Nutshell Fund Targets Three Quality Stocks at Reasonable Price

The Nutshell Growth Fund’s case for quality stocks at a reasonable price rests on a discipline most investors abandon in bull markets: refusing to pay for perfection. The fund runs a concentrated portfolio of around 30 global companies, screening simultaneously for exceptional financial quality and undemanding valuations. Mark Ellis, its founder and chief investment officer, currently sees that combination in three names: Adobe, Auto Trader and Amphenol.

Three Quality Stocks at a Reasonable Price: The Fund’s Current Picks

Adobe (Nasdaq: ADBE) has been one of the more contentious calls in quality-growth investing over the past two years. The shares dropped approximately 25% in 2024 and a further approximately 21% in 2025, with the price touching $224.13 on 10 April 2026, according to TradingKey, its lowest level since January 2019 and a cumulative decline of approximately 60% from its 2024 peak. These figures are described as approximate, with no higher-tier source covering the specific annual percentage declines.

The fund’s argument is not that the AI competitive threat to Adobe’s design software is imaginary. It is that the threat has already been priced in. Adobe’s Photoshop, Illustrator, Acrobat and Premiere Pro sit inside the daily workflows of designers and large enterprise customers; switching costs are real, and the company’s ability to embed AI tools directly into those established products gives it an integration advantage that newer entrants lack.

Management has backed that view with capital. Adobe’s board approved a $25 billion stock repurchase programme in March 2024, expiring 14 March 2028, as recorded in a filing with the Securities and Exchange Commission (SEC). By April 2026, that programme was described as nearly complete. Adobe then announced a second $25 billion repurchase authorisation on 21 April 2026, valid through April 2030. In the BusinessWire announcement, management stated: ‘Our new $25 billion share repurchase authorization is a direct expression of confidence in our robust cash flow and the long-term value we are delivering to investors.’ Two consecutive programmes of identical scale in two years is an unambiguous signal about where the board believes the stock sits relative to intrinsic value.

Auto Trader and Amphenol: Network Effects and Connector Dominance

Auto Trader (LSE: AUTO) operates the UK’s largest digital automotive marketplace. The network effect here is straightforward: buyers come for the inventory breadth, retailers advertise because the buyers are already there, and the cycle reinforces itself. The company owns none of the vehicles on its platform; retailers pay for advertising, data and digital services, which keeps the model capital-light and margins high.

The shares have weakened on concerns about dealer relationships and whether AI disrupts online automotive search. The fund’s position is that these concerns undervalue Auto Trader’s proprietary market data, brand recognition and the depth of its inventory access, assets that a new entrant cannot replicate quickly. At a reduced valuation, the fund sees the opportunity to hold a cash-generative franchise at what it considers a reasonable price.

Amphenol (NYSE: APH) manufactures the connectors, cables and sensors that run through data centres, communications networks, industrial equipment and aerospace systems. Components represent a small share of a system’s total cost but are critical to its function, which lets Amphenol compete on reliability and technical relationships rather than price alone.

Recent results underline the AI tailwind. In its most recently reported quarter (Q2), Amphenol posted adjusted earnings per share of $1.35, ahead of the consensus estimate of $1.19, on revenues of $8.76 billion against a $8.30 billion consensus, according to The Globe and Mail. Orders reached a record $10.7 billion, producing a book-to-bill ratio of 1.23:1. IT datacom sales rose 89% year over year and 63% organically in the same period, with CEO R. Adam Norwitt attributing the growth directly to AI infrastructure demand. Amphenol also completed a two-for-one stock split of its Class A Common Stock on 2 September 2026, as disclosed in an SEC filing.

The fund acknowledges that Amphenol does not screen as cheap on a headline price-earnings ratio. Its argument is that valuation should be assessed relative to the durability of growth, the reinvestment opportunity and the consistency of execution, all of which Amphenol’s record supports. That logic, applied consistently, is what sits behind the fund’s broader approach to quality stocks at a reasonable price, as Quartz has also examined in the context of Amphenol’s AI connectivity expansion.

For all three holdings, the next test is the same: whether AI proves to be the structural threat investors currently fear, or whether established scale and integration advantages blunt it. The earnings cadence over the next two quarters will start to settle that question.