- John Barr has led Needham Aggressive Growth Fund to an 84% rise since last April.
- Barr's fund outperformed the S&P 500 and Russell 2000 with lesser-known stock picks.
- nLIGHT, Vicor, and Tetra are highlighted as strong performers for future growth.
John Barr's performance over the last year at the helm of the Needham Aggressive Growth Fund (NEAGX) is impressive.
The small-cap-focused fund is up an eye-pooping 84% since last April, smashing the S&P 500's 30% returns and the 43% gain in the small-cap Russell 2000.
Perhaps the most interesting part of those gains is that most of the stocks in Barr's fund, which Morningstar data shows has beaten 99% of similar funds over the last five years, are names not many people have heard of.
And that's the way Barr likes it.
"There's less noise," he told Business Insider. "I think it's just the Mag 7 has captured so much attention from people that there's some really great smaller companies that just don't get covered, they don't get attention."
Here's the fund's top 10 holdings and their weightings, as of December 31, 2025:
- nLIGHT (4.88%)
- Vicor (4.39%)
- Arteris (3.49%)
- Vertiv (3.45%)
- PDF Solutions (3.41%)
- ThredUp (3.17%)
- OilDri (2.54%)
- Genius Sports (2.37%)
- Lincoln Educational Service (2.22%)
- Hammond Power Solutions (2.14%)
You could argue that much of Barr's investing philosophy relies on things flying under the radar — not just the companies themselves, but their new business lines.
He likes to call his holdings "hidden quality compounders," which are defined by three characteristics.
"Hidden" refers to the company already having a solid business model but investing in a new stream of revenue that the market doesn't yet understand. This weighs on the stock's cash flow, making it look unattractive before it starts to boom.
"The overall financials are kind of at a break-even point, so not really attractive to the value guys, nor is it attractive to the growth guys," Barr said. "And we're looking out one year, two years, even five years, for when the new thing will start to contribute, and to hold them with an average 10-year holding period."
Next, he looks at a management team's tenure and mindset. This means investing in founder-led firms or in firms whose executives have been there for many years, signaling a long-term outlook.
And third, Barr looks at how stable the business will remain if its new venture doesn't work out. If it would still be profitable, this limits downside potential, he said.
3 stock picks
Barr, who has managed his fund since 2010, highlighted three stocks in his fund that have these characteristics and that he thinks are set to outperform in the year ahead.
The first is nLIGHT (LASR), a laser producer that he says will benefit from increased government defense needs, as its lasers are used to shoot down drones.
Drone technology "is moving really fast," he said, "and then you have to find a way to counter them, and the lasers are one of them." He added: "Boy, this has gotten people's attention in the last year."
The stock has risen 808% in the last 12 months.
Second is Vicor (VICR), which produces power conversion components. The company has major demand from AI hyperscalers that are using its products in data centers.
"What has really driven the business in the last few months, the last few quarters, is their next generation, which works with AI processors," Barr said.
And third is Tetra (TTI), which produces chemicals for the fracking process. However, one of their new business lines is providing water treatment solutions in the Permian Basin, where new data centers are using large amounts of water.
"Data centers use a lot of water, and if it can be treated and reused, it's a big win for all," he said. "If this does work, then Tetra is very well positioned for it."
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