Fund Digest — Issue #8
Q1 2026 · High-Conviction Ideas from Long-Duration Investors
This is the third issue for Q1 2026, covering Generation PMCA, Black Bear Value Fund, Greenlight Capital, Rubric Capital, and Laughing Water Capital. The previous issue covered Donville Kent, FPA Funds, Greystone Capital and Heartland Advisors.
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.