Rothschild & Co LongRun Equity's Investment Thesis for Cadence Design Systems (CDNS)

Rothschild & Co Wealth Management, an investment management company, released its LongRun Equity strategy third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The firm is a committed long-term business owner, focused on a portfolio of high-quality companies. The strategy returned +3.9 % (in EUR, unhedged) in the third quarter, underperforming its benchmark’s 7.5% return. Since its inception, the strategy has delivered an annualized return of 10% compared to 11% for the global equities. The firm’s selection of highly profitable quality companies was not rewarded by the market, which instead focused on riskier, growth-focused, and often unprofitable companies. In addition, you can check the top 5 holdings of the fund to know its best picks in 2025.

In its third-quarter 2025 investor letter, Rothschild & Co LongRun Equity highlighted stocks such as Cadence Design Systems, Inc. (NASDAQ:CDNS). Cadence Design Systems, Inc. (NASDAQ:CDNS) is a global provider of software, hardware, and other services. The one-month return of Cadence Design Systems, Inc.  (NASDAQ:CDNS) was 3.72%, and its shares gained 2.97% of their value over the last 52 weeks. On December 24, 2025, Cadence Design Systems, Inc. (NASDAQ:CDNS) stock closed at $317.76 per share, with a market capitalization of $86.586 billion.

Rothschild & Co LongRun Equity stated the following regarding Cadence Design Systems, Inc. (NASDAQ:CDNS) in its third quarter 2025 investor letter:

"In this section, we take a closer look at one of our recent investments, Cadence Design Systems, Inc. (NASDAQ:CDNS), a company that provides the essential tools to design the chips powering today’s most advanced technologies.

Cadence Design Systems is a new holding in the LongRun Equity fund. The company perfectly fits our strategy of owning durable, high-quality compounders in structurally growing industries. Though not a household name, Cadence’s software and hardware tools are mission critical for designing the semiconductor chips that power smartphones, computers, autonomous cars, Artificial Intelligence (AI) systems and more. In the following paragraphs, we’ll break down Cadence’s business model and investment rationale in clear and straightforward terms.

When people think about AI, names like Nvidia, Google, OpenAI, or Microsoft usually come to mind. But how do these companies design the advanced chips that power AI? The answer leads to Cadence and Synopsys. These firms provide the essential software that makes designing cutting-edge chips possible - without it, modern AI simply wouldn’t exist…” (Click here to read the full text)

Cadence Design Systems, Inc. (NASDAQ:CDNS) is not on our list of 30 Most Popular Stocks Among Hedge Funds.  As per our database, 69 hedge fund portfolios held Cadence Design Systems, Inc. (NASDAQ:CDNS) at the end of the third quarter, which was 68 in the previous quarter. While we acknowledge the potential of Cadence Design Systems, Inc. (NASDAQ:CDNS) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Cadence Design Systems, Inc. (NASDAQ:CDNS) and shared the list of best stocks you’ll wish you bought sooner. Cadence Design Systems, Inc. (NASDAQ:CDNS) contributed to Brown Advisory Large-Cap Growth Strategy's performance in Q3 2025. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.