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The Carillon Eagle Small Cap Growth Fund's third-quarter 2025 commentary highlights the continued momentum of small-cap stocks. Rambus is effectively evolving from a licensing and patent-centric model to a comprehensive product company. Meanwhile, Shake Shack's stock experienced a decline after its quarterly performance did not meet the market's elevated expectations. These events underscore the dynamic nature of the small-cap growth sector, with some companies demonstrating strong strategic transitions and others facing market adjustments.

Detailed Investment Insights from Q3 2025

In the third quarter of 2025, small-cap stocks demonstrated a persistent upward trend, mirroring the robust performance observed in the preceding quarter. The Russell 2000\u00ae Growth Index notably recorded a 12.19% increase, signaling sustained investor confidence and growth within this market segment. This period was characterized by significant developments across various companies. For instance, Rambus, a key holding in the Carillon Eagle Small Cap Growth Fund, continued its strategic transformation. The company is actively moving away from its traditional role as a licensing and patent holder, progressively establishing itself as a fully integrated product company. This pivot involves a deepened focus on developing and marketing its own semiconductor and intellectual property solutions, aiming to capture new revenue streams and solidify its market position.

Conversely, the quarter also saw some market corrections. Shake Shack, a popular restaurant chain, experienced a notable pullback in its stock value. This downturn followed the release of its quarterly financial results, which, despite showing growth, did not align with the optimistic projections and high expectations set by analysts and investors. The discrepancy between actual performance and market expectations led to a re-evaluation of its stock. These contrasting scenarios within the small-cap growth universe highlight the diverse factors influencing stock performance, ranging from successful business model transformations to investor sentiment and earnings surprises.

The divergent paths of Rambus and Shake Shack in the third quarter of 2025 offer valuable lessons for investors in the small-cap growth space. Rambus's successful transition underscores the importance of strategic innovation and adaptation in a competitive market. Companies that can evolve their core business models to meet changing industry demands are often rewarded with sustained growth. On the other hand, Shake Shack's experience serves as a reminder that even strong brands must consistently meet or exceed market expectations, especially when valuations are high. It highlights the sensitivity of stock prices to quarterly results and the necessity for companies to manage investor expectations effectively. For portfolio managers, this quarter reinforces the need for meticulous due diligence, a balanced approach to growth and value, and the agility to respond to both opportunities and challenges within the dynamic small-cap market.