| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
The ClearBridge Value Strategy generated solid absolute returns in Q2 2026 but underperformed its Russell 1000 Value Index benchmark as AI-led growth stocks rebounded sharply. Value retained a substantial year-to-date lead, with the Russell 1000 Value Index returning 16.3% versus 10.3% for the broader index and 5.3% for growth, as investors continued rewarding cash flow durability and balance sheet strength. The Strategy benefited from strong stock selection in communication services, health care and IT, led by Alphabet, CVS Health, Micron Technology and Taiwan Semiconductor. Energy detracted as easing Middle East tensions drove oil prices lower, pressuring ConocoPhillips and Chevron. The managers used volatility to add exposure to AI enablers including Broadcom and AMD, low-cost energy producers like Diamondback Energy, and dislocated financials such as Blackstone. They exited Charles Schwab due to competitive pressures on float monetization and PG&E on lack of utility reform progress. Looking ahead, the managers emphasize selectivity, focusing on resilient balance sheets, visible cash generation and companies capable of compounding value across macro outcomes, while noting that elevated valuations and large infrastructure capital needs could increase market sensitivity to flows and risk appetite.
The ClearBridge Value Strategy focuses on companies with resilient balance sheets, visible free cash flow generation and exposure to tangible demand drivers, particularly in AI infrastructure, low-cost energy production and durable healthcare franchises, while maintaining valuation discipline and selectivity in an environment where value continues to outperform growth year to date.
As we move into the second half of the year, investors will need to navigate a market that is less one-dimensional than the rally in headline indexes suggests. AI-related demand remains a powerful support, but elevated valuations, shifting equity supply and large infrastructure capital needs could make markets more sensitive to changes in flows and risk appetite. Energy also remains an important swing factor, with depleted inventories keeping attention on energy security, infrastructure resilience and capital discipline. The fact that value continues to lead growth on a year-to-date basis suggests investors are still rewarding tangible earnings power and balance sheet durability beneath the AI-led rebound. In this environment, selectivity is essential, with a focus on resilient balance sheets, visible cash generation and companies capable of compounding value across a range of macro outcomes.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 9 2026 | 2026 Q2 | AMD, AVGO, BSX, BX, CF, COP, CVS, CVX, EMN, FANG, GOOGL, MU, PCG, SCHW, TSM, UNH | AI, energy, infrastructure, large cap, Managed Care, semiconductors, value |
GOOGL CVS MU TSM FANG BX AVGO AMD CF |
ClearBridge Value Strategy underperformed in Q2 despite solid absolute returns as AI-led growth rebounded, but value retained a substantial YTD lead. Strong selection in Alphabet, CVS, Micron and Taiwan Semi was offset by energy weakness. Managers added AI infrastructure exposure via Broadcom and AMD, low-cost energy through Diamondback, and Blackstone after private credit concerns created entry points. Focus remains on balance sheets, cash flow and selectivity amid elevated valuations. |
| Jan 15 2026 | 2025 Q4 | 300750.SZ, ARGX, CELH, CHTR, CMA, CORT, FCX, FI, FITB, GPN, ICE, META, MTB, MU, NEM, OM, PYPL, SLGN, TLN, WBS | AI, financials, gold, healthcare, materials, semiconductors, technology, value |
FITB PYPL |
Value spreads at historic extremes create upside potential as AI adoption must broaden beyond technology in 2026 to justify massive capital investment. Portfolio holds faster-growth companies at lower valuations than benchmark, positioned for AI adoption in underpriced sectors while maintaining exposure to real assets and cash-generating companies with strong fundamentals. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI remained the dominant market theme driving capital spending and infrastructure demand. The strongest opportunities are increasingly tied to physical inputs required to support AI: power, memory, infrastructure and energy. Leadership evolved from software and services toward compute investment supporting semiconductors, high-bandwidth memory, power, cooling and grid infrastructure. |
Infrastructure Semiconductors Memory Data Centers Cloud |
EnergyEnergy markets were a central source of volatility driven by geopolitical risk. The Iran conflict pushed WTI crude above $110 before falling below $70 as tensions eased. Despite near-term price pressure, the episode reinforced the importance of energy security, supply-chain resilience and capital discipline, while depleted inventories should support durable cash flow opportunities for well-capitalized, low-cost producers. |
Oil Geopolitical Inventories Energy Security Shale Producers | |
SemiconductorsSemiconductor demand remained strong, driven by AI-related capacity investment and leading-edge technology. Micron Technology was the best-performing holding, supported by growing confidence in the AI-driven memory cycle with strong demand for high-bandwidth memory used in AI servers reinforcing expectations for pricing strength and earnings growth. Taiwan Semiconductor also contributed as leading-edge semiconductor demand remained strong. |
Memory AI Foundries Semi Equipment | |
Managed CareManaged care benefited from improved sentiment as CVS Health and UnitedHealth Group advanced. CVS rose on stronger first-quarter earnings, raised full-year guidance and better performance in its health benefits business, while reduced policy uncertainty around exchange subsidies helped. UnitedHealth advanced as better cost trends and a more favorable outlook helped rebuild confidence after prior pressure on margins. |
Healthcare Insurance Policy | |
Alternative Asset ManagersThe Strategy initiated a position in Blackstone after weakness driven by private credit concerns and retail redemption requests created a more attractive entry point. Blackstone's balance-sheet-light, fee-driven model, real estate franchise and long-term compounding potential remain compelling, and the market was overly discounting manageable risks. |
Private Credit Real Estate Capital Markets | |
FertilizersThe Strategy reallocated from Eastman Chemical into CF Industries, shifting from a higher-cost commodity producer to one of the lowest-cost producers in global fertilizer, supported by low-cost U.S. natural gas feedstocks and a more favorable structural demand backdrop. |
Natural Gas Agriculture Commodity Chemicals | |
ValueValue retained a substantial year-to-date lead over growth as investors continued to reward cash flow durability, balance sheet strength and exposure to tangible demand drivers. The Russell 1000 Value Index returned 16.3% year to date compared with 10.3% for the Russell 1000 Index and 5.3% for the Russell 1000 Growth Index. The fact that value continues to lead growth suggests investors are still rewarding tangible earnings power and balance sheet durability. |
Cash Flow Balance Sheet Quality | |
| 2025 Q4 |
DividendsThe Fund invests approximately 50% of its assets in the 10 highest dividend-yielding Dow Jones Industrial Average stocks, known as the 'Dogs of the Dow' strategy. This systematic approach focuses on dividend yield as the primary selection criterion for equity investments. |
Dividend Yield Dogs of the Dow Income DJIA Yield |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 9, 2026 | Fund Letters | ClearBridge Investment Value Strategy | GOOGL | Alphabet Inc. | Internet Content & Information | Interactive Media & Services | Bull | NASDAQ | AI solutions, Cloud computing, Communication Services, Enterprise software, Equity, Interactive Media, margin expansion, search engine | Login |
| Jul 9, 2026 | Fund Letters | ClearBridge Investment Value Strategy | CVS | CVS Health Corporation | Healthcare Plans | Health Care Providers & Services | Bull | New York Stock Exchange | Equity, Health Care, health insurance, managed care, Pharmacy Benefits, turnaround | Login |
| Jul 9, 2026 | Fund Letters | ClearBridge Investment Value Strategy | MU | Micron Technology, Inc. | Semiconductors | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | AI infrastructure, Cyclical, Equity, growth, High-Bandwidth Memory, information technology, memory chips, semiconductors | Login |
| Jul 9, 2026 | Fund Letters | ClearBridge Investment Value Strategy | TSM | Taiwan Semiconductor Manufacturing Company Limited | Semiconductors | Semiconductors & Semiconductor Equipment | Bull | New York Stock Exchange | AI infrastructure, Equity, Foundry, growth, information technology, Leading-edge Technology, semiconductors, Taiwan | Login |
| Jul 9, 2026 | Fund Letters | ClearBridge Investment Value Strategy | FANG | Diamondback Energy, Inc. | Oil & Gas E&P | Oil, Gas & Consumable Fuels | Bull | NASDAQ | capital allocation, energy, Equity, Free Cash Flow, Low-cost producer, Oil & Gas Exploration, Permian Basin, Shale Producer, US | Login |
| Jul 9, 2026 | Fund Letters | ClearBridge Investment Value Strategy | BX | Blackstone Inc. | Asset Management | Capital Markets | Bull | New York Stock Exchange | alternative assets, asset management, Equity, Fee-Driven Model, financials, private equity, Real Estate, Value | Login |
| Jul 9, 2026 | Fund Letters | ClearBridge Investment Value Strategy | AVGO | Broadcom Inc. | Semiconductors | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | AI compute, custom silicon, Equity, growth, hyperscale, information technology, infrastructure, semiconductors | Login |
| Jul 9, 2026 | Fund Letters | ClearBridge Investment Value Strategy | AMD | Advanced Micro Devices, Inc. | Semiconductors | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | AI compute, data center, Equity, GPUs, growth, information technology, semiconductors | Login |
| Jul 9, 2026 | Fund Letters | ClearBridge Investment Value Strategy | CF | CF Industries Holdings, Inc. | Agricultural Inputs | Chemicals | Bull | New York Stock Exchange | Chemicals, commodity, Equity, Fertilizer, Low-cost producer, materials, natural gas, US, Value | Login |
| Jan 15, 2026 | Fund Letters | Brian Angerame | FITB | Fifth Third Bancorp | Financials | Regional Banks | Bull | NASDAQ | banking, Digitization, Loan_Growth, M&A, ROE | Login |
| Jan 15, 2026 | Fund Letters | Brian Angerame | PYPL | PayPal Holdings, Inc. | Financials | Transaction & Payment Processing Services | Neutral | NASDAQ | Competition, ecommerce, growth, Margins, Payments | Login |
| TICKER | COMMENTARY |
|---|---|
| GOOGL | Strong first-quarter earnings helped reframe AI from a pure capital spending concern to a monetization story, with Google Cloud benefiting from enterprise AI solutions and infrastructure, margins expanding and search remaining resilient. This reinforced the durability of Alphabet's core franchise even as AI reshapes the competitive landscape. |
| CVS | CVS rose as stronger first-quarter earnings, raised full-year guidance and better performance in its health benefits business supported confidence in the company's turnaround, while reduced policy uncertainty around exchange subsidies also helped. |
| UNH | UnitedHealth advanced as better cost trends and a more favorable outlook helped rebuild confidence after prior pressure on margins. |
| BSX | Boston Scientific declined on continued weakness in WATCHMAN, its device used to reduce stroke risk in patients with irregular heart rhythms, and concerns over share loss in electrophysiology. |
| MU | Micron Technology was the Strategy's best-performing holding for the quarter. The stock was supported by growing confidence in the AI-driven memory cycle, with strong demand for high-bandwidth memory used in AI servers reinforcing expectations for pricing strength and earnings growth. |
| TSM | Taiwan Semiconductor also contributed as leading-edge semiconductor demand and AI-related capacity investment remained strong. |
| COP | ConocoPhillips declined as easing Middle East tensions and negotiations between the U.S. and Iran resulted in a pullback in crude prices. Despite this pressure, we continue to have high conviction in the sector: the Iran episode reinforced the importance of energy security, supply-chain resilience and capital discipline, while depleted inventories should support durable cash flow opportunities for well-capitalized, low-cost producers. |
| CVX | Chevron declined as easing Middle East tensions and negotiations between the U.S. and Iran resulted in a pullback in crude prices. |
| FANG | During the quarter we initiated a position in Diamondback Energy, an independent oil and natural gas company with high-quality acreage and a low-cost operating profile. Given the potential for tighter oil markets as crude and refined product inventories are rebuilt, we added exposure to a best-in-class U.S. shale producer with deep inventory, balance sheet strength and corporate action optionality. We believe Diamondback's disciplined capital allocation and continued capital returns create multiple avenues for shareholder value creation through the commodity cycle. |
| BX | We also initiated a position in Blackstone, returning to alternative asset managers after weakness driven by private credit concerns and retail redemption requests created a more attractive entry point. Blackstone's balance-sheet-light, fee-driven model, real estate franchise and long-term compounding potential remain compelling, and we believe the market was overly discounting manageable risks. |
| AVGO | In IT, we added Broadcom and Advanced Micro Devices to increase exposure to AI hardware without chasing the most extended areas of the trend. Broadcom is positioned at the center of the custom AI compute buildout, with multi-year hyperscale relationships providing unusual visibility. |
| AMD | AMD offers exposure to compute demand with what we view as a more balanced risk-reward profile. |
| EMN | Meanwhile, we sold Eastman Chemical, which funded a new position in CF Industries. Eastman's investment case was pressured by its inability to move down the global chemical cost curve, the loss of a federal grant tied to its planned molecular recycling facility and a chemical cycle that remained more challenged than we expected. |
| CF | By reallocating into CF, we shifted from a higher-cost commodity producer to one of the lowest-cost producers in global fertilizer, supported by low-cost U.S. natural gas feedstocks and a more favorable structural demand backdrop. |
| SCHW | We also exited Charles Schwab. In Schwab, we became more concerned that competition for client cash balances, including potential AI-driven cash sorting, could pressure the company's profitable float monetization business. |
| PCG | We exited PG&E after becoming less optimistic about meaningful utility reform in California. |
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