In its latest investor letter for the fourth quarter of 2025, the Carillon Eagle Small Cap Growth Fund has provided an insightful analysis of its investment strategy and outlook for the coming year. The fund's report, which can be accessed by interested parties, discusses the performance of small-cap equities, noting a slight advantage for value stocks over growth stocks during the quarter. Looking ahead to 2026, the fund expresses optimism for the equity markets and identifies several sectors, including Cyclicals, Healthcare, Information Technology, Financials, and Consumer spending, as areas with significant growth potential. The letter also highlights the fund's top five holdings, offering a glimpse into its key investment decisions for 2025.
A significant portion of the Carillon Eagle Small Cap Growth Fund's Q4 2025 investor letter is dedicated to Varonis Systems, Inc. (NASDAQ:VRNS), a prominent cybersecurity software provider specializing in AI-powered data protection. As of February 17, 2026, VRNS shares were valued at $25.32. The company experienced a one-month decline of 23.04% and a twelve-month decrease of 41.86%, resulting in a market capitalization of $2.985 billion. The fund acknowledged that Varonis Systems' recent earnings were below expectations, primarily due to the underperformance of its on-premises product, which faced poor contract renewals and extended sales cycles, particularly in the latter half of the quarter.
However, the Carillon Eagle Small Cap Growth Fund remains cautiously optimistic about Varonis Systems' future. The letter emphasizes the company's strategic decision to discontinue sales of its on-premises product by the end of 2026, transitioning entirely to a cloud-delivered model. This move is anticipated to transform Varonis into a pure-play provider in the higher-growth segment of the market. The fund projects that this shift will enable Varonis to reduce operational costs and enhance opportunities for upselling new product features, thereby strengthening its market position and potential for long-term growth.
While Varonis Systems (NASDAQ:VRNS) is a notable holding for the Carillon Eagle Small Cap Growth Fund, it does not feature among the top 30 most popular stocks favored by hedge funds, according to available data. The company's total revenue for Q4 2025 reached $173.4 million, marking a 9% increase from the previous year. Despite Varonis's potential, the fund suggests that other AI-related stocks may offer more substantial upside and reduced downside risk, especially those positioned to benefit from certain economic trends. The detailed analysis provided by the Carillon Eagle Small Cap Growth Fund sheds light on the complexities and strategic adjustments within the cybersecurity and broader equity markets.