members, in accordance with interviews with a dozen former workers and other people accustomed to Polen Capital. Current departures embody the chief working officer, the chief compliance officer, the top of worldwide finance and the top of shopper service, in accordance with their LinkedIn profiles. Over the previous two years, Moss has eradicated roughly 100 jobs, or about half the workforce, among the individuals mentioned, asking to not be named discussing non-public data.
Moss declined to be interviewed for this story as did Ficklin and Davidowitz. In a press release to Bloomberg, the CEO defended Polen and its “autonomous” funding groups.
“Whereas Focus Progress, managed by our High quality Progress Crew, has confronted headwinds widespread amongst high quality progress managers, our conviction in a philosophy that has delivered long-term double-digit annualized returns is robust — as is our tradition that continues to draw prime funding expertise,” Moss mentioned.
When Moss arrived, Polen supplied just one funding technique, focus progress, that was mimicked throughout segregated mandates and the flagship fund. He expanded the variety of choices to a number of fairness funds, and individually managed accounts, and later constructed up a credit score and a collateralized mortgage obligation operation. Cash poured in. Belongings soared to almost $83 billion on the finish of 2021.
The Polen salesforce, nonetheless, was getting nervous. Shoppers have been asking if Polen was ever going to rethink its place on Nvidia, in accordance with a number of of the individuals accustomed to the matter. In assembly after assembly, the reply was no. By 2023, purchasers have been hitting the exits.
The highest was unmoved. Lead portfolio supervisor Davidowitz and Ficklin, who heads the standard progress workforce, insisted the cloud-based software-as-a-service, or SaaS, mannequin, would endure and thrive. The market frenzy over AI and Nvidia, they saved saying, would burn out in some unspecified time in the future. (Moss isn’t a part of the funding committee and doesn’t partake in funding choices.)
“You’re going to have to determine when to get off the Nvidia practice,” Davidowitz advised buyers in a video presentation in June 2024.
Folks near Polen Capital say it’s troublesome to go up in opposition to the three males on the prime. Collectively, Moss, Davidowitz and Ficklin have last management over all enterprise choices on the agency, which is in most half employee-owned.
It wasn’t till late 2025 — after Nvidia had minted fortunes for different buyers — that Polen relented. Concluding that its downbeat predictions about AI chips had been off base, Polen lastly started shopping for.
Even after hassle hit, it was principally enterprise as typical. Polen now has workplaces in London, Hong Kong and Abu Dhabi, in addition to two within the Boston space. Round 2021, Moss went into growth mode. Since then, Polen has acquired a variety of funds at Somerset Capital, a London-based emerging-markets boutique that was co-founded by Jacob Rees-Mogg, the previous Conservative member of Parliament; Boston-based credit score specialist DDJ Capital Administration; and two equities groups from LGM Investments with workplaces in Hong Kong and London. Solely final 12 months, as buyers walked, the agency added a workforce run by Drew Cupps, a small-cap specialist, for an workplace in Chicago.
Some Polen workers questioned the speedy growth, in addition to an costly renovation of the Boca Raton headquarters. Others have been unsettled when Moss purchased a waterfront residence in Boca Raton for $11 million in 2023, whilst purchasers have been pulling out.
In good occasions, Polen’s small variety of funds hit excessive after excessive and hoovered up cash from people and establishments. Monday by Friday, Polen workers received lunch without cost. To lighten issues up, the agency hosted workplace guide readings and guide golf equipment.
Lunch remains to be free, and the guide golf equipment are nonetheless going. A title Moss, Davidowitz and Ficklin as soon as really helpful: “Ego Is the Enemy,” by Ryan Vacation — a self-help guide on how an unhealthy perception in a single’s personal significance typically stands in the best way of success.