Mar Vista Investment Partners — US Quality Strategy, Q1 2026

CRM (Salesforce) — Sold / Exit

Thesis: Exited position as AI disruption risk to the traditional seat-based software revenue model widened the range of outcomes; the shift to consumption-based pricing may limit long-term revenue growth and pressure margins.

We exited our remaining position in Salesforce, as the range of potential outcomes has widened due to the growing risk that AI will disrupt the traditional seat-based software revenue model, despite Salesforce’s efforts to aggressively build an agentic enterprise platform. We believe the shift from a seat-based to a consumption-based model may limit long-term revenue growth, as seat-based attrition is likely to partially cannibalize the incremental revenue opportunity from consumption-based pricing. In addition, the consumption model is likely to carry a higher cost of goods sold, which could pressure margins over time.

Source: Mar Vista Investment Partners US Quality Strategy Q1 2026

ECL (Ecolab) — Long

Thesis: Embedded, recurring revenue model with durable competitive advantages and long-term demand drivers from water scarcity and regulatory requirements, supporting steady growth and margin improvement.

Ecolab provides hygiene, water treatment, and infection prevention solutions across industrial, healthcare, and institutional end markets. Its offerings are embedded in customer operations and often linked to regulatory requirements, safety standards, and efficiency objectives. Delivered through a global service network, these solutions contribute to high customer retention and a recurring revenue profile.

The company’s model combines consumable products with service and monitoring, which contributes to revenue visibility and resilience. Because its solutions are integral to maintaining uptime and compliance, demand tends to be less discretionary. Ecolab has also expanded its capabilities through digital tools and analytics, which we believe can enhance customer outcomes and deepen integration within client operations. Long-term demand drivers, including water scarcity and regulatory requirements, support the durability of the business model and may contribute to steady growth and margin improvement over time.

Source: Mar Vista Investment Partners US Quality Strategy Q1 2026

GEV (GE Vernova) — Long

Thesis: Dominant position in power generation and grid modernization, with AI and data center growth driving significant energy investment tailwinds and margin expansion ahead as legacy offshore wind projects roll off.

GE Vernova is a global leader in the electric power industry, providing products and services across the electricity value chain. GEV’s installed base helps generate approximately 25% of the world’s electricity. The company maintains one of the largest installed fleets of heavy-duty gas turbines globally, and its combination of equipment sales and high-margin service revenue creates a robust backlog and long-term earnings visibility.

Artificial intelligence and data center growth are key demand drivers. The International Energy Agency expects global data center electricity consumption to double by 2030 and triple by 2035 compared to 2024 — driving significant investment in reliable power generation and grid modernization, areas where GEV is well positioned to benefit. As legacy offshore wind projects roll off in 2027 and global energy demand rises, we see an opportunity for margin expansion driven by improved execution and operating leverage.

Source: Mar Vista Investment Partners US Quality Strategy Q1 2026

META (Meta Platforms) — Long

Thesis: Recent selloff is overdone — core fundamentals remain intact with strong advertiser demand and AI-driven improvements, and the stock is now trading near trough valuation levels (16x) disconnected from long-term earnings power.

The market is discounting worst-case legal and engagement outcomes that remain uncertain and likely to unfold over several years, particularly as Meta is expected to appeal. Core fundamentals remain intact, with strong advertiser demand supported by continued AI-driven improvements in targeting and conversion, as well as expanding monetization across Reels. Importantly, the stock is now trading near trough valuation levels (16x), which we view as disconnected from Meta’s long-term earnings power and ability to compound free cash flow as investment moderates.

Source: Mar Vista Investment Partners US Quality Strategy Q1 2026

MSFT (Microsoft) — Long

Thesis: Well-positioned to generate attractive long-term returns from its OpenAI partnership and AI monetization across its enterprise customer base, supported by strong operating cash flows, Azure growth, and Copilot adoption.

Microsoft is a top portfolio holding, supported by its financial strength, diversified revenue streams, and broad customer base, all of which provide resilience. The company is experiencing strong growth in Azure, its hyperscale cloud platform, which is capacity constrained, alongside increasing adoption of its Copilot offerings across its extensive enterprise customer base. We believe Microsoft should be well positioned to generate attractive long-term returns from its partnership with OpenAI and to effectively monetize generative AI capabilities across its global enterprise IT footprint through its expanding suite of Copilot and AI-enabled products.

Source: Mar Vista Investment Partners US Quality Strategy Q1 2026

QXO (QXO Incorporated) — Long

Thesis: Consolidation platform in the fragmented $200 billion building products distribution market, with technology and data analytics improving pricing and inventory management as the platform scales.

QXO is a building products distribution platform pursuing a consolidation strategy within a highly fragmented, ~$200 billion addressable market. The industry remains predominantly local and operationally fragmented, with many subscale distributors lacking purchasing power, logistics scale, and technological capabilities. QXO’s strategy is to aggregate these assets into a national platform through acquisitions and operational standardization.

In parallel, the industry is undergoing a gradual shift toward more digital and data-driven operations. As QXO invests in systems, data analytics, and pricing tools, there is potential to improve pricing consistency, inventory management, and service levels. The investment case is further supported by a capital allocation strategy led by Brad Jacobs, focused on acquiring subscale businesses and seeking to improve performance through procurement, logistics, and technology initiatives. We believe QXO operates in a target-rich environment with a potential runway for growth.

Source: Mar Vista Investment Partners US Quality Strategy Q1 2026

SAP (SAP ADR) — Sold / Exit

Thesis: Exited position as AI-enabled agentic solutions shift the user interface away from the SaaS application layer, introducing greater revenue volatility and margin pressure for traditional software incumbents.

We decided to exit our position in SAP as the range of outcomes expanded amid growing perceived risk of disruption to traditional software from AI. Solutions enabled by large language models are introducing new economic models that challenge the durability of software-as-a-service incumbents like SAP.

We believe that as enterprises continue to adopt generative AI solutions including agentic computing, traditional SaaS revenue models will shift from a per-seat pricing structure to a consumption-based model. This transition is likely to introduce greater volatility in out-year revenue streams, potentially pressure gross margins, and shift the user interface from the application layer (controlled by SaaS providers) to the agentic layer, which may be supported by third-party vendors including large language model providers.

Source: Mar Vista Investment Partners US Quality Strategy Q1 2026

Munro Partners — Q1 2026 Letter

CATL (Contemporary Amperex Technology) — Long

Thesis: World’s largest battery cell producer with 35% global market share, positioned to benefit from Europe’s accelerating EV adoption through partnerships with leading European automakers and new gigafactories across the continent.

Recognizing that much of the world is committed to achieving net zero carbon emissions, many industries will need to electrify, and batteries sit at the centre of this shift as a potential beneficiary. It’s no surprise that Munro’s research led to CATL, the world’s largest battery cell producer, commanding around 35% of global market share. While the U.S. has taken an “anti-China” stance toward electric vehicle and battery makers, CATL’s growth story extends well beyond America. With electric vehicle penetration already nearing 50% in China, the next runway of growth is in Europe, where EV adoption sits around 18% and policymakers are targeting full fleet electrification by 2035.

A key advantage lies in CATL’s leadership in lithium iron phosphate (LFP) battery technology, which eliminates the need for cobalt used in traditional NCM batteries — a major consideration for automakers focused on cost efficiency and supply chain sustainability.

Source: Munro Partners Q1 2026 Letter

GDMK (Galderma) — Long

Thesis: Global leader in aesthetic dermatology positioned to benefit from GLP-1-driven demand for facial aesthetics, with new biologic drug Nemluvio potentially more than doubling company earnings over five years.

With the rise of GLP-1 drugs came the rise of rapid weight loss, with a key side effect in patients being ‘Ozempic face’ — where the face hollows due to the lack of fat. In response, many within the GLP-1 user population are turning to aesthetic dermatology solutions such as fillers and Botox to restore facial volume. After capturing the early investment opportunities within the GLP-1 trend, the Munro team identified Galderma, a Swiss company and global leader in aesthetic dermatology, as a key beneficiary of this emerging demand.

Galderma is the world’s largest pure-play dermatology company, with a strong presence across all three segments of its US$87 billion addressable market: injectable aesthetics (including Dysport, the #2 brand behind Botox), skincare (Cetaphil), and therapeutic dermatology. We believe the company’s next major growth driver lies in biologics through its new drug Nemluvio, approved for prurigo nodularis and atopic dermatitis. We believe this could unlock a significant new revenue stream and potentially more than double company earnings over the next five years.

Source: Munro Partners Q1 2026 Letter

RHM (Rheinmetall) — Long

Thesis: Germany’s leading ammunition supplier positioned to benefit from three decades of European defence underinvestment and Germany’s €100 billion special defence fund, with 88% of its order book tied to NATO countries.

European defence contractors such as Rheinmetall are positioned to be a key beneficiary of rising NATO defence budgets, as both Europe and Asia focus on developing regional defence champions rather than remaining dependent on U.S. suppliers.

The growth trajectory of Rheinmetall stems from three decades of underinvestment in defence across Europe, now compounded by increased geopolitical uncertainty. The extent of this underinvestment became clear in 2022, when the Russia/Ukraine conflict highlighted that Germany reportedly had only three days’ worth of ammunition when the war broke out. Germany has since established a EUR €100 billion special fund to modernize and expand its defence capabilities. As the country’s leading ammunition supplier, Rheinmetall is positioned to be a direct beneficiary. We believe that the large-scale restocking phase is still ahead, as most current production continues to support Ukraine. At the same time, the U.S. has signalled a shift away from subsidising European defence, further encouraging regional self-sufficiency and investment.

Source: Munro Partners Q1 2026 Letter

TSM (TSMC) — Long

Thesis: World’s largest pure-play semiconductor foundry and critical enabler of AI infrastructure as the primary manufacturer for Nvidia, Broadcom, and AMD, with established technological leadership and scalability in the AI arms race.

Founded in 1987 in Taiwan, TSMC is the world’s largest pure-play semiconductor foundry, producing roughly 60% of the world’s outsourced semiconductors. As a foundry, the company manufactures chips that are designed by other firms, and its business model depends on scale, speed to market, and the maturity of its production nodes.

Because it produces semiconductors for nearly all major players, TSMC is often regarded as a bellwether for the semiconductor industry. In the field of artificial intelligence, it plays a central role as the primary manufacturer for Nvidia, Broadcom, and AMD, making it a critical supplier to the global AI infrastructure expansion. Through its technological leadership and scalability, TSMC has established itself as the clear leader in the AI arms race.

Source: Munro Partners Q1 2026 Letter

Praetorian Capital — Q1 2026 Investor Letter

JOE (St. Joe Company) — Long

Thesis: St. Joe owns 165,000 acres in the Florida Panhandle, positioned to benefit from rapid population migration as wealthy individuals flee major cities — with attractive AFFO multiples, strong earnings growth, high ROIC, and land that appreciates during inflation.

JOE owns approximately 165,000 acres in the Florida Panhandle. It has been widely known that JOE traded for a tiny fraction of its liquidation value for years, but without a catalyst, it was always perceived to be “dead money.”

Over the past few years, the population of the Panhandle has hit a critical mass where the Panhandle now has a center of gravity that is attracting people who want to live in one of the prettiest places in the country, with zero state income taxes and few of the problems of large cities.

The oddity of the current disdain for so-called “value investments” is that many of them are growing quite fast. I believe that JOE may grow revenue at a rapid rate for the foreseeable future, with earnings growing at a much faster clip. Meanwhile, I believe the shares trade at an attractive multiple on Adjusted Funds from Operations (AFFO), while substantial asset value is tossed in for free. Land tends to appreciate rapidly during periods of high inflation. More importantly, I believe we are witnessing a massive population migration as people with means choose to flee big cities for somewhere peaceful.

Source: Praetorian Capital Q1 2026 Investor Letter

MRX (Marex) — Long

Thesis: Structural beneficiary of elevated commodity volatility and trading volumes in a multipolar world, trading at a single-digit forward multiple with accelerating earnings and 27.6% ROE — pre-announced blowout Q1 results sent shares up 38%.

Will Marex be a structural beneficiary of elevated commodity volatility and trading volumes as we move from a unipolar world into a multipolar one with increasing structural imbalances? That is a bet I can actually underwrite.

Marex recently pre-announced blowout results for the first quarter, and saw its shares appreciate by 38% from before the announcement until they peaked out 13 trading days later. I originally expected Marex to earn around $4 to $5 a share in 2026 (up from $4.12 in 2025). Following a huge March for them, I now expect Marex to earn well in excess of $5 and more like $6 a share in 2027. Putting a 20x earnings multiple on that — for a business that grew revenues 27% in 2025 with a 27.6% ROE — gets you to $120 a share as a fair value, compared to $44.58 at quarter end.

Despite a large share price move since pre-announcing first quarter results, the shares remain optically quite cheap with a single-digit forward multiple, and the fair value is likely to keep increasing as they continue to grow the business, with an added benefit from periods of elevated volatility and trading volumes.

Source: Praetorian Capital Q1 2026 Investor Letter

Third Point — Q1 2026 Investor Letter

CSGP (CoStar Group) — Short

Thesis: Management’s continued allocation of the majority of operating income into the failing Homes.com venture — while the share price plummets — threatens long-term value and competitive positioning across the company’s core commercial real estate businesses.

Last year we invested in CoStar with a simple thesis: value in the company’s core commercial business could be unlocked by improving a deficient board that for years had blessed large investments in a failing venture, Homes.com.

Despite our efforts, CEO Andy Florance has continued what can only be seen as a reckless drain on a majority of the company’s operating income into Homes.com and related acquisitions even as the share price has continued to plummet. It appears to us that Mr. Florance’s obsession with Homes.com has diverted attention from core business areas, calling into question management’s ability to maintain a competitive edge in Apartments.com and the CoStar Suite in a rapidly changing market.

Source: Third Point Q1 2026 Investor Letter

GNRC (Generac Holdings) — Long

Thesis: Initiated after residential demand concerns were overdone; strong sequential growth in data center backlog and plans to double data center capacity provide the next leg of upside.

Third Point initiated this position in January in the wake of the selloff related to residential demand concerns, viewing it as overdone. On the earnings call in February, Generac management focused on robust sequential growth in data center backlog along with plans to double data center capacity going out of this year, which sent the stock soaring.

Source: Third Point Q1 2026 Investor Letter

INDR (Indra Sistemas) — Long

Thesis: Spanish national defense champion positioned to capture significant growth from NATO-driven defense spending increases, with a backlog expected to approach €20 billion by year-end 2026 — up from just €3 billion at the end of 2024.

We initiated a position in Indra Sistemas, an emerging national defense champion in Spain, in 2025. While Spain still consistently underspends on defense compared to NATO targets, it has committed to increasing defense spend as a percentage of GDP from ~1.4% to ~2% and to allocating most of this to local companies. Indra has emerged as the national champion thanks to its unparalleled deep technical expertise in radar systems, counter-drone systems, military simulators, cyber and space, while also acting as a systems integrator on major European programs.

The company reported stellar Fourth Quarter earnings at the end of February and showed a defense backlog that nearly quadrupled year-over-year. Of the 31 special modernization projects the Spanish government allocated in the back half of 2025, Indra won allocations on 29. Management commented that they expect a similar level of projects in 2026, implying Indra could exit the year with a backlog approaching €20 billion, up from just €3 billion exiting 2024.

Source: Third Point Q1 2026 Investor Letter

KEYS (Keysight Technologies) — Long

Thesis: Quality compounder emerging from a wireless cyclical downturn with expanding margins and increasing momentum across data center networking, next-generation defense systems, and satellite networks.

Keysight is still the market leader in test equipment for R&D. Third Point sees the company as a “quality compounder emerging from a wireless cyclical downturn,” with increasing momentum across data center networking, next-generation defense systems, and satellite networks.

Source: Third Point Q1 2026 Investor Letter

Brief Mentions

These stocks were mentioned in fund letters but without detailed investment commentary.

DGART (Digital Arts) — Long | Acatis Investment | Leading Japanese web security specialist with dominant market position, high customer retention, and increasing share buybacks funded by growing cash reserves.

MNRO (MonotaRO) — Long | Acatis Investment | Japan’s market leader in industrial eCommerce, growing 15% annually in a fragmented market while maintaining profitability.

NEM (Newmont) — Long | Acatis Investment | Market-leading gold producer held as a core position for decades; gold increasingly serves as a substitute for government bonds as central banks build reserves amid currency devaluation concerns.

Fund Digest curates investment ideas from publicly available hedge fund letters. For informational purposes only — not investment advice. Always do your own research. Past performance is not indicative of future results.

Generation PMCA — Q1 2026 Commentary

NFLX (Netflix) — Long

Thesis: Stepping away from the Warner Bros. acquisition demonstrates capital discipline; the core global streaming business has untapped potential with gaming, sports, and live events as growth drivers.

Netflix’s battle with Paramount for Warner Bros. Discovery has all the ingredients of a great movie. Spoiler alert — Netflix bowed out of the process after Paramount raised its offer to $31 per share. While we believed that Netflix was in a win-win situation, the decision to step away demonstrated discipline and prudent capital stewardship. Netflix earns a $2.8 billion break fee and should have renewed focus on its core global streaming business, which we believe has untapped potential.

We expect to see more gaming, sports, live comedy, musical performances, and events such as Skyscraper Live, which drew 6.2 million views. While competition in streaming is heated, Netflix has an unparalleled content library and the ability to create differentiated original content with a genuine feel sourced in various local markets, which then caters to its diverse global userbase.

Source: Generation PMCA Q1 2026 Commentary

SNYNF (Sanofi) — Long

Thesis: Blockbuster Dupixent drives high single-digit earnings growth through 2030; new drug revenues and strategic acquisitions provide meaningful growth beyond patent expiry, with the stock trading at a relatively low multiple of this year’s expected earnings.

Sanofi’s Dupixent is a blockbuster medication used to treat moderate-to-severe inflammatory conditions including atopic dermatitis (eczema) and asthma. New indications should help drive high single-digit annual earnings growth through 2030. Post-2031, the company will likely see growth temporarily stall, or even decline, when it loses patent protection. Uncertainty about the post-expiry growth profile may explain why the stock trades at a relatively low multiple of this year’s expected earnings.

However, the company has plans for meaningful growth beyond Dupixent with new drug revenues hitting €5.7 billion in 2025, up 34% year-over-year. Strategic acquisitions and steady performance from its vaccines business should also contribute to growth. Even if earnings decline somewhat post patent expiry, the total return could still be above 8% annualized from expected earnings growth alone, with potential upside from new drugs, acquisitions, and a revaluation once its profile is appreciated.

Source: Generation PMCA Q1 2026 Commentary

SPB (Superior Plus Corp) — Long

Thesis: Leading North American propane and CNG distributor with a fragmented propane market opportunity; the Superior Delivers cost-reduction initiative should drive cash flow growth, though management credibility issues have the stock trading near 20-year lows.

Superior Plus is a leading North American distributor of propane and compressed natural gas (CNG). In propane, cost advantages are vital. The company’s Superior Delivers initiative aims to reduce propane delivery costs through data-driven route optimization. Lower costs enhance customer value, which translates to additional customers and greater scale, further driving down unit costs. Unfortunately, Superior’s plan has encountered issues forcing management to push out expected savings to 2027 — their credibility has severely eroded, which could explain why the stock trades near a 20-year low.

Ultimately, the company’s plan should result in rising cash flow, otherwise it’s likely to attract activist investors to spur on the process.

Source: Generation PMCA Q1 2026 Commentary

UBER (Uber Technologies) — Long

Thesis: Autonomous vehicle adoption will take years to reach mass adoption; Uber is positioned as the platform layer through Uber Autonomous Solutions and key partnerships, while core ride-share and Eats generate substantial and growing free cash flow.

Uber Technologies has been under pressure because the advent of autonomous vehicles is viewed by the market as an existential threat. First, it will likely take many years for AVs to reach mass adoption — the World Economic Forum forecasts that less than 1% of new car sales in 2030 will have level 4 highway and urban capabilities and only 30 global cities will have significant robotaxi fleets.

Second, though AVs are clearly the future, Uber has several initiatives underway to remain the platform leader as the world transitions. It recently announced Uber Autonomous Solutions, a suite of services to help partners commercialize AV technology. Recent partnerships include Wayve, WeRide, and Apollo Go. Meanwhile, we expect Uber’s dominant ride-share business and Uber Eats to generate substantial free cash flow, increasing toward $20 billion annually over the next 5 years.

Source: Generation PMCA Q1 2026 Commentary

Greenlight Capital — Q1 2026 Letter

SLM (SLM Corp.) — Long

Thesis: Largest private student loan originator trading at 7x 2026 EPS with 90% cosigned loans mitigating credit risk, positioned for growth in graduate lending as the federal government exits the market, with capacity to repurchase ~30% of shares over three years.

SLM is the largest originator of private student loans in the U.S. The stock has declined due to concerns around AI-driven displacement of white-collar jobs and its impact on delinquencies. We established our position at an average price of $18.95 per share, or about 7x our 2026 EPS estimate. It is inherently difficult to predict the influence AI will have on employment this early in the adoption curve, but over time we expect workers to adapt and reskill to match the evolving job market.

Nearly 90% of SLM’s loans are cosigned, typically by a parent or grandparent, mitigating credit risk. We also see an opportunity for significant growth in graduate student lending as the federal government exits the market following provisions in the One Big Beautiful Bill Act. SLM has been actively repurchasing shares, and we estimate capacity to repurchase approximately 30% of the outstanding shares over the next three years.

Source: Greenlight Capital Q1 2026 Letter

VSNT (Versant Media Group) — Long

Thesis: Recent Comcast spin-off trading at less than 4x adjusted EBITDA with live news programming resistant to cord-cutting and growing non-Pay TV revenues, supporting return of nearly the entire market cap within four years.

VSNT is a recent spin-off from Comcast and owns cable channels like MS NOW (formerly MSNBC), CNBC, and USA Network, along with other non-Pay TV assets including GolfNow and Fandango. While the legacy cable business faces ongoing cord-cutting, over 60% of its programming is tied to live news and events, which we believe is more resistant to subscriber losses than other entertainment categories. Additionally, the company’s non-Pay TV revenues are growing and now represent nearly 20% of total revenues.

Following the spin-off, shares declined as Comcast shareholders sold stock they received, and index rebalancing forced additional selling when VSNT was removed from major indices. These dynamics left the shares trading at less than 4x adjusted EBITDA, with an implied cash flow yield that supported the company’s ability to return nearly its entire market cap within four years.

Source: Greenlight Capital Q1 2026 Letter

Black Bear Value Fund — Q1 2026 Letter

PSK.TO (PrairieSky Royalty) — Long

Thesis: Pure-play oil and natural gas royalty company with a 5–8% yield, capital-light model, exceptional management, and a call option on higher energy prices amid global underinvestment.

PrairieSky is a pure-play oil and natural gas royalty company that owns one of Canada’s largest portfolios of subsurface mineral rights and royalty interests across Western Canada. Importantly, the company does not operate or drill oil and gas wells itself; instead, it leases its land to third-party energy producers and collects high-margin royalty revenues based on production without incurring operational costs or capital expenditures. Businesses like this should trade at a meaningful premium to the average company due to the lack of capital intensity and long duration of healthy cash flows.

Likely due to both being an energy company and being in Canada, we can own the business at a 5–8% yield assuming stable production and steady energy prices. Additionally, the business is run by an exceptional CEO and Board that understands capital allocation at a deep level. Given the lack of global investment in energy development and potential for inflation, our ownership serves as a positive-yielding long-term business investment with a call option on higher energy prices.

Source: Black Bear Value Fund Q1 2026 Letter

TDW (Tidewater) — Long

Thesis: Offshore support vessel operator with an 8% current FCF yield and potential for 12–25% yields as the aging global fleet shrinks 40% and pricing power returns to a sector starved of capital.

Tidewater is a marine services firm that operates one of the world’s largest fleets of offshore support vessels. They serve the energy industry by transporting crew and supplies, towing and anchoring drillships, and supporting offshore construction projects.

What’s striking about this industry is the lack of investment in the OSV fleet. Since the GFC, global shipyard capacity has shrunk by nearly 60%. In addition, newbuild investment is lacking as many banks have pulled back from lending. Over the next decade, as fleets age, the global OSV market is expected to shrink by ~40%. This adds up to a potential for large pricing moves in our favor, coupled with high utilization. TDW generated ~$350M in free cash flow in 2025, which is a trailing ~8% FCF yield. In a more normal environment, I’d expect them to generate $500M–$1B, which gets to ~12–25% yields.

Source: Black Bear Value Fund Q1 2026 Letter

Blue Tower — Q1 2026 Letter

PBR (Petrobras) — Long

Thesis: Attractive valuation and idiosyncratic strengths as an oil and gas producer, positioned to benefit from sustained commodity price elevation due to Persian Gulf supply disruptions.

Although we have invested in other types of energy sector companies in the past, this is the first time that Blue Tower has invested in oil and gas exploration and production stocks. We typically do not invest in these commodity stocks as we prefer to invest in companies with strong barriers to entry, higher earnings quality, and lower maintenance capital expenditure requirements. Given the idiosyncratic strengths of Petrobras and current prices, we believe it is an attractive opportunity and also helps balance out the risk exposures in the portfolio.

Source: Blue Tower Q1 2026 Letter

SM (SM Energy) — Long

Thesis: Attractive oil and gas E&P opportunity at current prices, positioned to benefit from prolonged commodity supply disruptions and infrastructure damage requiring years to repair.

Although we have invested in other types of energy sector companies in the past, this is the first time that Blue Tower has invested in oil and gas exploration and production stocks. We typically do not invest in these commodity stocks as we prefer to invest in companies with strong barriers to entry, higher earnings quality, and lower maintenance capital expenditure requirements. Given the idiosyncratic strengths of SM Energy and current prices, we believe it is an attractive opportunity and also helps balance out the risk exposures in the portfolio.

Source: Blue Tower Q1 2026 Letter

Rubric Capital — Q1 2026 Letter

TLN (Talen Energy) — Long

Thesis: Independent power producer with an accretive acquisition strategy — two deals totaling $7 billion at 15%+ free cash flow per share accretion — positioning it as a disciplined buyer in contracted power assets.

Talen announced it was acquiring three high-quality assets in Ohio and Indiana on January 16, paying $3.5 billion for them alongside more than 15% immediate free cash flow per share accretion. This is Talen’s second attractive deal over the last year, with the first being its $3.5 billion purchase of a pair of combined-cycle gas turbines in Pennsylvania and Ohio at more than 50% free cash flow per share accretion.

Management described the acquisition strategy as fitting in with its “flywheel strategy of accretively deploying free cash flow into assets that are well positioned to be contracted with high quality counterparties.” This puts to rest the misguided notion that Talen is a better seller than buyer.

Source: Rubric Capital Q1 2026 Letter

Laughing Water Capital — Q1 2026 Letter

LFCR (Lifecore Biomedical) — Long

Thesis: Fill-finish CDMO winning new business at an impressive rate, trading at a significant discount to private market value — the board is now incentivized to close the gap through a sale of the company.

Lifecore, our fill-finish CDMO that puts drugs into syringes and vials, continues to win new business at an impressive rate. However, the time from winning new business to generating meaningful cash flows is measured in years in the CDMO world. Additionally, Lifecore recently announced that much of their pipeline is moving to the right as customer timing has shifted. As a result, the stock has been severely punished.

The shifting timeline is of course frustrating, but I think the market is over-reacting to fears of a potential capital raise as the company’s series A convertible preferred shares mature this summer. However, these shares are designed to PIK at maturity if the company is unable to redeem them, so no immediate liquidity needs are on the horizon.

In my view, the gap between the public market value of LFCR stock and the private market value of Lifecore’s assets has never been wider. I believe private buyers were willing to pay approximately $8 per share for Lifecore three years ago, and since that time management has taken out a lot of cost and won a lot of new business. It is incumbent upon the board to close this gap through a sale of the company.

Source: Laughing Water Capital Q1 2026 Letter

LQDA (Liquidia Corp) — Long

Thesis: YUTREPIA sales exceeding all expectations; a favorable patent ruling is expected shortly, and the company is a prime acquisition target for large pharma facing a $300 billion patent cliff.

Liquidia is our maker of a drug called YUTREPIA that combats Pulmonary Arterial Hypertension (PAH) and Pulmonary Hypertension Interstitial Lung Disease (PH-ILD). The sales launch of this drug continues to exceed all expectations, and the stock has appreciated nicely. However, I believe shares would be much higher if not for an ongoing patent battle with United Therapeutics. My work around the opinions of legal experts and past rulings by this judge suggest a favorable outcome is on the way.

Importantly, even if the ruling is unfavorable, Liquidia should be able to continue to take share in the PAH market — providing downside protection for the stock. If the ruling is favorable, even a material slowdown in the rate of adoption since inception could lead to a revenue run rate north of $1.2B by the end of the year. If Liquidia were to trade at the same multiple of sales as United Therapeutics, shares would be worth more than double where they are today. Additionally, the major pharmaceutical companies are facing an estimated $300B in patent cliffs over the next few years, with an estimated $1T in dry powder to make acquisitions. Liquidia appears to be a prime candidate for a takeout by large pharma.

Source: Laughing Water Capital Q1 2026 Letter

LRN (Stride Inc.) — Long

Thesis: Largest US virtual school operator, trading below 7.5x EBIT following a software implementation failure that cost 10,000 enrollments — with strong secular tailwinds and management executing on a fix, the stock should re-rate toward its pre-selloff levels.

Stride entered our portfolio as a mid-sized position. The company is the largest operator of virtual schools for grades K–12 in the U.S., serving more than 240,000 students across 30 states. Virtual schools are enjoying secular tailwinds as advances in technology and changes to the way online education is perceived following the Covid experience have led to what I believe is a sustainable increase in demand.

The company had been growing at mid-to-low teens percent for several years when, prior to the 2025–2026 school year, they attempted to upgrade the software that governs their enrollment process and learning management system. The implementation did not go smoothly — parents could not successfully navigate the enrollment process, and students faced problems logging in and finding the right classes. This cost the company upwards of 10,000 enrollments and led to a more than 50% decline in share price, where we began to buy stock.

The company is now valued below 7.5x EBIT, which seems to imply either that the company cannot fix their software, or that the market does not have the patience to wait. I am of the view that given enough time the problems will be fixed — and in fact, early indications from both the company and various open-market sources are that the company is well on its way down this path.

Source: Laughing Water Capital Q1 2026 Letter

NN (Nextnav Inc) — Long

Thesis: Wireless spectrum company on the verge of FCC approval for a terrestrial GPS backup, with spectrum valuation likely north of $50 per share based on recent comparable transactions — versus a current price of ~$15.

I have written about Nextnav, our wireless spectrum/5G terrestrial backup to GPS investment, several times in the past. This investment remains an outsized position. The FCC has submitted a draft Notice of Proposed Rule Making to the White House Office of Information and Regulatory Affairs, meaning the FCC is now on our side.

The proposal still needs to pass OIRA review, checking with the Department of Transportation and the Department of Defense. It seems unlikely that FCC Chair Brendan Carr would submit a proposal to OIRA without first running it by DOT and DOD. Further, Senator Ted Cruz has been a vocal advocate for terrestrial GPS in the past.

Recent transactions suggest a value north of $50 per share is well within range versus a month-end price of ~$15. Recent news that Amazon is interested in terrestrial spectrum through Globalstar and that SpaceX is looking to acquire more spectrum can only be viewed as positive — all that is needed to push value higher in an auction process of a scarce asset is two interested buyers with very deep pockets.

Source: Laughing Water Capital Q1 2026 Letter

TBPH (Theravance Biopharma) — Long

Thesis: Special situation with well-protected downside from cash and milestone payments, and 50–100% upside potential from a strategic review process expected to resolve within six months.

Theravance is a special situation. Following a failed Phase III FDA trial, the company is a pile of cash attached to a royalty stream that should generate ~$65M per year, as well as $2.6B in tax assets. The company has announced that they have accelerated the work of a strategic review committee, essentially saying that the royalty stream is for sale.

The downside is well protected by cash and near cash, and anything from $17–$25 is well within reason. Under certain scenarios, a buyer may be willing to pay a few dollars more. We bought our shares below $14, and the downside protection and range of upside outcomes is such that Theravance is a top 5 position for us. I expect this situation to resolve itself within the next 0–6 months.

Source: Laughing Water Capital Q1 2026 Letter

Fund Digest curates investment ideas from publicly available hedge fund letters. For informational purposes only — not investment advice. Always do your own research. Past performance is not indicative of future results.

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Black Bear Value Fund — Q1 2026

ACHC (Acadia Healthcare) — Long

Thesis: Management change to a capable former CEO should resolve operational issues and drive occupancy recovery, with stock undervalued at $16.24 average entry relative to normalized earnings potential of $3+ per share.

ACHC is the leading pure-play behavioral healthcare clinic operator in the U.S. After peaking near $90 in 2022, the stock came under heavy pressure in late 2024 following a New York Times investigation that revealed poor and sometimes abusive treatment of patients. Due to an overly aggressive expansion strategy and an inability to manage its patient ramp, ACHC had occupancy challenges that weighed on results, while litigation expenses were growing. ACHC shares ultimately bottomed out at around $11 in January.

Our work suggested the problems were entirely management-related and that ACHC’s asset quality is strong. Early this year we increased our position, believing that a leadership change was probable — and ultimately our average entry price for what is now a top 5 position is $16.24 per share.

In January, the company replaced its CEO, bringing back the former CEO who ran the company successfully from 2018 to 2022. The returning CEO is among the most well-regarded and capable operators in the industry. With this injection of confidence and competence, the shares recovered to $23.39 by the end of the quarter.

Source: Black Bear Value Fund

BLDR (Builders FirstSource) — Long

Thesis: Structural housing shortage with a 10–13% normalized free cash flow yield and a growing value-add business, with no growth priced in at current levels.

BLDR is a manufacturer and supplier of building materials with a focus on residential construction. Historically this business was cyclical with minimal pricing power as the primary products sold were lumber and other non-value-add housing materials. Since the GFC, BLDR has focused on growing their value-add business that is now 40%+ of the topline.

Our long-term thesis remains intact as there is a structural shortage of housing in the USA. Higher mortgage rates reduce the supply of existing home supply as homeowners are locked into low-rate mortgages. As we have seen in recent history, the overall pie of housing activity may shrink, with new homebuilders capturing an increasing share of home sales. I have lowered my estimates for the near-term cash generation of the business but still assume normalized free-cash-flow per share to be $9–$12 per year — implying a free-cash-flow yield of 10–13% with no growth priced in.

Source: Black Bear Value Fund

FLG (Flagstar Financial) — Long

Thesis: Regional bank turnaround with new management trading at 83% of conservatively marked book value — in contrast to similar banks trading at 120–150% of tangible book — offering 45–100% upside over 1–3 years.

Flagstar Financial is the former New York Community Bank (a mashup of Flagstar Bank, New York Community Bank and assets from Signature Bank). Like our past SHORT investments in Silicon Valley Bank and First Republic, FLG had a hole in their balance sheet from soured multifamily and office real estate. That is where the similarities end.

FLG raised over $1B in additional capital, led by former Treasury Secretary Steven Mnuchin. They revamped the management team and brought in a superstar CEO in Joseph Otting who successfully turned around OneWest Bank post-GFC. The turnaround is going well, and they recently reported their first profitable quarter since the new management team took over.

The valuation is extremely compelling. At quarter-end the bank was trading at ~83% of a conservatively marked balance sheet — in contrast to similar banks (who are NOT conservatively marked) trading at 120–150% of their tangible book value. At these prices the downside seems low and the stock could be up 45–100% over the next 1–3 years.

Source: Black Bear Value Fund

FPH (Five Point Holdings) — Long

Thesis: California real estate developer with a NAV estimated at 3x the current share price, benefiting from the state’s chronic housing shortage and regulatory tailwinds.

FPH is a real estate development company focused on creating large-scale, master-planned communities in some of the most supply-constrained and high-demand markets in California. They specialize in transforming underutilized land into residential and mixed-use environments. Their flagship properties are in Orange County, greater Los Angeles, and San Francisco.

Their most meaningful cash generative asset is held in a joint venture, obscuring the cash-flow generation of the business. Using conservative assumptions, we calculate a NAV estimate that is up to 3x higher than today’s share price. The need for affordable housing is extreme, especially in the metro communities of California. As the landowners, FPH stands to benefit from any positive shift in regulation and red tape.

Source: Black Bear Value Fund

Generation PMCA — Q1 2026

BLUA (Blue Owl Technology Finance) — Long

Thesis: BDC lending to established, profitable, mission-critical software and cybersecurity companies with first lien secured loans; only one historical loss with a 12.2% yield — the market is mis-pricing AI disruption risk.

Blue Owl Technology Finance is a business development corporation which lends its permanent capital base to other companies. Its share price declined because most of its loans are to software companies. The market is fearful of AI creating instant competition for software providers; however, Blue Owl Technology lends to established, highly profitable, mission-critical and cybersecurity-based software companies, mostly with first lien secured loans, and it’s only suffered one loss historically.

Source: Generation PMCA

CONMED (CONMED Corporation) — Long

Thesis: Medical device manufacturer with improving supply chain under new CEO and strong growth potential in BioBrace and surgical smoke management products, trading below fair value with potential as a takeover target.

CONMED is a medical device and equipment manufacturer. The share price has been declining over the last several years while the company grapples with supply-chain issues and competitive pressures. Its new CEO has made repairing supply-chain constraints the number one priority. Signs are emerging that the situation is improving with backorders at a 3-year low. The aim is to now build a world-class, data-driven supply chain.

We see strong growth ahead for the company’s BioBrace and surgical smoke management products. BioBrace is a cutting-edge reinforced bioinductive implant used for orthopedic procedures. Because research has found that surgical-related smoke contains a mixture of harmful byproducts including carcinogens, viruses, bacteria, and toxic gases, over 20 states have enacted legislation to address surgical smoke evacuation. Should the stock price continue to languish, it could be an ideal takeover target for a larger medical device maker.

Source: Generation PMCA

FANG (Diamondback Energy) — Long

Thesis: Disciplined capital allocator with best-in-class execution in the Permian Basin; industry-leading reinvestment rate and efficient operations support a protected dividend down to $37 WTI oil, with $4.4 billion of free cash flow expected in 2026.

Diamondback Energy is a Texas-based oil and gas company focused on the Permian Basin. We view the company as a disciplined capital allocator with best-in-class execution. Diamondback exited 2025 with its best drilling efficiency and completion efficiency stats in several years and an industry-leading reinvestment rate. Its efficient operations mean that its healthy dividend ought to be protected down to $37 WTI oil; therefore, management views its dividend as a fixed obligation. We expect full-year 2026 oil production to be 500,000 daily barrels, which should translate to $4.4 billion of free cash flow at lower than prevailing oil prices.

Source: Generation PMCA

META (Meta Platforms) — Long

Thesis: Unlike metaverse spending, AI investments are directly driving revenue and profitability gains — 18% ad impression growth and 30% Reels watch time growth — with material workforce reductions expected from AI productivity.

Meta Platforms’ capital expenditures are expected to balloon to $120 billion this year, which equates to nearly half of the company’s revenues. Investors are right to be skeptical of this spending on AI since the company appears to have sunk tens of billions on the metaverse with little to show for it. Unlike with the metaverse spending, we see a boost to revenues and profitability from Meta’s AI investments. AI-driven improvements and engagement increased the Q4 year-over-year growth in ad impressions by 18% and Instagram Reels watch times by 30%. We also expect cost savings from a material reduction in Meta’s workforce over the next 2 years due to AI productivity enhancements.

Source: Generation PMCA

SHG (Shurgard Self Storage) — Long

Thesis: One of Europe’s largest self-storage REITs with a 3.0% dividend yield, little leverage, and mid-to-high single-digit earnings growth; self-storage benefits from downsizing in recessions with the lowest volatility of any real estate segment.

BYG (Big Yellow Group) — Long

Thesis: Largest UK self-storage REIT with a 5.0% dividend yield, low leverage, mid-to-high single-digit earnings growth, and a share price trading well below fair value of €13.

We bought two dominant self-storage REITs — Big Yellow Group, the largest in the UK, and Shurgard Self Storage, one of the largest in Europe. They pay dividend yields of 5.0% and 3.0% respectively, both have little leverage, should grow earnings by mid- to high-single digits, and trade well below our respective fair value estimates.

Source: Generation PMCA

Greenlight Capital — Q1 2026

CROX (Crocs, Inc.) — Long

Thesis: Well-run footwear company with 12% annualized organic sales growth and industry-leading margins trading at 6x 2026 EPS, with over half of core brand sales from international markets and capacity for 10%+ annual buybacks.

CROX is a global footwear company best known for its iconic clogs. It is a well-run business with industry-leading margins and a 10-year annualized organic sales growth rate of 12%. Last year, a decline in U.S. sales raised existential concerns about the core brand, which we believe were overblown. While consumer preferences have shifted in the U.S., over half of core Crocs brand sales now come from international markets, which continue to grow at a strong pace. We also expect U.S. declines to moderate as comparisons normalize following last year’s inventory clean-up actions. We established our position at an average price of $83.49 per share, or about 6x our 2026 EPS estimate. The company has directed most of its free cash flow to buybacks, and we expect annual repurchases of over 10% of the outstanding shares going forward.

Source: Greenlight Capital

DHT (DHT Holdings) — Long

Thesis: VLCC shortage and elevated charter rates will drive a dividend surge from $0.74 to an estimated $3.50 per share as the company pays out current earnings.

DHT advanced from $12.21 to $18.27 per share during the quarter. The company owns and charters out Very Large Crude Carriers (VLCCs). Even prior to the war, VLCCs were in short supply, with day rates rising to about 500% of the long-term average level. The company pays out its current earnings as a dividend, and at these elevated charter rates, we expect the dividend to rise from $0.74 to $3.50 per share this year.

Source: Greenlight Capital

CNR (Core Natural Resources) — Long

Thesis: War-driven disruption to global natural gas supply is increasing coal demand, providing significant upside to CNR’s earnings.

CNR stock went from $88.51 to $104.73 during the quarter. More than all the gain came after the war began. As the war disrupts natural gas supply on a global basis, demand for coal increases.

Source: Greenlight Capital

Fund Digest curates investment ideas from publicly available hedge fund letters. For informational purposes only — not investment advice. Always do your own research. Past performance is not indicative of future results.

Donville Kent Asset Management — March 2026 ROE Reporter

BAMI (Blue Ant Media) — Long

Thesis: Newly public content company trading at 2.5x earnings with a net cash balance sheet, positioned to benefit from 20%+ annual streaming market growth and significant acquisition opportunities — worth approximately $20/share vs. today’s $5.65.

For those of you interested to learn more about Blue Ant, their investor presentation is a good primer, but we would also suggest looking through their content catalogue to understand the diversity and breadth of programming. Their content is sold in over 100 countries on over 300 platforms with over a billion global views per month.

An investor willing to do the work has an edge when it comes to Blue Ant because the stock is new to the market and hasn’t gone through the price discovery process yet. The company’s financial estimates don’t show up on Bloomberg, Factset, Yahoo Finance, etc. Before coming public, Blue Ant grew revenue 18% per year from 2020 to 2025 with 18% return on capital. The global streaming market is projected to grow over 20% per year for the next several years. Blue Ant received an additional $34.7M cash payout in March as part of the RTO process and is now sitting with a net cash balance sheet. Factoring in their recently closed acquisitions, the stock is currently trading on 2.5x earnings. We think it is worth ~$20/share with upside from there as they are sitting on cash and expect to acquire additional libraries of content.

Source: Donville Kent Asset Management March 2026 ROE Reporter

E (Enterprise Group) — Long

Thesis: Three 2025 headwinds — LNG Canada delays, weak Canadian natural gas prices, and a client asset sale pause — have all reversed into tailwinds in 2026, with cash flow set to inflect higher as growth capex investments pay off.

Enterprise was facing 3 headwinds in 2025 that have turned into tailwinds in 2026.

The LNG Canada was delayed in 2025, and it took a while to reach full utilization, which only happened in March 2026. The price of natural gas in Canada was weak in 2025 (even went negative) but has since rebounded. One of their largest clients was undergoing a large asset sale and stopped activity during due diligence but that client has since returned to the market in full form in 2026.

2024–2025 was a time of growth capex investment for Enterprise and now they will see those investments pay off — cashflow should inflect higher. They now have the assets in place to do $55–$60M in yearly revenue. The timing of Enterprise’s capex investments is well timed as 2025–2026 is just the start of the inflection higher for Canada’s natural gas market.

Source: Donville Kent Asset Management March 2026 ROE Reporter

GRID (Tantalus Systems) — Long

Thesis: Smart grid solutions provider with a proven product (TruSense Gateway) that has achieved 100% trial-to-order conversion rate across all utility customers, now scaling commercialization with profits inflecting higher.

Tantalus is bringing intelligence to the electrical grid with data and analytics where there wasn’t before. They are a provider of smart grid solutions to public power and electric cooperative utilities. The company’s hardware devices, software applications, and related services automate, monitor, and control power flow, consumption, and quality to improve grid reliability.

Before coming public, Tantalus had 18 consecutive quarters of profitability. They went public in 2021 to raise the capital needed to invest in the TruSense Gateway. They invested over $10M into the product and expensed it all, making the company look like they were losing money upfront — but they are now scaling the final product and profits are inflecting higher. Utilities typically trial the TruSense Gateway for 12–18 months before committing to a purchase order. Tantalus hasn’t had a single trial user not convert to orders and revenue growth is now ramping as more and more users convert.

Source: Donville Kent Asset Management March 2026 ROE Reporter

PRL (Propel Holdings) — Long

Thesis: Q4 2025 weakness driven by the government shutdown and loan loss provisions from accelerated lending; if Q4 marked the bottom for provisions, the stock is cheap and should perform well from current levels.

Propel reported Q4 earnings on March 3, 2026 — the stock declined ~12%. Most of the weakness in their quarter was due to the government shutdown plus them ramping lending in December 2025. With new loans they have to take loan loss provisions on day 1 but the loan revenue occurs over the life of the loan, so accelerating your loan growth makes the company appear less profitable in the short term.

Propel only has 2% exposure to the Canadian market but the stock still trades in a similar manner to GoEasy. If Q4 2025 did mark the bottom for provisions and performance should improve from here, then the stock is cheap and should do well from these levels. We are going to wait for confirmation before adding back to this investment.

Source: Donville Kent Asset Management March 2026 ROE Reporter

VHI (VitalHub) — Long

Thesis: Defensible healthcare software company with strong moats from integration and workflow expertise, positioned for ~35% EBITDA growth in 2026 with near 100% free cash flow conversion and $120M in cash.

VitalHub is our only software investment at the moment. There’s more nuance in the software landscape than just AI as an existential risk. Not all software companies are created equally, but they are all being treated the same right now. This dislocation creates an opportunity. The amount of support, integration, management of the modules/solutions and relationships is the moat. The hard part of software was never writing the code. It was figuring out what the problem was and what the workflow needs to be and having access to the data needed to solve it.

Government healthcare funding for digital tools, like the ones VitalHub offers, is growing in order to drive efficiency given the rising demand and lack of capacity in hospitals and doctors’ offices. Doctors and nurses aren’t vibe coding products. Hospitals aren’t willing to take this risk. Cyber security, workflow efficacy, and reliability are priorities that are much more important in this highly regulated industry.

VitalHub completed most of their recent M&A integration in H2/25. EBITDA should grow ~35% in 2026 with close to 100% free cash flow conversion. VHI has $120M in cash on hand and will add another ~$35M from cashflow in 2026.

Source: Donville Kent Asset Management March 2026 ROE Reporter

ZDC (Zedcor) — Long

Thesis: High-growth tower infrastructure company trading at 10x 2027 cash earnings while growing revenues 90% and earnings 100%, with significant runway from doubling its salesforce and expanding regional hubs.

Zedcor raised $30M at $6.00/share in February. This is enough capital to build ~100 towers — reading between the lines, we expect they have a large order coming from someone like Amazon or Kroger, who they have been working on for a while, and needed the extra capacity. We are still very bullish on Zedcor as they still have a long runway for growth. They are currently doubling their salesforce this year and have the opportunity to 4x the number of regional hubs they have.

A common pushback we hear is that the stock is expensive, but if you model out the financials instead of looking up the PE on Bloomberg or Yahoo Finance, you’ll see it is on 10x 2027 cash earnings while growing revenues +90% and earnings +100%. The idiosyncratic element to Zedcor is that they depreciate towers much faster than they actually need maintenance capex, which reduces taxes paid and leaves more cash for investment but makes it harder to calculate ROE. Adjusting for real asset value, Zedcor’s ROE is actually around 28–30%, which makes sense based on the unit economics of an individual tower and factoring in utilization rates.

Source: Donville Kent Asset Management March 2026 ROE Reporter

FPA Funds — Q1 2026 Commentary

AON (Aon) — Long

Thesis: Leading insurance/reinsurance brokerage trading at an undemanding valuation after sell-side downgrades on slowing organic growth, with a long track record of value-creating capital allocation.

Longtime holding Aon is among the world’s leading providers of insurance/reinsurance brokerage and human resources solutions. The company reported slowing organic revenue growth for 2025, which led to a slew of sell-side downgrades that pressured the stock price. Aon currently trades at an undemanding multiple of earnings and maintains a long track record of opportunistic capital allocation.

Source: FPA Funds Q1 2026 Commentary

AZL (Azelis) — Long

Thesis: Small-cap European specialty chemical distributor added as an undervalued opportunity after harvesting gains from long-held AI-exposed positions.

During the past quarter our two largest purchases were additions to existing positions — Azelis, a small-cap, European-based specialty chemical distributor, and Becton Dickinson, a US-based medical technology company. In contrast, our two largest sales were Alphabet and TE Connectivity, positions we have held for well over a decade and which presently share the benefit of being favored by investors for their exposure to artificial intelligence. These actions are consistent with our activity over the past twelve to eighteen months, which has seen us harvest gains from long-held positions and recycle the proceeds into what we perceive to be undervalued opportunities.

Source: FPA Funds Q1 2026 Commentary

BDX (Becton Dickinson) — Long

Thesis: US-based medical technology company added as a top-two purchase in Q1 2026, representing a redeployment from AI-exposed names into undervalued healthcare opportunities.

During the past quarter our two largest purchases were additions to existing positions — Azelis, a small-cap, European-based specialty chemical distributor, and Becton Dickinson, a US-based medical technology company. In contrast, our two largest sales were Alphabet and TE Connectivity, positions we have held for well over a decade. These actions are consistent with our activity over the past twelve to eighteen months, which has seen us harvest gains from long-held positions and recycle the proceeds into what we perceive to be undervalued opportunities.

Source: FPA Funds Q1 2026 Commentary

Greenlight Capital — Q1 2026 Letter

GLRE (Greenlight Capital Re) — Long

Thesis: Greenlight Re is performing well and earning its cost of capital, but the share price does not reflect this — creating an opportunity for aggressive share repurchases at a meaningful discount to intrinsic value.

While Greenlight Capital Re, Ltd. is performing well and earning its cost of capital, I believe our share price does not reflect this. That perception has implications for capital allocation. We believe that the company has the financial flexibility and capital strength, as exemplified by the rating upgrade, to be more aggressive on share repurchases to capture the discount being offered in the market.

Source: Greenlight Capital Q1 2026 Letter

Greystone Capital Management — Q1 2026 Letter

SES.TO (Secure Waste Infrastructure) — Long

Thesis: A waste management and energy infrastructure business with durable, recurring revenues being valued like a cyclical energy services company, offering 50–60% upside through organic growth and share buybacks — subsequently announced as an acquisition target by GFL Environmental at $6.4 billion.

Secure is a waste management and energy infrastructure business that processes, recycles and disposes of waste, wastewater and byproduct from oil and gas drilling in Western Canada. Secure owns a valuable network of waste and energy infrastructure assets through which volumes of produced water, solid waste, and other byproducts must flow. What makes their infrastructure so attractive is that the volumes are sticky, regulated, and largely non-discretionary, while disposal is expensive and often impractical for customers to handle or transport elsewhere. The network would be extremely difficult to replicate, requiring substantial capital, years of permitting, and long-standing customer relationships.

At the time of our initial investment, Secure was being viewed as, and valued like, a cyclical energy services business beholden to the price of oil. That view would accurately describe Secure’s past, but since 2014, the company has executed a remarkable transformation, shifting its revenue mix from more cyclical oil and gas services tied to new drilling activity to largely waste management revenues tied to ongoing production activity. Today, Secure more closely resembles a municipal waste business than anything energy related, as 80% of revenues and cash flows are recurring waste management cash flows, compared to 40% a decade ago.

Management has proven to be excellent operators and capital allocators, aggressively repurchasing undervalued stock — reducing total shares outstanding by 25% since initiating their buyback program in late 2022. At roughly CAD $22/share, Secure traded at approximately 10.8x 2026E EBITDA while waste management peers typically trade at mid-teens multiples. Using conservative assumptions, shares offered an additional 50–60% upside over the next few years. As I was finalizing this letter, the company announced an agreement to be acquired by GFL Environmental for total consideration of $6.4 billion.

Source: Greystone Capital Management Q1 2026 Letter

Heartland Advisors — Q1 2026 Small Cap Value Commentary

SF (Stifel Financial) — Long

Thesis: Wealth manager trading at an attractive 11x 2026 consensus EPS with durable low-double-digit EPS growth potential, benefiting from AI-driven operational efficiency and continued advisor recruitment despite near-term rate headwinds.

Shares of the global wealth manager began selling off in early February as the market expressed concerns around AI’s ability to disrupt their business. Then, the spike in interest rates, driven by concerns about higher inflation and oil prices, further weighed on the stock.

We believe Stifel should still be able to grow revenues and expand margins for the foreseeable future as the company continues to execute on organic asset growth. The company ranked no. 1 in JD Power’s Advisor Satisfaction study for the third consecutive year and continues to attract new financial advisors to its platform. Meanwhile, AI should be a tailwind for operational efficiency as it allows Stifel to automate routine tasks like compliance checks, client onboarding, and producing reports. With a P/E ratio of 11 times 2026 consensus EPS estimates, we believe Stifel is trading at an attractive valuation for a business enjoying durable earnings growth.

Source: Heartland Advisors Q1 2026 Small Cap Value Commentary

SIMO (Silicon Motion Technology) — Long

Thesis: Leading maker of memory components undervalued at $117 versus a $185 price target, benefiting from hyperscaler datacenter capex growth and margin expansion from a shift to higher-margin leading-edge applications.

A year ago, shares of the leading maker of memory components used in PCs, smartphones, data centers, and industrial and auto applications sold off amid a variety of concerns — including tariffs, consumer spending worries, and questions over whether investors might be overestimating the capex needs of hyperscalers. At the time, we remained committed to the stock because we believed the company was in the early days of a re-rating process, as SIMO had been making a push away from trailing-edge, lower-margin consumer electronics into higher-margin, leading-edge applications driven by hyperscaler demands.

What a difference a year makes. In the first quarter, the stock was a contributor to our outperformance as consumer spending has held up and hyperscalers continue to indicate robust datacenter capex growth. Management reiterated the firm’s outlook for their PC and smartphone end markets and the growth prospects for their data center storage components, which are expected to drive margins substantially higher.

Source: Heartland Advisors Q1 2026 Small Cap Value Commentary

WH (Wyndham Hotels) — Long

Thesis: Midscale and economy hotel franchisor poised to benefit from a broadening economy and improving PMI, trading at just 11–12x EBITDA versus peers at 17–20x with active buybacks and a growing dividend.

In this K-shaped recovery, shares of Wyndham Hotels have been punished as revenues for hotels that operate in the midscale and economy space have lagged behind upscale peers such as Marriott or Hilton. This isn’t so surprising, as inflation has eaten into consumer budgets while the weak manufacturing economy also impacted Wyndham’s grey and blue collar business travel base.

Yet a broadening economy and improving PMI should benefit Wyndham’s base of business travelers and middle income customers. The global franchisor of hotels such as Wyndham, Days Inn, La Quinta, Ramada, and Super 8 should also see an incremental boost in demand from key events this year, including the World Cup in North America, the 250th birthday celebration for the U.S., and the 100th anniversary of Route 66.

Wyndham shares are valued at just 11–12x EBITDA, which compares favorably to Marriott and Hilton at 17–20x. Management has been actively buying back the company’s shares while consistently boosting its dividend payout.

Source: Heartland Advisors Q1 2026 Small Cap Value Commentary

Fund Digest curates investment ideas from publicly available hedge fund letters. For informational purposes only — not investment advice. Always do your own research. Past performance is not indicative of future results.

Acatis Investment — Monthly Investment Report, April 2026

BENE (BeOne Medicines) — Long

Thesis: Leading Chinese biotech focused on molecularly targeted and immuno-oncological cancer drugs, growing rapidly and reaching profitability in 2025.

BeOne is a leading Chinese biotech company that focuses on researching, developing and marketing molecularly targeted and immuno-oncological drugs for the treatment of cancer. BeOne looks after patients worldwide, is growing rapidly and reached the profit zone in 2025.

Source: Acatis Investment Monthly Investment Report April 2026

CCJ (Cameco) — Long

Thesis: Market leader in Western uranium with Westinghouse acquisition providing an integrated position in both uranium production and power plant equipment, positioned for the nuclear energy renaissance with 80 plants under construction and 120 in planning.

Cameco represents the renaissance of nuclear energy — 80 power plants under construction, 120 in planning — with an ideal position: since taking over Westinghouse, this Canadian company not only produces uranium but also provides equipment to power plants.

Source: Acatis Investment Monthly Investment Report April 2026

KGHM (KGHM Polska Miedz) — Long

Thesis: Europe’s largest copper producer with silver as a major byproduct, making it the world’s second-largest silver producer — dual commodity exposure that goes largely unnoticed by the investment community.

We also have KGHM Polska Miedz in the portfolio. It allows us to kill two birds with one stone: the Polish company is by far the largest copper producer in Europe. Since silver is mainly a by-product of copper mining, KGHM has for many years been the second-largest producer of silver in the world — mostly unnoticed by the broader investment community.

Source: Acatis Investment Monthly Investment Report April 2026

KHC (Kraft Heinz) — Long

Thesis: Depressed valuation (P/E ~11, 7% dividend yield) combined with forced management action on the brand portfolio offers a recovery similar to Procter & Gamble’s, with over 8% returned to shareholders annually.

The valuation has reached a level that will force adjustments to the brand portfolio. The P/E ratio is at around 11, and the dividend yield at 7%. When one includes the (albeit credit-financed) share buy-backs, more than 8% is returned to shareholders every year. Procter & Gamble reached this same point some years ago — and recovered almost 50% after management did the necessary clean-up work. Another glimpse of hope for Kraft Heinz is the turnaround of the Canadian business, which represents about 10% of total sales. And finally, product innovations such as sugar-free ketchup.

Source: Acatis Investment Monthly Investment Report April 2026

LI (Li Ning) — Long

Thesis: Leading Chinese sporting goods manufacturer with a larger market share than Adidas in China, showing solid growth with margins exceeding 10% despite consumer weakness.

Li Ning and Anta are the leading Chinese sporting goods manufacturers; Li Ning has a larger share of the Chinese market than Adidas. The company is showing solid growth with a margin exceeding 10% despite continued consumer weakness in the Chinese market, which however does not affect the Sports & Leisure segment to the same degree.

Source: Acatis Investment Monthly Investment Report April 2026

SU (Schneider Electric) — Long

Thesis: The technological backbone of the energy transition and AI boom, with record sales of €40.2 billion, an 18.7% operating margin, 16 consecutive dividend increases, and triple-digit data center growth.

Schneider Electric is the technological backbone of the energy transformation and the boom in AI, and the company also delivers impressive numbers in this regard: record sales of EUR 40.2 billion, an operating margin of 18.7% (2025), and the 16th dividend increase in a row. With triple-digit growth in the data center business and expected profit growth of up to 15% for 2026, this stock offers a rare combination of quality and growth.

Source: Acatis Investment Monthly Investment Report April 2026

TLXP (Telix Pharmaceuticals) — Long

Thesis: Developer of radioactive drugs for cancer detection and targeted internal radiation therapy, with a core portfolio in prostate cancer and a pipeline expanding into kidney cancer.

Telix develops radioactive drugs that detect cancer cells in the body and irradiate them from the inside. Tumors are made visible to the millimeter. The targeted radiation enables personalized treatments. The core portfolio consists of Illuccix and Gozellix for prostate cancer. Drugs for kidney cancer are in the clinical development pipeline.

Source: Acatis Investment Monthly Investment Report April 2026

WPM (Wheaton Precious Metals) — Long

Thesis: A long-term core holding that functions as a bank for silver mines — financing production and receiving a share of output in return, providing leveraged exposure to silver.

We have also been invested in Wheaton Precious Metals for many years. In a way, it is like a sort of bank that finances silver mines and receives a portion of the production in return, which is then sold in the market.

Source: Acatis Investment Monthly Investment Report April 2026

XIACF (Xiaomi) — Long

Thesis: Chinese tech conglomerate combining Apple and Porsche positioning with an ecosystem of affordable, high-quality products; share price cut in half from its 2025 peak provides an attractive entry point.

This tech group is the Chinese combination of Apple and Porsche. Xiaomi has been successful in offering an ecosystem of affordable and high-quality products with a sophisticated design. This is evident not just with regard to smartphones and other electronic devices, but also in vehicles such as the sporty sedan SU7 — the purported challenger of the Porsche Taycan. Since the hype in 2025, the share price has been cut almost in half, which represents a good entry point, in our opinion.

Source: Acatis Investment Monthly Investment Report April 2026

XPEL (Xpel Technologies) — Long

Thesis: Global market leader in paint protection film, with a strong North American base and growing international expansion.

Xpel Technologies, the global market leader for paint protection film, generates most of its sales in North America but is increasingly exporting its successful business model into other countries thanks to its unique selling points.

Source: Acatis Investment Monthly Investment Report April 2026

YARA (Yara International) — Long

Thesis: Blockade of the Straits of Hormuz has eliminated competing fertilizer exports, temporarily doubling Yara’s profits in 2026 and compressing its already attractive P/E to 6.

The Straits of Hormuz are blocked and neither gas nor fertilizer can pass. This is excellent news for European fertilizer producer Yara — the company’s profits are expected to temporarily double in 2026. This means that the already attractive P/E ratio is reduced to 6!

Source: Acatis Investment Monthly Investment Report April 2026

Alger Spectra Fund — Q1 2026 Commentary

APP (AppLovin Corp.) — Long

Thesis: AppLovin’s AI-powered software engine and scale/data advantage in mobile gaming create a competitive moat and network effects, with expansion into e-commerce and other segments driving long-term growth.

AppLovin is an advertising technology company offering a digital platform that helps mobile app developers market, monetize, and analyze their apps. We believe the company is experiencing a positive lifecycle change, driven by its AI-powered software engine. While currently focused on mobile gaming, AppLovin is expanding into other market segments. Its Demand Side Platform supports ad placements, user acquisition, inventory matching, and performance analytics.

We believe AI is central to AppLovin’s growth, driving a large majority of the company’s revenue through its recommendation and targeting engine. AppLovin gains a competitive advantage by delivering higher-value app installs, leveraging data from its game portfolio and developer partners. This scale and data advantage enhances its network effect, improving its technology and boosting market share in mobile gaming. We remain constructive on the company’s long-term trajectory.

Source: Alger Spectra Fund Q1 2026 Commentary

GEV (GE Vernova Inc.) — Long

Thesis: Uniquely positioned to benefit from the global energy transition and rising power demand driven by AI data centers, with a record backlog and high-margin services providing long-term free cash flow visibility.

GE Vernova is a purpose-built global energy company operating through three segments — Power, Wind, and Electrification — that provide technologies to generate, transfer, convert, and store electricity. The company supports approximately a quarter of the world’s electricity generation through a massive installed base of gas and wind turbines, and its record backlog and high-margin services business provide significant visibility into long-term free cash flow potential through the end of the decade.

We believe GE Vernova is uniquely positioned to benefit from the global energy transition and rising power demand driven by AI data centers. During the quarter, shares contributed positively to performance supported by a strong fiscal fourth-quarter earnings report that highlighted a significant organic increase in orders, led by a tripling of Gas Power equipment orders and record bookings in the Electrification segment.

Source: Alger Spectra Fund Q1 2026 Commentary

MSFT (Microsoft Corporation) — Long

Thesis: Primary beneficiary of cloud workload migration and AI integration into enterprise operations, with fully contracted GPU capacity providing multiple years of committed future revenue.

Microsoft is a global technology leader and a primary beneficiary of the ongoing digital transformation of enterprise computing, holding dominant positions in desktop software, cloud infrastructure, and generative artificial intelligence. We believe the company is well positioned as businesses continue to shift workloads to the cloud and integrate AI into their operations.

Despite the company delivering better-than-expected total revenue and earnings, with operating profitability improving substantially year over year, shares detracted from performance. The primary source of investor disappointment was the Azure cloud business, where revenue growth came in slightly below elevated expectations. Management attributed the shortfall in part to supply constraints, suggesting that the company is currently unable to fully meet customer demand rather than facing softening in underlying appetite. The total value of newly signed customer contracts grew significantly, providing multiple years of committed future revenue, while management noted that its entire GPU capacity is fully contracted for its useful life.

Source: Alger Spectra Fund Q1 2026 Commentary

NBIS (Nebius Group) — Long

Thesis: Vertically integrated AI infrastructure platform with proprietary data center design and in-house software, positioned to capitalize on sustained AI computing capacity buildout following a landmark multi-year hyperscaler agreement.

Nebius Group is a specialized AI infrastructure company that provides a full-stack platform, including GPU-accelerated cloud computing, to help enterprises build, train, and deploy large-scale artificial intelligence models. The company is anchored by its vertically integrated approach, which combines proprietary data center design with in-house software to deliver superior performance and lower operating costs compared to traditional GPU cloud providers.

During the quarter, shares contributed positively to performance driven by several reinforcing catalysts. The company announced a landmark multi-year infrastructure agreement with a major AI hyperscaler, significantly expanding its contracted backlog and validating its platform at scale. Fiscal fourth-quarter results were exceptionally strong, with revenue increasing dramatically year over year as demand for dedicated AI compute capacity accelerated. Profitability also reached a meaningful milestone, as the company reported positive adjusted earnings at the group level for the first time, reflecting strong pricing power and growing operating leverage.

Source: Alger Spectra Fund Q1 2026 Commentary

NVDA (NVIDIA Corporation) — Long

Thesis: Dominant market position in GPU design, unmatched product roadmap, and expanding ecosystem position NVIDIA as a direct beneficiary of AI infrastructure buildout — structural demand for accelerated computing remains firmly intact.

Nvidia is the world’s leading designer of graphics processing units (GPUs) and accelerated computing platforms, providing the foundational hardware and software that power artificial intelligence training and inference across data centers, cloud infrastructure, and edge applications globally. The company’s GPUs have become the de facto standard for AI workloads, and its expanding ecosystem of networking, software, and systems solutions has deepened its strategic importance to hyperscalers, enterprises, and sovereign AI initiatives worldwide.

During the quarter, shares detracted from performance despite the company delivering record fiscal fourth-quarter results that exceeded expectations on both revenue and earnings, with strong forward guidance pointing to continued acceleration. A sharp post-earnings sell-off reflected broader investor anxiety around the sustainability of AI capital spending and a wider rotation out of mega-cap technology names. Despite the near-term volatility, we believe the structural demand for accelerated computing remains firmly intact.

Source: Alger Spectra Fund Q1 2026 Commentary

WDC (Western Digital Corporation) — Long

Thesis: Leadership in high-capacity drive technology and essential role in AI data infrastructure, supported by capital discipline across a highly consolidated industry and full-year production committed under long-term agreements.

Western Digital is a hard disk drive storage company benefiting from rising hyperscaler data-center investment and the continued proliferation of data. The HDD industry is highly consolidated, with only two scaled manufacturers, and Western Digital holds a leading market position.

Industry participants have emphasized capital discipline — prioritizing higher areal density rather than adding significant unit capacity — which supports a healthier supply/demand balance and improved profitability. During the quarter, the company delivered strong fiscal second-quarter results highlighted by robust revenue growth, record gross margins, and favorable pricing dynamics in a tightly supplied market. Notably, the company’s full-year production capacity is committed under long-term agreements, providing strong revenue visibility.

Source: Alger Spectra Fund Q1 2026 Commentary

Fund Digest curates investment ideas from publicly available hedge fund letters. For informational purposes only — not investment advice. Always do your own research. Past performance is not indicative of future results.

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Praetorian Capital — 2025 Q4 Investor Letter

JOE (St. Joe Company) — Long

Thesis: St. Joe’s Florida Panhandle land holdings will appreciate rapidly as wealthy individuals flee major cities for tax-free, peaceful alternatives, while the company grows revenue and earnings at attractive valuations with substantial free asset value.

JOE owns approximately 167,000 acres in the Florida Panhandle. It has been widely known that JOE traded for a tiny fraction of its liquidation value for years, but without a catalyst, it was always perceived to be “dead money.”

Over the past few years, the population of the Panhandle has hit a critical mass where the Panhandle now has a center of gravity that is attracting people who want to live in one of the prettiest places in the country, with zero state income taxes and few of the problems of large cities.

The oddity of the current disdain for so-called “value investments” is that many of them are growing quite fast. I believe that JOE may grow revenue at a rapid rate for the foreseeable future, with earnings growing at a much faster clip. Meanwhile, I believe the shares trade at an attractive multiple on Adjusted Funds from Operations (AFFO), while substantial asset value is tossed in for free.

Source: Praetorian Capital 2025 Q4 Investor Letter

MRX (Marex) — Long

Thesis: Marex is a long-term compounder gaining market share from bulge bracket competitors by serving mid-market commodity firms and hedge funds, trading at a high single-digit earnings multiple with strong ROE and multiple tailwinds in increasingly volatile, financialized markets.

Marex continues to take market share from bulge bracket firms who are unable to offer competitive levels of services to mid-market firms, while consistently purchasing smaller players who cannot afford the increased compliance costs of participating in a global market.

My view is that in the increasingly volatile and financialized markets of the future, CFOs will feel a need to hedge not just commodity risks, but currencies, interest rates, freight rates, weather derivatives and all sorts of other products that may not even exist today. As the CFO, you get a large bonus for hedging correctly, and few penalties for hedging poorly, since Adjusted EBITDA tends to adjust the losses away. Meanwhile, Marex trades at a high single-digit 2026 estimated earnings multiple, has grown earnings at an impressive rate, and has consistently earned unusually high returns on equity, despite constantly reinvesting in the business. I see this as something of a long-term compounder that overlaps in many of my favorite themes, with many tailwinds and opportunities to continue to consolidate a sector with few scale competitors for M&A opportunities.

Source: Praetorian Capital 2025 Q4 Investor Letter

Robotti — Letter

TDW (Tidewater) — Long

Thesis: Offshore energy services company benefits from structural supply tightening, improved balance sheets, and pricing power despite cyclical volatility and near-term sentiment swings.

Offshore energy services provide a current example of this non-linear runway. Following a prolonged downturn after the last commodity cycle, offshore oil service companies were widely viewed as uninvestable. Years of underinvestment, restructuring, and bankruptcies dramatically reduced capacity and forced the surviving companies to rebuild with far more conservative balance sheets. What appeared to be an industry in terminal decline was, in reality, an industry being reset.

The result has been a sharp tightening in the supply-demand balance. Companies such as Tidewater and offshore drillers that emerged from restructuring with improved balance sheets were positioned to benefit disproportionately. With consolidated fleets, restored capital discipline, and replacement costs far above asset values, pricing power returned to a sector long characterized by extreme cyclicality.

This recovery has not been linear, nor do we believe it is complete. Activity today is not being driven by speculative enthusiasm, but by the economic necessity of offsetting natural production declines and replacing existing supply. The volatility in Tidewater’s share price highlights the exaggerations created by modern fund flows and what Benjamin Graham described as the manic-depressive behavior of Mr. Market. We reduced exposure as the stock surged above $100, while the company itself aggressively repurchased shares at an average price near $39 in early 2025. Throughout this period, Tidewater has continued to generate double-digit free cash flow yields and reinvest that capital to increase per-share value.

Source: Robotti Letter

Semper Augustus — Letter

BRK.B (Berkshire Hathaway) — Long

Thesis: Berkshire Hathaway under new CEO Greg Abel is well-positioned with excellent insurance operations, strong capital allocation discipline, and a legacy of compounding wealth at 19.7% annually over 61 years.

Speaking of ending, we have come to the end of an era. Berkshire Hathaway’s CEO announced on May 3, 2025, at the close of Berkshire’s Annual General Meeting, that he was stepping down at the end of the year. As of January 1, 2026, the company is now in the able hands of Greg Abel. Greg has overseen all of Berkshire’s non-insurance businesses since 2018. He’s more active than Warren was in oversight and has Warren and the board’s complete confidence. Between Greg managing the company and allocating its capital, Ajit Jain overseeing what is by far the best insurance operation in the world, and Berkshire’s roster of outstanding managers, the company is in excellent hands.

Warren will stay on as Chairman indefinitely and will be in the office daily! Albert Einstein famously identified compound interest as the eighth wonder of the world. I contend that if Einstein was correct, then by extension, Warren is the human embodiment of the eighth wonder. Whether guiding his partnerships in the early years, or leading Berkshire for the last 61, Warren led with integrity and morality. His shareholders were his partners. Accounting was never to be abused. His word was his honor.

Source: Semper Augustus Letter

Sequoia Fund — Year-End Letter

ACN (Accenture Plc) — Long

Thesis: Market leader in IT services with durable competitive moats intact; generative AI presents opportunity rather than existential threat given enterprise dependency on Accenture’s breadth, depth, and track record navigating past IT transitions.

Accenture Plc is the market leader in information technology services, providing strategic advice, systems implementation, IT outsourcing, and business process outsourcing to Global 2000 enterprises. Originally a spin-out of accounting firm Arthur Andersen, the firm has grown to nearly 800,000 employees and over $70 billion in revenues.

This changed in 2025, with the stock price dropping nearly 40% from its highs. With the company’s revenue growth slowing and generalized exuberance for artificial intelligence increasing, investors began to question whether generative AI might be on the cusp of upending the IT services industry. Our updated research, however, indicated that Accenture’s principal moats remain very much intact. Enterprise IT departments explained their dependency on Accenture’s enormous breadth and depth of IT expertise as well as the company’s intimate knowledge of their specific business processes and end-markets. C-suite executives cited Accenture as one of just a handful of consultancies they could credibly recommend to their boards for complex IT migrations that can cost hundreds of millions of dollars, span several years, and involve thousands of employees around the world. We purchased our shares of Accenture in late 2025 at a mid-teens multiple of our estimate of forward earnings.

Source: Sequoia Fund Year-End Letter

ALGN (Align Technology, Inc.) — Long

Thesis: Clear aligner market leader with durable competitive advantages; despite current stagnation from weak patient traffic and patent expiration, long-term market growth remains largely untapped with significant opportunity in teen and adult segments.

Align Technology, Inc. is the company behind the Invisalign clear aligner orthodontic system. Today, Align’s market capitalization stands at roughly $12 billion with revenues of roughly $4 billion in 2025. Invisalign accounts for over $3 billion of this total. The company earns sky-high returns on tangible capital, has no debt, and roughly $1 billion of cash on its balance sheet.

Align’s business has stagnated since 2021, when a pandemic-driven surge in demand propelled revenues forward by approximately 60%. One culprit is weak patient traffic in the orthodontic and dental end markets. Another culprit is competition — Align’s fundamental patents expired around 2017, and competitors have since emerged. However, we firmly believe that Align will remain the market leader for many years to come. Clear aligners are more of a “solution” than a “product,” encompassing multiple components that all work together to move teeth and drive productivity at the practice level. The market opportunity remains largely untapped — hundreds of millions of adults across the world have crooked teeth and the means to pay for clear aligner therapy. We purchased our shares in Align for a low-to-mid-teens multiple of our estimate of forward earnings.

Source: Sequoia Fund Year-End Letter

COF (Capital One Financial) — Long

Thesis: Discover Financial acquisition delivers cost synergies and network economics benefits; positions Capital One as largest US credit card lender with improved strategic position and higher-returning card-focused revenue mix.

Shares of Capital One Financial returned 38% in 2025, capping a year in which revenues grew approximately 37% and earnings per share increased approximately 40%. The major development during the year was the May closing of Capital One’s $35 billion acquisition of Discover Financial Services. The transaction delivers clear financial benefits both through back-office cost synergies and through the ability, over time, to shift hundreds of billions of dollars of debit and credit purchase volume from Visa and Mastercard’s networks onto Discover’s network. This will allow Capital One to retain the highly attractive economics that previously flowed to third-party card networks.

Just as importantly, the transaction meaningfully improves Capital One’s strategic position. It makes Capital One the largest credit card lender in the United States, further reinforcing the company’s scale advantages. Capital One will now have its own payment network, which should give the company better access to data, greater control over pricing, reduced exposure to certain debit and credit regulations, and more flexibility in the funding and structuring of rewards. At the current price, Capital One’s shares trade for a very low double-digit multiple of our estimate of forward earnings.

Source: Sequoia Fund Year-End Letter

CSU (Constellation Software, Inc.) — Long

Thesis: New CEO Mark Miller well-positioned to navigate AI era given developer background and company’s track record adapting through multiple software paradigm shifts; niche software businesses should benefit from AI capabilities rather than be disrupted by them.

Shares of Constellation Software returned -22% in US dollars in 2025. Two factors weighed on the stock last year. First, founder and CEO Mark Leonard resigned in November due to a serious health condition. Second, the broader markdown in valuations accorded to software companies on account of AI-related fears.

Notwithstanding our admiration for Mark Leonard, we believe former COO Mark Miller is eminently qualified to take the CEO reins. He was the co-founder of the very first acquisition Constellation Software ever made, and he grew his branch of the Constellation tree in exemplary fashion over the subsequent 30 years. Mark Miller’s background as a developer should give him extra depth and credibility to help the company navigate what it means to write and maintain software in an AI-enabled era. Mark Miller and many of the leaders and companies at Constellation have lived through multiple eras of software. AI makes software code much easier to write and understand, but we think this might very well be as much an opportunity as it is a risk — particularly for the types of niche business software companies that Constellation has sought to amass over the years. At the current price, shares trade for a high-teens multiple of our estimate of forward earnings per share, which we find compelling.

Source: Sequoia Fund Year-End Letter

UMG (Universal Music Group) — Long

Thesis: UMG’s irreplaceable catalog and artist relationships position it to benefit from rising streaming prices and AI-driven content monetization opportunities, despite recent share price weakness from generative AI concerns.

Universal Music Group’s stock came under pressure last year. We attribute this pressure to two primary sources. First, there have been renewed concerns about the impact of generative AI on music generally and major labels like UMG specifically. Most fully AI-generated content has never gotten any noticeable amount of listening, but concerns persist. Second, streaming platforms have been cautious about pushing through necessary retail price increases.

Time will tell, but we are starting to see positive signs on the retail price front. Most notably, over the past several months, Spotify announced retail price increases in certain European markets and in the US for its premium subscription plans. If our thesis is valid, we should see more such price increases from Spotify and other streaming platforms in the years to come. We also expect that AI will afford labels like UMG new and incremental opportunities to monetize their existing intellectual property. Earlier this year, UMG signed a deal with AI platform Udio that will allow fans to use AI to remix and adapt label-licensed content in a walled garden. We continue to believe that human artists and the labels who represent them will make up the vast majority of commercially relevant music over the long term.

Source: Sequoia Fund Year-End Letter

Third Point — Q4 2025 Investor Letter

QBR (Quebecor) — Long

Thesis: Quebecor is replicating T-Mobile’s disruptive playbook in Canada with 40% pricing discount to incumbents, capturing 31% of industry net adds with 50% EBITDA margins, while incumbents are constrained by high leverage and dividend commitments.

A similar dynamic has emerged in Canada, where the market structure is even more favorable for Quebecor, the wireless upstart from Quebec with national ambitions. Canadian incumbent pricing is currently a materially worse experience for consumers than what we’re used to seeing in the US. Most consumers have capped monthly data plans, with only 27% of Canadians paying for a 100GB+ or unlimited plan as of YE 2024. When coupled with 3.5–4.0x turns of financial leverage and dividend payout ratios at over 80% of free cash flow, Canada’s Big 3 providers are poorly positioned to match pricing from an aggressive and well-run challenger.

Quebecor’s latest ARPU is C$35, a 40% discount to incumbent backbooks priced at C$56-58. This disruptive pricing has enabled Quebecor to capture 328,000 net adds of the trailing twelve months — 31% of total net industry growth — for a player with just 11.5% share of total industry subscribers. Normally we would expect this sort of explosive growth to require substantial cash burn, but Quebecor’s telco segment boasts ~50% EBITDA margins despite selling at such disruptive price points. At the helm are CEO and controlling shareholder Pierre Karl Peladeau, who holds a C$3.7 billion economic stake, and CFO Hugues Simard. Their disciplined execution has more than 10x’d Quebecor’s market cap since 2009.

Source: Third Point Q4 2025 Investor Letter

SK (SK Square) — Long

Thesis: SK Square trades at a 47% discount to NAV despite 96% of assets being SK Hynix, a highly liquid KOSPI constituent, creating a unique opportunity as management aggressively buys back shares and targets reducing the NAV discount to 30% by 2028.

SK Square is a Seoul-based Korean holding company with a market capitalization of approximately $47 billion. It spun out of SK Telecom in 2021 and actively invests in and manages a diversified portfolio of technology assets including a 20% stake in SK Hynix. SK Square’s management has made narrowing the historically wide discount between its market price and its net asset value (NAV) a core strategic priority, setting formal targets to reduce the NAV discount — most recently aiming for 30% or lower by 2028.

We invested in SK Square primarily because of our favorable view on the company’s primary asset, SK Hynix. Tightening supply and accelerating AI-driven demand have pushed DDR5 and server DRAM pricing materially higher, disproportionately benefiting SK Hynix’s premium-weighted mix. More importantly, we believe the company has solidified its leadership in high-bandwidth memory (HBM), emerging as the exclusive HBM supplier for Microsoft’s in-house AI accelerator and securing roughly two-thirds of NVIDIA’s anticipated HBM4 demand at meaningfully higher price points and margins than prior generations.

Source: Third Point Q4 2025 Investor Letter

SOMN (Somnigroup) — Long

Thesis: Somnigroup has consolidated the US mattress market with 40% wholesale share and merged with Mattress Firm, positioning it to capture share from overleveraged competitors facing maturity walls while benefiting from either a housing cycle recovery or continued consolidation.

Somnigroup is the dominant player in US mattresses and has grown its share of the domestic wholesale market from 27% in 2018 to over 40% in 2024. In Q1 2025, Somnigroup completed its merger with the largest mattress retailer, Mattress Firm (estimated retail market share of 40%), and is now leveraging this advantaged distribution to accelerate share gains. Its Tempur wholesale product has already ramped from an estimated ~48% of Mattress Firm sales at the time of deal close to over 60% of volumes today.

Looking forward, we believe Somnigroup has multiple ways to win. Either the housing cycle turns, which would provide a billion-dollar revenue tailwind at high margins, or the trough sustains and the last competitors standing — Sleep Number and Serta Simmons — face continued top-line pressure with 2027 and 2028 maturity walls looming. The proforma entity’s 2,200 locations and $1.8 billion of run-rate sales and marketing spend are each more than twice the size of the second and third largest mattress competitors combined. We see no obvious buyers for subscale mattress manufacturers and believe restructurings from either player represent high incremental margin share gain opportunities for Somnigroup that are not on investors’ radars.

Source: Third Point Q4 2025 Investor Letter

Voss Capital — Letter

CHH (Choice Hotels) — Long

Thesis: Choice Hotels trades at historic 10.7x EBITDA discount due to cyclical headwinds, but portfolio shift to extended stay and international direct franchising, combined with $700M+ balance sheet cash unlock and 26% short interest, offers 50% upside to 14x forward EBITDA.

CHH is an asset-light, high-margin (60%+ EBITDA margin on revenue ex-pass-through costs) hotel franchisor trading at a distressed multiple due to cyclical top-line headwinds experienced in 2025, namely U.S. RevPAR declines and lack of U.S. room growth. The market has severely punished the stock — down from $154 in early 2025 to $106 today.

The consensus narrative that CHH is a struggling, low-end domestic motel brand has over-stayed its welcome. CHH is actively shifting its portfolio toward higher revenue, stickier segments — Extended Stay now comprises 9% of total rooms and 40% of CHH’s active pipeline, with room count up 12% year-over-year. Extended Stay hotels benefit from longer average stays and generate a juicy 6% royalty rate for CHH. Internationally, direct franchising is now 41% of the international portfolio (up from 19% just three years ago), with EBITDA per international unit having more than tripled.

Notably, the company has been using its own balance sheet to fund the development of two new hotel brands. As these hotels are completed, secured with 30-year franchise agreements, and sold, CHH will return to a purely asset-light model and likely free up over $700 million of capital — equivalent to 14% of the current market cap. CHH is currently trading at the bottom 2.5% of its historical valuation range over the past ten years at 10.7x EBITDA. If the stock reverts to its 20-year median valuation of 14x forward EBITDA, the stock has ~50% upside.

Source: Voss Capital Letter

CLBT (Cellebrite) — Long

Thesis: Cellebrite’s defensible moat from exploit libraries, hardware capabilities, and institutional trust in law enforcement, combined with compelling new AI products like Guardian Investigate, positions it for growth at a 60% discount to market multiples.

On core long Cellebrite’s digital forensics turf, there are several major barriers to entry, and the software itself could be considered the least of them. A defensible moat for CLBT has been its exploit library — CLBT’s device unlock and extraction capability requires zero-day and N-day exploits for iOS and Android, hardware interposers and chip-off capabilities for physically damaged devices, and bootloader exploits that survive OS updates.

Law enforcement agencies need tools that hold up in court under Daubert/Frye standards, and reaching that point requires formal testing, documentation, and a lengthy legal track record. Government procurement is slow, relationship-driven, and often dependent on a primary vendor such as Cellebrite. Agencies are conservative — a failed extraction or evidence challenge in court could be career-damaging for a detective or prosecutor. CLBT has only recently introduced AI functionality and modules that are expanding the TAM and fueling their next leg of growth. Their soon to be released Guardian Investigate product takes all the data Cellebrite ingests from phones and triangulates with other data sources to build out and help investigative units solve cases. CLBT stands up on an Enterprise Value/Free Cash Flow ex-SBC multiple (13.1x ‘27E), such that it is now at a >60% discount to the broader market despite having a massive net cash position, ~20% growth, and 34% FCF margins.

Source: Voss Capital Letter

FLYW (Flywire) — Long

Thesis: Flywire’s embedded global payment network with immense switching costs and 80% revenue from processing fees trades at a 6x EBITDA multiple despite rapid scaling, offering significant upside versus comparable acquisitions.

Our largest position remains Flywire (FLYW). Operating at the intersection of payments and software, FLYW targets high-value, complex verticals — such as healthcare, education, and travel — where payments are deeply entangled with core workflows, receivables, reconciliation, and compliance.

The company has dredged a formidable moat by building global payment capabilities through localized banking relationships and rails in practically every country. Because FLYW is so deeply embedded into hospital billing systems, university ERPs, and travel back-office tools, the switching costs are immense. Over 80% of FLYW’s revenue comes from processing fees (FX spreads and cross-border fees) rather than software. Replicating this bespoke network of payment rails from scratch today would realistically take over five years and $100M+ in legal and compliance spending. Despite this deep entrenchment and rapid scaling, a massive valuation disconnect exists. Competitors with a fraction of FLYW’s growth are being acquired at mid-to-high teens EBITDA multiples, whereas FLYW trades at just a 6x multiple on 2027 consensus EBITDA estimates. A slightly larger private competitor, Airwallex, recently raised funds at an $8B valuation, making FLYW’s $1.1B enterprise value look remarkably compelling by comparison.

Source: Voss Capital Letter

PAR (PAR Technology) — Long

Thesis: PAR’s dominant restaurant POS platform with high switching costs will thrive as an early adopter of AI, expanding its TAM and accelerating product velocity despite intense competition.

Software has always been a hyper-competitive industry teeming with well-funded start-ups. Consider PAR Technology’s niche in restaurant point-of-sale (POS). Despite facing over 6,000 global competitors — including countless “free” alternatives requiring no subscription — PAR consistently wins mandates from Tier-1 restaurant chains. A prime example is their newly announced deal with Papa John’s, which abandoned its in-house software to migrate to PAR. This dynamic runs 180° counter to the prevailing market narrative.

AI will undoubtedly turn up the heat on this already intense global competition, but it will also accelerate PAR’s product velocity, broaden its capabilities, and vastly expand its TAM. Ultimately, the endgame for incumbents is unlikely to be the race to zero gross margins that so many software skeptics are predicting.

Source: Voss Capital Letter

Brief Mentions

These stocks were mentioned in fund letters but without detailed investment commentary.

APPL (AppLovin) — Long | Davis Funds | AppLovin is a leader in delivering ads for mobile gaming, a growing sector with strong growth prospects.

CTRA (Coterra) — Long | Davis Funds | Coterra owns oil in the Permian and natural gas in the Marcellus, providing exposure to natural gas as a key energy source for powering AI data centers.

CVS (CVS Group) — Long | Davis Funds | CVS Group is a healthcare holding with strong 2025 performance and attractive positioning in the healthcare sector.

DIDI (DiDi) — Long | Davis Funds | DiDi is the ride sharing leader in China with strong long-term growth outlook and is a well-run company.

EG (Everest Group) — Long | Davis Funds | Everest Group was added to the portfolio as part of a redeployment from trimmed bank positions into property & casualty reinsurers to capitalize on attractive valuations in the sector.

MTUAY (Meituan) — Long | Davis Funds | Meituan is the food delivery leader in China with strong long-term growth outlook and is a well-run company despite recent competitive pressures.

RenaissanceRe (RenaissanceRe) — Long | Davis Funds | RenaissanceRe was added to the portfolio as part of a redeployment from trimmed bank positions into property & casualty reinsurers.

GOOGL (Alphabet) — Long | Fundsmith | Alphabet made its first appearance as a top contributor in 2025 and remains part of the portfolio’s high-quality business holdings.

META (Meta Platforms) — Long | Fundsmith | Meta is a core holding that has contributed positively to fund performance and remains part of the portfolio’s high-quality business mix.

MSFT (Microsoft) — Long | Fundsmith | Microsoft is a core long-term holding that has appeared in the top five contributors ten times, demonstrating consistent value creation.

DOL (Dollarama) — Long | Giverny Capital | Dollarama’s 46% stock price appreciation in 2025 demonstrates strong operational performance and market resilience as a major Canadian holding.

GOOGL (Alphabet) — Long | Giverny Capital | Alphabet is one of only two AI-related companies in Giverny’s portfolio, held since 2011, providing exposure to transformative AI technology.

META (Meta Platforms) — Long | Giverny Capital | Meta Platforms is one of only two AI-related companies in Giverny’s portfolio, held since 2018, providing exposure to transformative AI technology.

Fund Digest curates investment ideas from publicly available hedge fund letters. For informational purposes only — not investment advice. Always do your own research. Past performance is not indicative of future results.

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Heartland Advisors — Commentary

BLDR (Builders FirstSource) — Long

Thesis: Largest lumber and building products distributor positioned for cyclical housing recovery with chairman insider buying, consistent buybacks, and significant EPS upside at less than 11x EBITDA.

Builders FirstSource (BLDR) was one of the biggest detractors in the quarter, but one where we have continued faith. BLDR is the largest distributor of lumber and building products materials for contractors and home builders. The company has been a consolidator of smaller regional lumberyards over time and made a push towards increasing value-add building products such as pre-assembled trusses to save builders time and labor on the job site.

Housing starts weakened in 2025 as high interest rates cooled housing demand amid decreased housing affordability and an oversupply of new homes. As a result, BLDR earnings and estimates have been revised lower, and the stock is down nearly 40% since late January.

We believe it’s early days in the housing market’s cyclical recovery and fundamental improvement. Moreover, BLDR’s chairman bought $55 million of stock in the summer. The company has also been a consistent acquirer of its own shares through buybacks. Management has said it believes the business can generate $2.1 billion to $2.4 billion of EBITDA in a normalized housing start environment. Even if we take the low-end of that range, that still represents very strong upside.

Source: Heartland Advisors Commentary

GOOGL (Alphabet) — Long

Thesis: A company with key assets required to be a meaningful AI player that traded at a 30% discount to the S&P 500 in May 2025, providing a margin of safety that has since more than doubled.

On the other side of sentiment, Alphabet’s Google search engine was seen as at risk of disruption by OpenAI and other AI startups. In May of 2025, shares of Alphabet were trading at a 30% discount to the S&P 500, a bargain in our opinion. Not because we ‘knew’ that Alphabet was the AI winner. Rather, we viewed Alphabet as having key assets required to be a meaningful player in the AI race (consistent free cash flow, multiple 5+ billion user apps, real-time data, cloud computing infrastructure, custom application-specific semiconductors, and its own large-language model). Most importantly, the discounted valuation provided us with a margin of safety that gave us comfort in knowing that we didn’t need to be perfectly right in our assessment of the business to make money. Since May, shares of Alphabet have more than doubled.

Source: Heartland Advisors Commentary

JBHT (J.B. Hunt Transport Services) — Long

Thesis: Deep Value transportation company with scale advantages in intermodal shipping, strong cash flow, fortress balance sheet, and aggressive share buybacks trading at a 25% discount to industrials peers despite margin expansion.

J.B. Hunt, which falls into the Deep Value bucket, is a diversified transportation company focusing on intermodal shipping. Customers hire Hunt to move freight using different methods of transportation to reduce cost. The company owns the largest fleet of 53-foot shipping containers, which allow for three ocean-freight shipping units to be consolidated into two Hunt containers that can then be moved by rail and company-owned trucks. JBHT’s intermodal business is roughly twice as big as the next largest competitor, resulting in a scale and cost advantage that has produced high returns on capital and better prices for customers.

In Q3, Hunt beat analysts’ forecasts, owing to recent actions to reduce costs. Management’s focus on improving areas that they can control seems to be working, as operating margins for JBHT’s intermodal segment expanded by 100 basis points year over year, despite fewer loads shipped in the quarter. While managing through a freight recession, cash flow generation remains strong, the company’s balance sheet is in fantastic shape with a leverage ratio of less than 1x, and management has been aggressively repurchasing company stock below our view of intrinsic value. In 2025, the company bought back more than 5% of the shares outstanding. JBHT currently trades at 11.8 times consensus next 12-month EV/EBITDA, which represents a 25% discount to the Industrial sector.

Source: Heartland Advisors Commentary

LAMR (Lamar Advertising) — Long

Thesis: Leading out-of-home advertising REIT with strong Q3 fundamentals, active capital allocation, and 2026 mid-term election cycle tailwinds trading at reasonable 15x 2026 EV/EBITDA valuation.

One of the top contributors to our Strategy’s performance in the quarter was Lamar Advertising (LAMR), the nation’s leading out-of-home advertising company. It recently provided a solid Q3 report and very favorable outlook causing the stock to rally.

When it comes to stock selection, we like to see improving fundamentals confirmed by actions of management through active share buybacks, insider buying, and growing dividends. LAMR is one of these companies, as the company has been active on its buyback program and increased its dividend this year. LAMR’s pacings have been strong, which should lead to positive earnings growth in 2026. Even better, 2026 brings with it the mid-term election cycle, which should boost political advertising spending on Lamar’s properties. Still, the stock trades at a reasonable valuation of around 15 times 2026 Enterprise Value/EBITDA.

Source: Heartland Advisors Commentary

MKTX (MarketAxess Holdings) — Long

Thesis: Quality Value e-trading platform leader in corporate bonds with 40%+ operating margins gaining share in portfolio trading, trading at 13.7x EV/EBITDA with significant international growth opportunity and superior margins versus exchange peers.

In the quarter, we initiated a new position in MarketAxess Holdings (MKTX), a Quality Value company that owns and operates the largest e-trading platform in the U.S. for corporate bonds.

Operating a trading platform is all about scale, where volume determines profitability. Rising customer activity can be a virtuous circle that begets more trading as depth of liquidity improves for all platform participants. MKTX’s operating margin exceeds 40% while gross margin can exceed 75%. CEO Chris Concannon has led a multi-year initiative to invest in a competing portfolio trading product among other value-added tools. We have been encouraged by recent trading data that suggest MKTX is gaining share in key areas of the U.S. credit market, with share recovery happening even faster than we expected. When we purchased the stock in the fourth quarter, MarketAxess was trading at 12.6 times consensus EV/EBITDA estimates for 2026. Since then, the multiple has expanded to 13.7 times — still favorable to the company’s domestic exchange peers, who are trading at a median multiple of 16.6 times, despite MKTX’s superior profit margins and balance sheet.

Source: Heartland Advisors Commentary

WCC (WESCO International) — Long

Thesis: Logistics and supply chain solutions company with improving growth prospects and EBITDA margin expansion potential offering double-digit EPS growth at less than 1x FY2027 sales and 10x EBITDA.

Another overlooked stock with notable upside potential in 2026 is WESCO International (WCC), a logistics and supply chain solutions company in which we initiated a new position during the quarter.

Shares of WESCO had been underperforming the Industrial sector in 2024 and the first half of 2025. That was largely due to double-digit declines in its Utility and Broadband Solutions segment as well as the ongoing slowdown in its Electrical & Electronic Solutions segment. EBITDA margins declined during this period, but they appear to be set to expand going forward as we expect WCC to return to mid-single-digit growth rates within both segments. We also expect WESCO’s EBITDA margins to improve from an expected 6.6% in FY 2025, thanks in part to cost savings from prior investments in automation. With improving growth prospects and a healthy potential to expand EBITDA margins, WCC could offer double-digit EPS growth for several years to come. Yet the stock trades at less than 1 times FY 2027 sales and around 10 times EBITDA.

Source: Heartland Advisors Commentary

Generation PMCA — Commentary

CNMD (CONMED Corporation) — Long

Thesis: Medical device manufacturer with improving supply chain under new CEO, strong growth potential in BioBrace and surgical smoke management products, and potential takeover target trading well below fair value of $60.

CONMED is a medical device and equipment manufacturer. The share price has been declining over the last several years while the company grapples with supply-chain issues and competitive pressures. Its new CEO has made repairing supply-chain constraints the number one priority. Signs are emerging that the situation is improving with backorders at a 3-year low. The aim is to now build a world-class, data-driven supply chain. We see strong growth ahead for the company’s BioBrace and surgical smoke management products. BioBrace is a cutting-edge reinforced bioinductive implant used for orthopedic procedures. Because research has found that surgical-related smoke contains a mixture of harmful byproducts including dead cellular material, carcinogens, viruses, bacteria, and toxic gases, over 20 States have enacted legislation to address surgical smoke evacuation. The company offers a range of products to offset these issues. Should the stock price continue to languish, it could be an ideal takeover target for a larger medical device maker. Our FMV estimate is $60.

Source: Hedge Fund Alpha — Generation PMCA Commentary

RV Capital — Commentary

IPCO (International Petroleum Corporation) — Short

Thesis: Sold after oil price decline made the investment less attractive on a quantitative basis; recalculated fair value based on lower oil prices showed negative operating cash flow.

The decision to sell IPCO was the most purely quantitative of the three sell decisions. When I originally bought our position towards the end of 2023, it was based on a set of assumptions about IPCO’s annual production and the prevailing oil price. Then, in 2025, a strange and unexpected thing happened. The oil price fell significantly, and instead of the share price falling, IPCO’s share price went up — nearly doubling in USD Dollar terms vs our initial investment. When I recalculated my fair value based on the same production assumptions and the new oil price, the opportunity seemed less attractive. In fact, it looked like IPCO’s operating cash flow would turn negative. As a result, I decided to sell.

Source: Hedge Fund Alpha — RV Capital Commentary

PDD (PDD Holdings Inc.) — Short

Thesis: Sold due to regulatory risk after reports of physical altercations between PDD employees and Chinese regulators, despite maintaining conviction in the underlying business model.

I sold for an idiosyncratic reason. Shortly before Christmas, Chinese investor friends drew my attention to a Bloomberg article reporting that at least two fistfights broke out between PDD Holdings Inc. employees and Chinese regulators performing checks at the e-commerce company’s Shanghai premises. It is never a good idea to get on the wrong side of regulators anywhere, but it is a particularly bad idea in China. I cannot think of a single instance where a company has fallen foul of Chinese regulators, and shareholders have not subsequently spent many years in the doldrums. Alibaba is probably the most famous example, but others include Didi, after-school tutoring company New Oriental, and, more recently, subprime lender Qifu. Furthermore, what did PDD employees want to hide so much that they would rather engage in a fistfight with regulators than disclose it?

Source: Hedge Fund Alpha — RV Capital Commentary

Laughing Water Capital — Letter

LFCR (Lifecore Biomedical) — Long

Thesis: A CDMO with excess capacity in a supply-constrained market, strong management execution, and multiple new large customer wins should see significant EBITDA growth and multiple expansion as capacity utilization increases.

Lifecore has excess capacity in a market where there is a global shortage of capacity, demand is growing, and new supply cannot be quickly or effectively built because of a limited supply chain and regulatory barriers. Additionally, customers shop on quality control above all else, and new facilities cannot demonstrate a long track record of effective quality control. It is nearly impossible to imagine scenarios where Lifecore does not fill their existing capacity absent completely destroying their ~40 year record of quality control, and incremental business is very sticky and comes with high margins. A new management team has been racking up customer wins and taking out costs. Private market value multiples suggest considerable upside for the stock, and I believe a past sale process received low ball bids near the current stock price, suggesting downside protection is real.

In sum, what I see with Lifecore is a business with real competitive advantages that is executing at a very high level, where the stock has solid downside protection, earnings power is obviously growing, and the upside is tied to measurable cash flow and private market value in the not-too-distant future.

Source: Laughing Water Capital Letter

LQDA (Liquidia Corp) — Long

Thesis: Liquidia’s approved PAH drug Yutrepia is gaining market share with superior delivery and tolerability, patent litigation risks are manageable, and the stock has downside protection with substantial upside if patent battles are won.

Liquidia’s drug — Yutrepia — has been approved for treatment of pulmonary arterial hypertension (PAH) and pulmonary hypertension associated with interstitial lung disease (PH-ILD). Early sales of Yutrepia have crushed expectations as patients — and prescribers — seem to prefer Yutrepia vs. the incumbent due to superior delivery and tolerability.

Liquidia has won many patent battles vs. United Therapeutics already, but the war is not yet won. United Therapeutics has a $22B market cap, and much of that is at risk due to Liquidia’s advances. My reading of the materials and discussions with attorneys lead me to believe that the odds for success are heavily tilted in Liquidia’s favor. If they win the patent battle, in my view the stock could easily double or triple as they continue to penetrate the market. We thus have a situation where the downside seems reasonably well protected, and the upside could be substantial over the next 1-2 years.

Source: Laughing Water Capital Letter

NN (NextNav Inc) — Long

Thesis: NextNav’s terrestrial GPS backup proposal has strong political support from Trump administration officials and the FCC, represents a national security priority, and the repurposed 900 MHz spectrum could be worth $60+ per share if approved.

NextNav is our wireless spectrum / terrestrial backup to GPS investment. In 2017 Senator Ted Cruz, now Chairman of the Senate Committee on Commerce, Science, & Transportation that oversees the FCC, first called for a terrestrial backup to GPS. Congress passed the National Timing Resilience and Security Act of 2018, which explicitly calls for a terrestrial, wireless, wide-area backup system to GPS. In 2020 President Trump issued an Executive Order calling for a non-satellite-based alternative to GPS. The FCC published a Notice of Inquiry in March of 2025 that focuses on identifying a backup to GPS, while mentioning NextNav by name. NextNav’s proposal asks that the 900 MHz spectrum band — where NextNav already has spectrum — be repurposed for this use, requiring zero government funding. In my view, the repurposed spectrum could be worth over $60 per share.

Source: Laughing Water Capital Letter

PAR (PAR Technology) — Long

Thesis: PAR’s dominant restaurant POS platform with high switching costs is being punished by AI fears and a short-term revenue delay, but management appears to have won a major tier-1 operator deal that will validate the long-term thesis.

PAR’s biggest problem seems to be that they are a software company in a world that believes AI and “vibe coding” will destroy legacy software. This belief caused multiples to come down dramatically across the sector. The other mortal sin committed by PAR was choosing to think long term about their business in a market that seems to only care about “hitting the numbers.” In brief, management elected to delay some expected revenue so that they could divert resources toward winning new business from a tier 1 operator.

PAR is not just software — it is years of customer relationships and ecosystem integrations that can’t be replicated through code alone. PAR’s customers have enterprise level decision making processes in place. Nobody responsible for hundreds or thousands of restaurants will switch to a vibe-coded upstart on a whim. Management has indicated that they have moved past the RFP stage and into the development phase with a major new customer, commenting “we’re generally in a market where the press release comes out quite a bit after we’ve won a deal.” It seems as if PAR’s decision to delay some revenue to win a big new customer will be rewarded, but the stock market doesn’t seem to think so. I believe that with time the market’s view will more closely match my own.

Source: Laughing Water Capital Letter

SES.TO (Secure Waste Infrastructure) — Long

Thesis: A stable waste management business with misleading accounting that hides 30%+ EBITDA margins, aggressive management share buybacks, and growth projects should deliver strong returns even without multiple expansion.

Secure is our waste management business that operates primarily alongside the oil fields in Western Canada. This is a stable business whose cash flows are largely tied to oil production, which does not swing violently as oil drilling can. The accounting here is wonky as part of the business is a pass-through pipeline, which hides the fact that economic EBITDA margins are north of 30%, while those relying on a quantitative screen would incorrectly conclude that margins are closer to 4%.

Importantly, management is determined to take advantage of their low share price, and have been voracious buyers of their own stock. Additionally, management has several high ROIC growth projects available to them. The combination of steady cash flows, a shrinking float, organic growth, and reinvestment opportunities is powerful and I expect Secure will reward us over the years to come even without multiple expansion. Waste peers typically trade at mid to high teens multiples of EBITDA, while SECURE trades around 10x while converting more EBITDA to cash than peers.

Source: Laughing Water Capital Letter

VTY.L (Vistry Group PLC) — Long

Thesis: A U.K. asset-light homebuilder with recession-resilient partnerships model, recovering from accounting issues, benefiting from £39B government housing funding, and trading at only 4.5x 2026 EBIT with significant growth ahead.

Vistry is our U.K. asset light “Partnerships” homebuilder. This is a recession resilient business that is actively repurchasing stock. The U.K. has recently announced a new ten year, £39B funding program that dwarfs the previous program in both size and duration. Management recently announced they expect to grow EBIT in the high teens in H2’25, more than 20% in 2026, and that “the real step-up” will come in 2027 as the recently announced funding flows through the market. CEO Greg Fitzgerald seems to be a believer as he has purchased ~£1M of stock in the open market this year. Despite all this, Vistry shares still trade at ~4.5x 2026 EBIT, while transaction comps indicate a low double-digit multiple would be more appropriate. Shares could double from here and still trade below where they were trading prior to the accounting problems, and there should still be significant upside from there as the business executes in the years to come.

Source: Laughing Water Capital Letter

Mar Vista Investment Partners — MVIP USQP Commentary 4Q25

AAPL (Apple Inc.) — Long

Thesis: Apple’s ecosystem strength, with 2 billion active devices and 1 billion paying subscribers, provides stable recurring services revenue and positions it to lead in AI-enabled edge devices.

We continue to view Apple as a competitively advantaged business, anchored by the strength of its ecosystem. With over 2 billion active devices and more than 1 billion paying subscribers, Apple benefits from a loyal customer base and a growing stream of high-margin, recurring services revenue. This stable cash flow enables continued investment in innovation, even during periods of cyclical softness. We believe Apple remains well positioned to lead in the emerging category of AI-enabled edge devices. Calendar Q3 results exceeded street expectations and calendar Q4 guidance calls for low double-digit top-line growth as strong demand for the new iPhone 17 series phones, a rebound in China, and sustained services demand drive top-line growth and resilient margins.

Source: Mar Vista Investment Partners MVIP USQP Commentary 4Q25

GOOG (Alphabet Inc.) — Long

Thesis: Alphabet’s AI-first pivot is driving tangible user engagement and enterprise spending, with Google Cloud emerging as a high-growth profit center, supporting high-teens EPS growth at conservative 20x-25x multiples.

Alphabet’s Q4 performance marks a significant triumph, characterized by a rare “beat and raise” narrative across all critical business segments. Google Cloud’s revenue growth reached an impressive 34%, and it boasts an extraordinary $155 billion backlog, a nearly double increase compared to the previous quarter. This remarkable transformation has propelled Cloud from a margin drag to a high-octane profit center.

Strategically, the “AI-first” pivot has transcended its initial roadmap status and become a tangible driver of user engagement and enterprise spending. The milestone of 650 million monthly active users on the Gemini App serves as a tangible counter-narrative to concerns about AI-driven search disruption. By integrating Gemini across its entire ecosystem, Alphabet has fortified its competitive advantage, enabling it to defend its search franchise while simultaneously capturing new market share in the enterprise cloud sector. This fundamental strength underpins a trajectory of high-teens EPS growth, making a 20x–25x earnings multiple appear conservative.

Source: Mar Vista Investment Partners MVIP USQP Commentary 4Q25

MSFT (Microsoft Corp.) — Long

Thesis: Microsoft’s financial strength, diversified revenue streams, accelerating Azure growth with capacity constraints, and broad Copilot adoption position it to generate attractive long-term returns from OpenAI partnership and AI monetization.

Microsoft stock came under pressure in Q4 as investors grew concerned about the rising cost of building AI data infrastructure to support foundation models such as OpenAI. Capital expenditures across Microsoft and its hyperscaler peers accelerated in calendar 2025 and are expected to increase again in 2026. While these investments are substantial, Microsoft is well positioned to fund this growth through its large and expanding base of operating cash flows.

Despite the pressure, Microsoft has made strides toward monetizing AI. Copilot adoption is gaining traction across the Microsoft 365 suite, with increasing deployment in enterprises. Combined with its growing AI services and Azure capabilities, Microsoft is positioned to capture a significant share of the emerging AI-driven enterprise software market. These factors support our expectation for sustained revenue and earnings growth, with Azure re-accelerating in the second half of fiscal 2026.

Source: Mar Vista Investment Partners MVIP USQP Commentary 4Q25

Palm Harbour Capital — Letter 2025 Q4

CNVRG.PSE (Converge ICT Solutions) — Long

Thesis: Philippines’ leading pure-play fiber broadband operator with the lowest EV/EBITDA multiple among peers, a double-digit free cash flow yield, and improving capital allocation as capex normalizes following a completed network build-out.

Converge is the Philippines’ leading pure-play fiber broadband operator. The company has largely completed the build-out of its fiber network and is now shifting its focus toward increasing utilization and monetization of this infrastructure. As a result, capital expenditures are expected to normalize and decline meaningfully over the coming years.

Since 2019, the company has invested ₱85.8 billion in capex while maintaining a very conservative balance sheet — net leverage remains low at just 0.5x as of the third quarter of 2025. This disciplined approach underscores the strength of its business model, which is already highly cash generative. With capex normalization on the horizon, free cash flow generation is expected to strengthen further, allowing for increased shareholder returns. At current share price levels, the stock offers an attractive entry point into a leading growth player in Philippine broadband, trading at a double-digit free cash flow yield and the lowest EV/EBITDA multiple of the big three.

[Source: Palm Harbour Capital Letter 2025 Q4](https://www.palmharbourcapital.com/files/PHC Letter Q4_2025_ENG_Final.pdf)

Fund Digest curates investment ideas from publicly available hedge fund letters. For informational purposes only — not investment advice. Always do your own research. Past performance is not indicative of future results.

Continue reading in Part 4: Praetorian Capital, Robotti, Semper Augustus, Sequoia Fund, Third Point, Voss Capital, and Brief Mentions.

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FPA Funds — FPA Funds Letter

IFF (International Flavors & Fragrances) — Long | High Confidence

Thesis: New management is executing a turnaround focused on operational excellence and deleveraging through non-core asset sales, with potential for free cash flow to grow from $4 to $5-6 per share and stock price to reach $125 within three years from current $67.

Poor management has plagued International Flavors & Fragrances for years. As a leading producer of food, beverage, scent, home and personal care, and health products and ingredients, its products are ubiquitous across many household staples. They produce one-third of probiotics, the enzyme used in half of cold-water laundry detergents, another enzyme used in 20% of the beer brewed globally, and one-third of yogurts use an IFF culture, to name a few. Prior management’s reckless capital allocation and ineptitude at managing its diverse global enterprise, transforming a high-margin, unlevered company into one with a lower margin and a higher level of leverage. We have a constructive view of the new CEO, who has renewed the company’s focus on being a best-in-class operationally with a smaller product suite. They have sold, and will continue to sell, non-core assets, which will decrease their leverage and, hopefully, allow for higher margins. We believe that their current $4 of free cash earnings could increase to $5-6 in a few years, and if successful, the stock could reach $125 within three years from its current level of $67.

Source: FPA Funds Letter

MSFT (Microsoft) — Short | High Confidence

Thesis: Microsoft’s 30x+ earnings valuation requires unrealistic revenue growth assumptions that would necessitate adding revenue equivalent to Oracle, SAP, Salesforce, Workday, Snowflake, ServiceNow, and Nintendo combined over five years.

Now, as an example of a tough question currently being posed by the market, we submit Microsoft, a company we actually owned from 2010 to 2020. When we originally purchased Microsoft back in 2010, the valuation was less than 10x after-tax earnings after subtracting the cash on the balance sheet. But let’s now look at what one must believe to be constructive on the return prospects at the current multiple of 30x+ earnings. Microsoft generated $293bn of revenue over the last twelve months. If revenue were indeed to grow at 10% CAGR over the next five years, Microsoft would theoretically generate $472bn in revenue in 2030, an increase of $178bn. To put the $178bn increase into perspective, Microsoft would need to add revenue greater than the aggregate sales of ERP leaders Oracle and SAP, who generated ~$100bn in combined sales over the past twelve months. The bulls will say this is achievable, also factoring in Salesforce ($40bn), Workday ($9bn), Snowflake ($4.4bn), ServiceNow ($12bn), and Nintendo ($12bn). We are not saying this can’t happen, but thankfully as benchmark agnostic investors, there is nothing forcing us to make the wager that it will.

Source: FPA Funds Letter

NJR (New Jersey Resources) — Long | High Confidence

Thesis: New Jersey Resources is a well-managed regulated utility with mid-double digit ROE and consistent high single-digit EPS growth, now trading at an attractive 15x forward P/E down from 20x, representing an overlooked value opportunity.

New Jersey Resources (NJR) is a regulated gas utility serving Morris, Ocean and Monmouth counties in New Jersey. New Jersey has a favorable utility regulation environment — NJR gets a 9.6% allowed ROE and realizes practical cost reimbursement mechanisms that show up in the GAAP financials. The company has a culture of disciplined but ambitious capital allocation at the holding company level and has diversified into clean energy, FERC-regulated storage and pipelines and energy services and trading. NJR earns a mid-double digit ROE, strong for a utility holding company. All in, NJR has a history of high single digit EPS growth on top of its 50%+ dividend payout ratio.

The Fund has owned shares in NJR since inception in 2002. And like SNX and RLI, the company has grown and evolved but hasn’t fundamentally changed over the last ten years. Yet its forward P/E multiple has declined from 20x to 15x. We believe this is another case of an overlooked, “boring” stock and think shares in NJR are attractive.

Source: FPA Funds Letter

PLUS (ePlus) — Long | Medium Confidence

Thesis: ePlus is a well-run value-added reseller and IT consultant with high quality metrics and significant cash holdings that make it inexpensive relative to its growth and quality profile.

In Q4, we added a new position in ePlus (PLUS). ePlus is a value-added reseller (VAR) and consultant that helps businesses manage their IT spending. The company is well run in our opinion and scores highly on our quality dashboard. Adjusting for ePlus’ significant cash holdings, we think the company is inexpensive for its growth and quality profile.

Source: FPA Funds Letter

RLI (RLI Corp) — Long | High Confidence

Thesis: RLI is a best-in-class specialty insurer with exceptional financial metrics (sub-90% combined ratios, ~20% ROE) now trading at a reasonable 20x forward earnings after valuation compression, presenting an attractive entry point.

RLI is a specialty insurer with a diversity of niche lines including school busses, Hawaii homeowners and construction surety. The company has best in class financial metrics including consistent combined ratios under 90% and a return on equity (ROE) approaching 20%, despite being over capitalized. RLI has a unique risk culture that compensates everyone from underwriters to executives based on long-term profitability net of adverse developments. Practically, this means that the company won’t commit capital or grow in unprofitable markets. RLI is probably the best managed insurer that we know and we first bought shares in 2011.

Because of its well-deserved reputation for quality, RLI has always traded at a premium valuation. But its trading multiples have come down over the last five years and RLI now trades for roughly 20x forward earnings. Near term earnings growth will slow as the company pulls back in a soft market. But the company has experienced soft markets before, notably 2015–2017 when premiums grew at a 2.4% average rate and the company traded for ~30x earnings.

Source: FPA Funds Letter

SNX (TD Synnex) — Long | High Confidence

Thesis: TD Synnex trades at a low valuation multiple (10x forward earnings) despite improving business fundamentals, higher margins, and stronger returns on capital, representing an overlooked opportunity in the SMID space.

TD Synnex (SNX) is the world’s largest IT distributor. The company was formed by the merger of Tech Data and Synnex in 2021. 20 years ago, IT distribution meant delivering PCs, servers and networking equipment from warehouses to customers. But SNX used its position as a middleman to add value to both sides of the equation, acting as an outsourced sales force for its OEM suppliers while providing bundling, consultation and other value-added services to its customers. SNX evolved with the times selling increasing amounts of software, security, cloud and now AI products.

What is interesting to us is that SNX trades at roughly 10x forward earnings, towards the low end of its historical range. The business continues to evolve but the basics are roughly the same as they were ten years ago. If anything, the business has gotten incrementally better — higher margins, higher returns on capital, more scale, consolidation among the large players and more international opportunity. After digesting Covid era excess spending, recent results have been strong. And the company has a long history of growth and strong returns for shareholders.

Source: FPA Funds Letter

Fundsmith — Annual Letter to Shareholders

AAPL (Apple) — Long | Medium Confidence

Thesis: Apple’s strategy of leveraging its installed base of high-end consumers and services ecosystem rather than competing in AI infrastructure capex may prove superior to hyperscaler profitability.

One company which intrigues us in this respect is Apple. Depending upon your point of view it has either been left behind in the scramble to build Large Language Models (’LLMs’) and hyperscale to provide AI infrastructure or it has opted out of the race. As a result, its capital expenditure in 2025 was a mere $12 billion which pales into insignificance in comparison with the hyperscalers.

It may be making a virtue of necessity but maybe Tim Cook is working on an old adage, ‘You don’t have to own a cow to sell milk’. Apple has its devices and about a billion mostly high-end consumers locked into them and increasingly into its services. It seems unlikely that there will be a shortage of LLMs that the hyperscalers will want to offer Apple for iPhone users. If this is indeed the business model Apple is relying on it may not bode well for the LLM developers and/or hyperscalers’ profitability.

Source: Fundsmith Annual Letter to Shareholders

BF.B (Brown-Forman) — Short | Medium Confidence

Thesis: Brown-Forman’s alcoholic drinks business faces structural headwinds from weight loss drug adoption, Generation Z drinking habits decline, and cannabis legalization.

Brown-Forman and PepsiCo’s snack business seem to us to be directly in the crosshairs of the impact of reduced appetites from weight loss drugs. Whether or not our Novo Nordisk investment finally comes good, we believe that weight loss drugs and their impact are here to stay. In addition, the alcoholic drinks business faces headwinds from the impact of Generation Z’s drinking habits (lack of) and the legalisation of cannabis.

Source: Fundsmith Annual Letter to Shareholders

EL (EssilorLuxottica) — Long | Medium Confidence

Thesis: EssilorLuxottica dominates the eyeglasses market with tailwinds from untapped vision correction markets and innovations like myopia-prevention lenses and Meta AI glasses.

EssilorLuxottica arose from the merger of French and Italian companies which dominate the market for eyeglasses, both frames and lenses. There is a tailwind for this business from people who do not yet have access to vision correction. In addition, it has some interesting innovations such as the Stellest lenses which help prevent deterioration for children with myopia and of course the Meta AI glasses.

Source: Fundsmith Annual Letter to Shareholders

NOVO (Novo Nordisk) — Long | Medium Confidence

Thesis: Novo Nordisk’s depressed valuation at 13x PE following management missteps and generic competition presents a buying opportunity as a fundamentally good business experiencing a temporary setback.

Novo Nordisk managed to reaffirm my belief that you should never say ‘Things can’t get any worse’. The company has parlayed a market leading position in what is probably the most exciting drug development for about three decades into a secondary position. Despite all the bad news, the current share price of around 13x earnings is depressingly cheap for a business of this quality. What it demonstrates once again is that markets frequently overreact on both the upside and downside.

Source: Fundsmith Annual Letter to Shareholders

Giverny Capital — Annual Letter 2025

CSU (Constellation Software) — Long | High Confidence

Thesis: Constellation Software’s 26% stock decline in 2025 is unrelated to fundamentals — revenue climbed 15% and adjusted EPS 21% — with durable niche software businesses, a strong successor CEO, and AI as a potential acquisition opportunity rather than threat.

The other factor contributing to our underperformance was the sharp decline in Constellation Software’s stock price, our largest holding at the beginning of the year. Wall Street has become very negative on almost all software companies, viewing AI as a destroyer of the industry. However, the consumer market is not the same as the enterprise market. For businesses, the software they use has often been installed over decades, is designed for specific needs, and plays a critical role in their daily operations.

Constellation’s stock price has fallen by 26% in 2025 (and by another 12% to date in 2026). Such a decline is completely unrelated to the company’s current situation. Indeed, revenue climbed 15% in 2025 and adjusted EPS by 21%. Since our initial purchase in 2014, EPS have grown at an annualized growth rate of 20%. Constellation owns more than 1000 different companies acquired over the past 30 years, each occupying a niche in a specific market. It seems unrealistic to believe that an operator of a dozen mini-golf courses is going to start coding their own AI-powered reservation software to save something like $5,000 in annual fees! AI could even be an indirect opportunity for Constellation: the company grows primarily through acquisitions, and clearly, the cost of potential target companies has just dropped dramatically.

Source: Giverny Capital Annual Letter 2025

FIVE (Five Below) — Long | High Confidence

Thesis: Five Below’s business model of discount retail with items under $5 remains intact despite temporary management challenges; new leadership has restored sales and profit growth, delivering 213% total return (21% annualized) over six years from initial 2020 pandemic-driven purchase.

We had been following this chain of stores with items under $5 for a few years. The company had maintained a growth rate of 20-25% per year. At the beginning of the pandemic, Five Below had to close all its stores, and its stock quickly fell by 50%. We took advantage of this by buying shares at around $71.

Five Below’s stock rebounded quickly in 2021 and continued to perform well in 2022 and 2023. However, the company went through a more difficult period in 2024. The company eventually decided to make a change in management. By early April 2025 — at the height of the US president’s tariff threats — the stock had fallen to $55. Our patience was sorely tested. New President Winnie Park got things back on track, and sales and profits rebounded by the end of the fiscal year. The stock is trading at $222 as I write this. We have therefore achieved a total return on our initial 2020 purchase of approximately 213%, or an annualized return of nearly 21% over roughly six years.

Source: Giverny Capital Annual Letter 2025

V (Visa) — Long | High Confidence

Thesis: Visa has the strongest business model and widest economic moat in the credit card transaction ecosystem, held since 2010, with superior competitive positioning compared to transaction processors like Fiserv.

I am very familiar with the credit card transaction ecosystem, which includes issuers (banks), transaction processors (Fiserv), and payment networks (Visa, Mastercard). We have held Visa shares since 2010, and I know full well that it has the strongest business model in the ecosystem and, above all, with the widest economic moat. We invested in Fiserv, in addition to Visa, primarily because the stock was cheaper (approximately 15x earnings versus 25x for Visa). This was a mistake because I should have simply allocated that capital to Visa. We would have achieved a better return and would have avoided many unnecessary headaches.

Source: Giverny Capital Annual Letter 2025

Greystone Capital Management — Letter

APG (APi Group) — Long | High Confidence

Thesis: Mission-critical fire and life-safety services business with recurring revenue, strong cash generation, and attractive forward returns of ~18% annually if 2028 targets are achieved, with limited downside risk.

APi Group continues to execute as a steady, high-quality business operating in mission-critical fire and life-safety services. 2025 was another strong year, characterized by mid-single-digit organic growth, disciplined pricing, expanding margins, and robust cash generation. APG continues to shift the revenue mix toward recurring inspection, monitoring, and service work, which carries higher margins, lower working capital intensity, and strong customer stickiness. APG remains one of the most economically resilient models we own with recurring revenue, critical infrastructure exposure, and zero technological displacement risk.

If APG achieves their three-year targets of $10B in revenues, $1.6 billion in EBITDA and 80% FCF conversion by 2028, shares should be worth $65 at current multiples for roughly 60% upside. That equates to an 18% annual return profile with limited risk, an underappreciated setup in today’s market.

Source: Greystone Capital Management Letter

DR.TO (Medical Facilities Corp.) — Long | High Confidence

Thesis: Specialized surgical hospital operator with durable cash flows, aggressive share repurchases reducing shares by 40% over four years, and significant upside to intrinsic value of $18-20/share.

Medical Facilities’ business model remains fundamentally attractive, consisting of ownership interests in specialized surgical hospitals with strong local market positions, high physician alignment, and favorable long-term demographic tailwinds. These assets generate durable cash flows with limited technological displacement risk and modest ongoing capital requirements. Management has remained focused on optimizing existing assets rather than pursuing dilutive growth, and then harvesting cash flow for capital returns, a strategy that maximizes per-share value over time.

During 2025, MFC continues to allocate capital with an owner’s mindset, buying back over 20% of shares outstanding through a tender offer and open market purchases. During the past four years, MFC has reduced shares outstanding by nearly 40%. Despite these positives, at $11.50/share, MFC trades well below my estimate of intrinsic value between $18-20/share.

Source: Greystone Capital Management Letter

FOUR (Shift4 Payments) — Long | High Confidence

Thesis: Integrated end-to-end payments platform with durable competitive advantages from owning the full stack, strong merchant conversion economics, and significant upside to $112-155/share as earnings power grows to $8-11/share by 2028.

During the quarter, we initiated a position in Shift4 Payments, an integrated payments company with a long track record of operational execution and disciplined capital allocation. Founded in 1999 in a New Jersey basement, Shift4 has steadily built a leading position across hospitality, restaurant, and stadium end markets. While shares have declined more than 40% over the past year alongside much of the payments sector, the underlying business has continued to perform well, with solid organic growth, expanding gross margins, and the completion of its largest acquisition to date, Global Blue, during 2025.

Throughout its 26-year history, Shift4 has evolved substantially, pairing deep industry knowledge with a consistent ability to adapt as the payments landscape has changed. Under conservative assumptions, Shift4 has the potential to grow revenue and free cash flow at a 20–25% rate over the coming years. With a founder-led management team focused on disciplined capital allocation, an active share repurchase program covering roughly 20% of shares outstanding, and a compelling starting valuation, FOUR offers an attractive long-term risk-adjusted return profile. Since their IPO in 2020, FOUR has compounded shareholder capital at 20.5% per year, outpacing the S&P500 by 400bps per year.

Source: Greystone Capital Management Letter

KITS.TO (KITS Eyecare) — Long | High Confidence

Thesis: Vertically integrated e-commerce eyecare business with strong unit economics, 25-30% organic growth, and significant margin expansion potential as fixed costs leverage, trading below intrinsic value of CAD $35-45/share.

KITS Eyecare, our e-commerce eyecare business, continued to execute exceptionally well through 2025, further validating the strength of its vertically integrated, direct-to-consumer eyecare model. KITS is an innovative, customer-focused business that has built a better, and more cost-effective model for purchasing glasses and contacts. Despite low brand awareness, especially in the US, KITS has found product/market/fit, and 2026 is on pace to be another record year of revenue and EBITDA.

Despite being just eight years old as a business, KITS is one of the fastest organically growing businesses in Canada. High quality prescription glasses with lens upgrades retail on KITS.com for less than $60. Similar products at competing brands would cost between $150–$300. Based on my intrinsic value estimate of approximately CAD $35-$45/share, I still see a wide disconnect between price and value.

Source: Greystone Capital Management Letter

NRP (Natural Resource Partners) — Long | High Confidence

Thesis: Coal royalty business with durable cash flows, strengthening balance sheet, and significant upside to intrinsic value of $200-250/share as leverage improves and distributions increase.

Natural Resource Partners, our coal royalty business, delivered another strong year in 2025, continuing its evolution into a debt-free, capital-return-focused royalty and infrastructure business. Due to the nature of the royalty business model that avoids ongoing capital expenditures and high operating costs, cash flows remained robust across the mineral rights segment, in what has been a tough environment for both met and thermal coal prices.

The royalty business model provides exceptional durability, having been stress-tested through various pricing environments and macro environments. Most importantly, the balance sheet continues to strengthen, and leverage metrics now sit comfortably within long-term targets, giving management flexibility to increase shareholder distributions within a few quarters. Shares trade at a substantial discount to my intrinsic value estimate of $200-250/share, making NRP one of the most compelling asymmetries in the portfolio.

Source: Greystone Capital Management Letter

Fund Digest curates investment ideas from publicly available hedge fund letters. For informational purposes only — not investment advice. Always do your own research. Past performance is not indicative of future results.

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Alger Spectra Fund — Letter

CDTX (Cidara Therapeutics, Inc.) — Long | High Confidence

Thesis: Cidara’s lead antiviral program CD388 advanced to Phase 3 after compelling Phase 2b results, positioning it as a potentially first-in-class influenza prophylactic, with acquisition by Merck at $9.2 billion validating the technology.

Cidara Therapeutics is a biotechnology company developing drug-Fc conjugate (DFC) therapeutics, with its lead program CD388, an investigational long-acting, strain-agnostic antiviral designed to prevent influenza infection in individuals at higher risk of complications. CD388 was supported by compelling Phase 2b NAVIGATE results and advanced into the Phase 3 ANCHOR study, positioning it as a potentially first-in-class, single-dose prophylactic option for influenza prevention. Share contributed positively after Merck announced an all-cash agreement to acquire Cidara for approximately $9.2 billion.

Source: Alger Spectra Fund Letter

GOOGL (Alphabet Inc.) — Long | High Confidence

Thesis: Alphabet is benefiting from improving execution across its AI strategy, with Google Cloud driving accelerating usage and AI token processing, supported by strengthening cloud demand and potential TPU capability expansion.

Alphabet is the parent of Google and a global leader in digital advertising, cloud computing, and AI-driven consumer services. Shares contributed positively during the quarter as investors increasingly recognized improving execution across the company’s AI strategy, supported by strong engagement trends and rising AI-related workloads. Google Cloud was a key driver, with management highlighting accelerating usage, including increased AI token processing and continued momentum in the Gemini ecosystem. Sentiment was further supported by strengthening cloud demand and new customer wins, as well as reports that Google may broaden access to its TPU capabilities, including potential deployments beyond Google Cloud.

Source: Alger Spectra Fund Letter

META (Meta Platforms Inc.) — Long | Medium Confidence

Thesis: Meta is investing heavily in AI infrastructure with strong underlying advertising momentum and robust revenue growth potential, despite near-term pressure from elevated CapEx expectations.

Meta is the world’s largest social-media company, operating platforms that include Facebook, Instagram, WhatsApp, and Messenger. Shares detracted during the quarter as investors focused on management’s guidance for materially higher operating expenses and capital expenditures (CapEx) tied to AI infrastructure investments. Management noted that 2026 CapEx is expected to be “notably” higher than 2025, which pressured forward earnings and free-cash-flow expectations despite strong underlying results. While the company highlighted continued advertising momentum and indicated that revenue growth could remain robust into year-end, investors remained concerned about the magnitude and timing of the AI-related CapEx.

Source: Alger Spectra Fund Letter

MSFT (Microsoft Corporation) — Long | High Confidence

Thesis: Microsoft is benefiting from corporate digitization with strong Azure demand signals evidenced by surging commercial bookings and rising remaining performance obligations, supported by significant CapEx increases to address capacity constraints.

Microsoft is a beneficiary of corporate America’s transformative digitization. The company operates through three segments: Productivity and Business Processes (Office365, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). Shares detracted during the quarter after the company reported Azure cloud growth and forward guidance fell short of elevated investor expectations, in part because revenue recognition lagged strong demand and the company remained capacity constrained. While Azure still grew 39% year-over-year (YoY) and management guided to 37% growth in the current quarter, we believe investors focused on the near-term mismatch between demand and available capacity. Importantly, demand signals improved: commercial bookings surged (reported up approximately 111% YoY) and remaining performance obligations rose 51% compared to 37% from the prior quarter, extending revenue visibility. To address the backlog and support AI/cloud workloads, management signaled a step-up in investment, including roughly $30B of capital expenditures (CapEx) in the current quarter and an expectation that fiscal-2026 CapEx growth will be higher than fiscal-2025.

Source: Alger Spectra Fund Letter

NBIS (Nebius Group N.V.) — Long | Medium Confidence

Thesis: Nebius is a differentiated AI-focused cloud infrastructure provider benefiting from accelerating AI adoption and GPU compute supply constraints, with expanding capacity and large multi-year contracts improving revenue visibility.

Nebius is a provider of AI-focused cloud infrastructure, operating GPU compute capacity across Europe and expanding in the U.S. We view the company as a differentiated “neocloud” beneficiary of accelerating AI adoption, as demand for high-quality GPU compute continues to outstrip available supply of chips, power, and data center capacity. Nebius already operates a first-party data center in Finland and has deployed GPU capacity in Paris, while adding U.S. capacity through a Kansas City, Missouri deployment and a new data center build-out in New Jersey. During the quarter, shares detracted amid a broader selloff in AI infrastructure-related equities as investors grew more concerned about the “circularity” of AI ecosystem financing and the durability of AI infrastructure spending. Despite near-term volatility, Nebius continues to sign large, long-term agreements with tier-one customers, including multi-year AI infrastructure contracts with major cloud service providers, improving revenue visibility as new capacity comes online.

Source: Alger Spectra Fund Letter

NTRA (Natera, Inc.) — Long | High Confidence

Thesis: Natera’s specialty diagnostics business is delivering strong revenue and margin performance with higher test volumes and favorable reimbursement dynamics, particularly in the Signatera oncology franchise.

Natera is a specialty diagnostics laboratory that provides high-value genetic testing across three core franchises: reproductive health (including non-invasive prenatal testing for chromosomal conditions such as trisomy 13, 18, and 21), oncology (led by Signatera, which measures circulating tumor DNA to assess treatment response and detect molecular residual disease and cancer recurrence), and transplant (tests used to monitor organ rejection). These tests are built on the company’s proprietary cell-free DNA liquid biopsy platform, enabling highly sensitive detection from a blood sample. Shares contributed positively after the company reported strong fiscal third-quarter earnings, with management commentary pointing to revenue and margin performance that exceeded expectations on the back of higher test volumes and favorable reimbursement dynamics— particularly within the Signatera franchise—alongside another increase to full-year 2025 revenue and margin guidance.

Source: Alger Spectra Fund Letter

Baumann Capital — Fourth Quarter 2025 Commentary

SOL (SOL Group) — Long | High Confidence

Thesis: SOL Group is a durable dual-engine compounder with hard-to-replicate infrastructure in industrial gases and homecare, offering attractive normalized owner’s earnings with demographic tailwinds and high switching costs.

Founded in 1927 in Monza, Italy, SOL emerged as a dual-engine industrial compounder with close to €2bn in sales. They operate both, one of Europe’s leading industrial gas franchises serving 50k customers across 32 countries (think Linde or Air Liquide), as well as a homecare health business (called Vivisol) that has grown to 750k patients, making it the largest home respiratory care provider in Italy, Belgium, and the Netherlands. Both divisions contribute about half of the business, but 55% of sales are really exposed to healthcare.

The two divisions share one simple founding logic: Gases are manufactured and then either delivered to customers via on-site pipelines (sticky!), bulk trucks (good!), cylinders (expensive!), or dispensed directly to NHS-reimbursed patients at home via concentrators and ventilators (sticky!).

With 60% ownership, SOL is still controlled by the two founding families, Fumagalli and Annoni, who take things very seriously. They never sold a share and spent about eight decades building something that only patient capital can build: A physically irreplicable infrastructure network. Each year’s cash flow has gone into building more gas filling stations, acquiring more Vivisol patient contracts, and extending the geographic footprint.

Source: Baumann Capital Shareholder Letter

Bireme Capital — Bireme Capital Letter

AAPL (Apple Inc.) — Short | High Confidence

Thesis: Apple’s valuation at 33x earnings is unsustainable for a mature company with mid-single-digit revenue growth, and its aggressive buybacks at current prices are unlikely to contribute meaningfully to future returns.

In conclusion, we believe valuations will become a headwind as the market settles back to a more appropriate multiple for this stage of Apple’s life. Apple continues to repurchase shares at a prodigious pace, buying $92b in FY 2025. Will today’s buybacks prove to be a good investment? In 2016, Apple traded at 10x earnings and was scaling quickly in a secular growth market. Today a mature Apple trades at 33x earnings while sales are growing at a mid-single-digit rate. We do not think Apple’s investments in its own stock will contribute meaningfully to returns on a go-forward basis.

Source: Bireme Capital Letter

PINFRA (Promotora y Operadora de Infraestructura) — Long | High Confidence

Thesis: Mexico’s largest toll-road operator trades at 7x EBITDA and 10x PE versus 15-25x for global peers, with a strong track record of 10%+ EBIT growth and 8-15% real IRR potential.

PINFRA is Mexico’s largest toll-road operator and concessionaire. They have a tremendous track record, growing EBIT from 2.5b MXN in 2011 to 11b last year while maintaining a high-teens return on capital. And yet the stock trades at just 7x EBITDA and 10x PE, a massive discount to the 15-25x EBITDA multiples enjoyed by global peers such as Ferrovial. Today they manage 27 toll roads, many of which are crucial thoroughfares around Mexico City and offer significant time savings and fewer potholes relative to the “libre” highways which by law must run parallel to the toll roads. Thus more than 300,000 vehicles per day choose to pay tolls on PINFRA’s roads. Even under conservative run-off scenarios in which no capital is reinvested, we think PINFRA offers around an 8% inflation-adjusted IRR (in pesos). More realistic reinvestment scenarios push the returns closer to 15% in real terms, and serious potential upside exists should the family decide to sell the business given private equity interest in similar assets at 12-15x EBITDA.

Source: Bireme Capital Letter

RS (RS Technologies) — Long | High Confidence

Thesis: Japanese semiconductor niche leader with 30% market share in reclaimed silicon wafers trades at 8-9x EBIT versus 30x for peers, with 2-3x upside from re-rating and a non-core GRINM stake worth ~50% of market cap.

RS Technologies is a small-cap Japanese company that dominates an important niche in the worldwide semiconductor supply chain: reclaimed silicon wafers for testing and calibration. The company is the number one supplier worldwide, with about 30% market share. Since 2015, EBIT in their reclaimed wafer business has increased from 1.5b yen to 10b yen, driven both by overall semiconductor industry growth as well as the increased need for test wafers at more complex process nodes. Management plans to expand capacity by 30% in Taiwan and Japan and to quadruple output in their new facility in Shandong, China. At an enterprise value of ¥80b, RS trades around 8-9x EBIT — a fraction of peers such as Phoenix Silicon (~30x 2025e EBIT). RS also owns a 33% stake in GRINM Semiconductor Materials Co., a joint venture making prime wafers that IPO’d in 2022. GRINM’s current valuation implies a value of more than ¥100b for RS’s stake — roughly equal to RS’s entire market cap. Even a two-thirds discount plus RS’s share of GRINM’s net cash would represent roughly 50% of RS’s current market capitalization. Taken together, we see a plausible case for 2-3x upside.

Source: Bireme Capital Letter

SWON (SoftwareOne) — Long | High Confidence

Thesis: Software reseller trading at 5x forward EBITDA with 20%+ EBITDA margins and 5% dividend yield is undervalued; merger with Crayon offers CHF 100m cost synergies and mid-teens share price potential by end-2026.

SoftwareOne (SWON SW) is a global software reseller and IT services marketplace headquartered in Switzerland. It manages licensing and cloud subscriptions for Microsoft and other vendors. Revenues have grown steadily from CHF 830m in 2020 to CHF 1.0b in 2024, with EBITDA margins above 20% and annual dividends exceeding CHF 50m (~5% yield). At today’s price of around CHF 7, the stock trades at about 5x forward EBITDA and 9x PE, while peers trade at 7-10x EBITDA and 11-16x PE. The company went public on the Swiss SIX Exchange in 2019 at CHF 18 per share, more than double the price today. SoftwareOne provides a valuable service to both software vendors and customers — helping vendors avoid hiring armies of sales staff for SMBs, while helping customers with procurement, implementation, and support through a single point of contact. The merger with Crayon Group, expected to deliver up to CHF 100m in cost synergies, makes a mid-teens share price by year-end 2026 attainable.

Source: Bireme Capital Letter

Davis Funds — Davis International Fund PM Commentary with Danton Goei

8035 (Tokyo Electron) — Long | High Confidence

Thesis: Tokyo Electron is a top semiconductor equipment manufacturer benefiting from strong demand for fab construction driven by AI chip production needs.

In the equipment space, it’s also a real bottleneck and Tokyo Electron is one of the top semiconductor equipment companies. It’s based in Japan and competes on a global basis, and there the demand also is extremely strong, driven by companies, whether it’s in Taiwan or Korea or the United States, that are building fabs to build semiconductors.

Source: Davis Funds International Commentary

AUMOVIO (AUMOVIO) — Long | High Confidence

Thesis: AUMOVIO is a German auto parts spinoff trading at an attractive 8x earnings with a free option on Aurora autonomous trucking venture expected to roll out around 2028.

AUMOVIO, the spinoff — in general, we think that spinoffs are a really attractive space to look at. What’s interesting about AUMOVIO is it’s a German car parts manufacturer, not really high growth. The valuation was attractive at eight times when we bought it. But they also have a JV with Aurora, the US autonomous trucking company, and we believe in a couple of years, in 2028 or so, they should be rolling that out. So if that’s successful, we feel like we’re really getting a free option on that venture going forward.

Source: Davis Funds International Commentary

CB (Chubb) — Long | High Confidence

Thesis: Chubb’s diversified product and geographic mix, disciplined underwriting culture, and strong pricing trends support low-20s returns on tangible equity, with valuation likely to settle at 10-11x earnings over the next few years.

Chubb is one of our core property & casualty insurance holdings. It is well-diversified across products and geographies. The company has consistently generated returns on equity comfortably ahead of the industry owing to a combination of running advantaged lines of business with a disciplined underwriting and operating culture. Pricing trends in the insurance markets have generally been strong in recent years, and consequently Chubb has been earning returns on tangible equity in the low 20s. While competitive forces may in time push that back toward a “normalized” level a few points lower, Chubb we believe would still be valued at 10–11x earnings looking out a few years.

Source: Davis Funds Financial Commentary

COF (Capital One Financial) — Long | High Confidence

Thesis: Capital One’s transformational Discover Financial acquisition unlocks $1.5B in cost synergies and $1.2B in network synergies, positioning the company to earn 20% returns on tangible capital while trading at less than 10x earnings.

Capital One continues to be the largest position in the fund. Its transformational acquisition of Discover Financial closed in May 2025. In addition to targeting annual cost synergies of $1.5 billion, management is anticipating so-called “network” synergies of $1.2 billion from transitioning certain Capital One debit and credit card volumes into Discover’s networks. Importantly, the latter synergy target is based on transitioning only a minority of Capital One’s credit card volume. Longer-term, we think the company has an opportunity to continue integrating its card-issuing activities with its card network. Looking out a few years we believe Capital One remains attractively priced at less than 10x earnings despite the potential, in our view, to earn superior returns on tangible capital.

Source: Davis Funds Financial Commentary

UNH (UnitedHealth) — Long | High Confidence

Thesis: UnitedHealth presents an attractive entry point after a 40% stock decline, representing a compelling opportunity to re-establish a position in a quality healthcare company.

Healthcare is one where we saw a great opportunity to add to UnitedHealth, which is a name we’ve owned in the past, but in the past sold it on valuation. And then recently in a month, the stock was down 40%, so we’ve started positioning UnitedHealth.

Source: Davis Funds Global Commentary

VALE (Vale) — Long | High Confidence

Thesis: Vale has a competitive advantage through higher iron content and lower impurities in its iron ore compared to competitors, offering attractive valuation.

We’ve built a new position in Vale. We really like Vale, the Brazilian iron ore producer, because on average, their iron ore has a higher percentage content of iron and less impurities than the competitors. We believe they’re competitively advantaged because of the better quality iron ore that they have.

Source: Davis Funds International Commentary

WFC (Wells Fargo) — Long | High Confidence

Thesis: Wells Fargo’s removal of the Federal Reserve asset cap, right-sized cost structure, and positive momentum in investment banking and wealth management position it to earn high-teens returns on tangible equity at a reasonable 2.1x tangible book value valuation.

Wells Fargo is the largest “traditional” bank in our portfolio. The company passed a milestone this year with the removal of the asset cap imposed by the Federal Reserve that has been a governor on its growth. Just as importantly, Wells Fargo has made progress over several years in right-sizing its cost structure. It has also seen positive momentum in the business lines it has recently been investing into (investment banking, credit cards and wealth management). The bank has a surplus of capital which it is working down through share repurchases, which will enhance earnings per share growth over the medium term. Despite the stock’s +36% return in 2025, Wells Fargo’s valuation at 2.1x tangible book value remains reasonable for a bank that ought to earn a high-teens return on tangible equity.

Source: Davis Funds Financial Commentary

Donville Kent Asset Management — December

E (Enterprise Group) — Long | High Confidence

Thesis: Enterprise’s three external headwinds have resolved, investment cycle is complete, and Canadian LNG government support positions the company for significant 2026 free cashflow growth.

Enterprise reported a great bounce back quarter. There were three headwinds outside of their control earlier this year that have now been resolved. First, the price of Canadian natural gas was temporarily low (below $0) for a fraction of time which slowed overall sector activity. Natural gas is now at multi-year highs and activity is ramping higher.

Source: Donville Kent Asset Management December

GSY (GoEasy) — Long | High Confidence

Thesis: GoEasy’s stock correction to historically low 6x PE despite 23% ROE represents an attractive re-entry after trimming at higher valuations, with continued high-rate compounding expected even in difficult periods.

In their most recent quarter, they reported a 23% ROE versus an expected ROE of 25% and now the stock has corrected to its historically low-end level PE of 6x. This is the opportunity we see. Investors focus on the short term and put the stock on sale. But, even in “bad” years or “bad” quarters, they still compound at a high rate. Similar to Propel, as discussed below, we trimmed a significant portion of GoEasy earlier in the year as its valuation approached the high end of its historical band. Due to this correction, we have significantly added back to this position.

Source: Donville Kent Asset Management December

PRL (Propel) — Long | High Confidence

Thesis: Propel’s new US banking license enables geographic expansion while trading at historically cheap valuation after correction, with strong fundamentals including 25% ROE and 30% revenue growth.

Propel’s quarter was impressive, especially considering the macro backdrop. Their story is different from GoEasy because most of the business is done in the US and the UK. They recently announced receiving their US banking license, which allows them to reach new customers and geographies they previously couldn’t. Similar to GoEasy, Propel’s valuation trades in a historical pattern. Earlier this year we trimmed our position as the multiple was at the high end. With this correction, we have significantly added back to our position as the stock traded down to a historically cheap valuation.

Source: Donville Kent Asset Management December

VHI (VitalHub) — Long | High Confidence

Thesis: VitalHub’s profit margins have bottomed post-acquisition integration with $124M cash enabling M&A, supporting a $20+ per share valuation representing 100%+ upside from current levels.

VitalHub’s quarter beat expectations on every metric. Profit margins have now bottomed after integrating their recent acquisitions and margins will improve from here. As stated earlier, the fact that the stock is down is not related to the fundamentals of the business and we see this stock above $20/share much faster than one might think. VitalHub is sitting on more than $124M in cash with no debt and have spoken to how they’re seeing a significant increase in M&A activity. We expect M&A announcements to increase in pace over the next 12 months. Factoring in acquisitions and improved margins, we can work backwards to a $20/share valuation, which is more than 100% upside from here.

Source: Donville Kent Asset Management December

ZDC (Zedcor) — Long | High Confidence

Thesis: Zedcor’s Canadian business generates 67% EBITDA margins while US business scales rapidly; depreciation is overstated relative to actual asset lives, supporting 87% revenue and 94% earnings growth expectations for 2026.

What is most impressive is that their Canadian business is their most mature segment and still growing 30% year over year but most importantly has 67% EBITDA margins and 50% IFRS reported Net Income margins. As their US business, which is growing 363% year over year with 33% segment EBITDA margins, hits critical mass, their profit margins in the US should trend much higher and closer to the Canadian market. For Zedcor in particular, by far the largest cost of building each of their towers is the thousands of pounds of powder coated steel — these towers have operated through legitimate hurricanes and continued to operate normally. We expect at least 87% revenue growth & 94% earnings growth in 2026.

Source: Donville Kent Asset Management December

Fund Digest curates investment ideas from publicly available hedge fund letters. For informational purposes only — not investment advice. Always do your own research. Past performance is not indicative of future results.

Continue reading in Part 2: FPA Funds, Fundsmith, Giverny Capital, and Greystone Capital Management.