In August 2025, with U.S. equities trading near record highs, <a href="https://davidfiszel.com" target="_blank" rel="none noopener">David Fiszel</a> told investors he was returning most of their money.
Honeycomb Asset Management, the fund he founded in 2016 after working at SAC Capital, Rhombus Capital, and Point72, had liquidated most of its public equity portfolio. The majority of client capital would be returned that September. Fiszel's explanation was fairly straightforward: He wasn't finding enough attractive investments to justify maintaining the fund's existing exposure. In his view, the market had become increasingly frothy.
The decision didn't come after a period of poor performance. Honeycomb had returned 58 percent in 2020, 18 percent in 2023, and another 18 percent in 2024. Its performance in 2025 was modestly positive. Fiszel had also been gradually reducing the fund's gross and net exposure throughout the year.
He didn't exit everything. Honeycomb kept its longer-term private investments, and Fiszel remained personally invested in those positions alongside his limited partners.
That distinction matters. The decision wasn't to abandon investing altogether. It was to stop putting as much capital into a public market where Fiszel no longer believed the available opportunities justified the exposure.
<h2 style="text-align: left;">Sometimes the Harder Decision Is to Do Less</h2>
Investment strategies can sound fairly simple when they're described after the fact. Following one while markets are moving is considerably harder.
Fund managers are expected to put capital to work. Investors are paying them to find opportunities, so holding back can create its own pressure. Returning capital goes a step further because it means giving up assets that generate management fees and accepting that the market may continue rising after the money has been returned.
That's what made Fiszel's decision in August 2025 unusual. He wasn't waiting until the market had already fallen to reduce risk. He was looking at the opportunities available to him while prices were still high and deciding he couldn't find enough that he wanted to own.
That also meant accepting the possibility that the decision would look premature.
Fiszel has spoken about this problem in the context of earlier market cycles. "For those who invested at critical moments of structural change, such as 2000 or 2007," he said in 2026, "it took 5-7 years just to break even."
His point wasn't that another crash would arrive on a particular date. It was that the price paid when entering a market can affect returns for years afterward.
A five- or seven-year recovery period matters to a long-term investor even if the market eventually returns to its previous high. Those are years when capital isn't compounding from a higher base, and that lost time becomes more significant over a long investment horizon.
<h2 style="text-align: left;">What Fiszel Was Seeing in the Market</h2>
Market concentration provides some context for why Fiszel had become more cautious.
As of December 31, 2025, the ten largest holdings in the S&amp;P 500 represented roughly 40 percent of the index's total weight, according to research from Lord Abbett. By March 2026, the top ten accounted for 37.3 percent, with Nvidia at 7.08 percent, Apple at 6.19 percent, and Microsoft at 4.97 percent. As of September 2026, the seven largest technology companies represented roughly 33.5 percent of the index.
The concentration becomes even more noticeable when you group companies by their connection to artificial intelligence. By April 2026, AI-linked companies represented roughly 45 percent of S&amp;P 500 market capitalization.
That matters for investors who assume owning an index automatically gives them broad market exposure. An S&amp;P 500 fund still contains hundreds of companies, but market-cap weighting means the largest companies have a much greater influence on its performance.
The strong performance of those companies has helped drive the index's strong performance. It also means an investor's results have become increasingly dependent on a relatively small group of very large businesses.
None of that tells investors when those stocks will fall, or whether they will fall at all. Concentration can persist for a long time, particularly when the companies driving it continue producing strong earnings.
But for a manager whose strategy depends on finding individual companies that appear mispriced relative to one another, a market increasingly dominated by the same group of large companies can make attractive opportunities harder to find.
<h2 style="text-align: left;">The Decision Matters Separately From What Happened Next</h2>
Fiszel's decision will inevitably be judged against what the market does afterward.
If stocks fall sharply, returning capital in 2025 will look well timed. If the market continues rising for several years, investors may wonder whether he stepped away too soon.
Neither outcome changes the information available when he made the decision.
At the time, valuations were elevated, index concentration was historically high, and Fiszel was running a strategy built around finding individual technology investments he believed were mispriced. If he couldn't find enough of them at prices he was comfortable paying, continuing to hold the same level of exposure simply because the market was rising would have meant moving away from the way he had chosen to invest.
Reducing the fund would have had a financial cost. Keeping more assets under management would have meant continuing to collect fees on them. Returning capital meant giving that up.
Fiszel chose to reduce the public portfolio instead.
What he kept is also revealing. Honeycomb retained its longer-duration private investments, and Fiszel continued managing those positions alongside his LPs. Over the years, the private portfolio has included <a href="https://www.crunchbase.com/person/david-fiszel" target="_blank" rel="none noopener">SpaceX, Klarna, Bombas, Farfetch, and Peloton</a>, along with earlier private investments in Facebook, Spotify, and Palantir.
That fits with an argument Fiszel made publicly the following spring. If public markets have become increasingly concentrated in a small number of established companies while many fast-growing businesses remain private for longer, the opportunity set outside the public market begins to look different.
His decision wasn't simply to move everything to cash and wait for stocks to fall. <a href="https://davidfiszel.me" target="_blank" rel="none noopener">He reduced exposure where he was having difficulty finding opportunities</a> and kept capital invested where he still saw them.
<h2 style="text-align: left;">The Pressure to Get Back In</h2>
Stepping away from a rising market creates another problem: you have to keep watching it rise without you.
Every month of additional gains can make the original decision harder to maintain. Other investors are making money, financial headlines remain positive, and the temptation grows to reconsider the assumptions that led you to reduce exposure in the first place.
Professional investors aren't immune to that pressure.
Fund managers also have to think about career risk. Underperforming while making the same general decisions as everyone else can be easier to explain than underperforming because you made a decision few other managers were willing to make.
That is one reason having an investment process matters. A manager can decide ahead of time what conditions would make an investment attractive again and what evidence would change the original thesis. Without those guidelines, it's much easier to respond to whatever the market has done most recently.
The purpose isn't to prevent someone from changing their mind. New information should change an investment decision when it affects the original reasoning. The challenge is distinguishing genuinely new information from the discomfort of watching prices continue moving without you.
<h2 style="text-align: left;">Knowing When the Opportunity Isn't There</h2>
By mid-2026, concerns about market concentration had become much more common. Research firms were publishing on the risks, strategists were examining what could happen if the largest technology companies stopped leading the market, and more investors were asking how diversified a market-cap-weighted index really was.
Fiszel had already reduced Honeycomb's public exposure roughly a year earlier.
Whether that timing ultimately proves advantageous will depend on what markets do over a much longer period. Fiszel himself wasn't claiming to know exactly when the market would peak.
The more interesting part of the decision is that he didn't need to make that prediction.
His judgment was about the opportunities available to him at the prices the market was offering. If he couldn't find enough investments where the potential return justified the risk, keeping investors' money simply to remain fully invested didn't solve that problem.
That's a less dramatic decision than calling the top of a market, but it's also a more useful way to understand what happened at Honeycomb.
Investors naturally spend a great deal of time deciding what they want to buy. There are also periods when the available choices don't look compelling enough to justify putting more money to work.
For Fiszel, August 2025 was one of those periods. He reduced the public portfolio, returned most of the capital entrusted to him, and kept the longer-term investments where he still believed the opportunity remained.
What happens to the market afterward will determine how good the timing looks. It won't change why he made the decision in the first place.
Disclaimer- &ldquo;This advertorial is for general information and educational purposes only. It does not constitute investment advice, a recommendation, solicitation, offer or invitation to buy or sell any security, fund or financial product. Readers should conduct their own independent assessment and consult a SEBI-registered investment adviser before making any investment decision. Past performance is not suggestive of future results.&rdquo;

David Fiszel reduced Honeycomb’s public equity exposure in 2025 amid high valuations and market concentration concerns.

Why David Fiszel Walked Away From the Top of the Market

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Why David Fiszel Walked Away From the Top of the Market

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