Fund Digest — Issue #9
Q1 2026 · High-Conviction Ideas from Long-Duration Investors
This is the 5th issue for Q1 2026, covering top ideas from Mar Vista Investment Partners, Munro Partners, Praetorian Capital, and Third Point Capital. The previous issue covered Generation PMCA, Black Bear Value Fund, Greenlight Capital, Rubric Capital, and Laughing Water Capital.
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.