| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.3% | 14.39% | 16.92% |
The Cambiar SMID Fund returned 14.39% in 2Q 2026, trailing the Russell 2500 Value Index's 18.5% gain as small caps rallied sharply. The quarter was dominated by AI-driven technology stocks, particularly semiconductors, which now comprise nearly 50% of the S&P 500 alongside related names. While the portfolio's semiconductor holdings in Lattice Semi and On Semiconductor participated in the rally, the extreme concentration and parabolic price moves warrant caution given stretched valuations. The manager is prudently trimming expensive technology positions and reallocating to quality companies with strong fundamentals. Industrials outperformed significantly, led by sharp rebounds in WillScot Holdings and ACV Auctions, while Financials holdings generated positive returns but trailed the index due to weakness in Lazard and Cboe. The portfolio ended with 4% cash for opportunistic deployment. Looking ahead, the manager questions whether 2026 will mark small cap leadership after years of underperformance, maintaining discipline through a singles-and-doubles approach focused on compounding capital rather than chasing euphoric themes. Value stocks are leading year-to-date despite growth's second quarter outperformance.
The Cambiar SMID Fund pursues a disciplined value approach focused on quality companies with strong cash flows, robust balance sheets, and reasonable valuations in the small and mid-cap segment of the U.S. equity market.
The manager remains constructive but cautious, noting that while equity markets have performed well and participation has broadened beyond the Mag 7, there is still an underlying penchant for risk-taking with explosive price action in AI winners. The team is questioning whether 2026 will be the year small caps regain leadership after underperforming since 2020. With no shortage of crosscurrents to consider, the manager is maintaining discipline and moving toward the exit on expensive technology positions while reallocating to quality companies with strong fundamentals and reasonable valuations. The tone is measured and selective, emphasizing a singles and doubles approach to compounding capital over a longer arc rather than reaching for excess risk in euphoric market environments.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 21 2026 | 2026 Q2 | ACVA, CBOE, DINO, DLB, LAZ, LSCC, ON, WSC | AI, financials, industrials, semiconductors, small caps, technology, valuation, value | - | Cambiar SMID returned 14.39% in 2Q 2026, trailing the index as AI-driven semiconductors dominated. The manager is trimming expensive technology positions despite strong fundamentals, reallocating to quality value names with robust cash flows and reasonable valuations. Industrials rebounded sharply while Financials lagged modestly. With 4% cash and disciplined positioning, the fund is positioned for potential small cap leadership after years of underperformance while avoiding speculative excess in concentrated mega-cap technology. |
| Apr 29 2026 | 2026 Q1 | ALGN, BOKF, CF, CLX, HF, LUV, ON, PHR, SAIA, SOLV, WBS | AI, diversification, energy, Geopolitical, Quality, SMID Cap, value |
ON SOLV PHR |
Cambiar SMID Fund returned 2.21% in Q1 2026, lagging the value index due to healthcare headwinds and lower energy exposure. The fund capitalized on volatility with seven new buys including ON Semiconductor, viewing the semiconductor cycle as poised to inflect higher. Focus remains on quality companies with pricing power as markets shift toward margin of safety. |
| Jan 26 2026 | 2025 Q4 | ACVA, ALGN, BOKF, COO, EEFT, FNF, GOOGL, JBHT, LAZ, MAS, NVDA, WFC, WSC | AI, Credit Stress, financials, healthcare, Quality, small caps, value | COO | Cambiar SMID Fund struggled in 2025's speculative environment that favored momentum over quality, but fourth quarter showed encouraging signs as value sectors outperformed growth. With Financials as the largest allocation at 22% and Healthcare overweight, the fund is positioned for potential benefits from steepening yield curves and continued value rotation in 2026. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI-driven demand created a massive rally in technology stocks, particularly semiconductors, which now comprise nearly 50% of the S&P 500 alongside related names like Amazon and Alphabet. The semiconductor cycle driven by AI eclipses the late-90s internet era, with advanced AI chips requiring increased memory creating a multiplier effect. While margins and profits have been strong, the extreme concentration and parabolic price moves warrant caution, especially given stretched valuations like Micron trading at 10-12x book value versus a 2.0x historical median. |
Semiconductors Technology Valuation Concentration Memory |
Semiconductor CycleThe current AI-driven semiconductor cycle has produced extreme stock price gains that eclipse the mid-late 90s capacity cycle. Advanced AI chips require increasing amounts of memory with each iteration, creating a multiplier effect within the semiconductor complex. The portfolio holds Lattice Semi and On Semiconductor to participate in this rally, though the manager questions whether this represents a structural opportunity or cyclical peak given the parabolic nature of the advance. |
Memory AI chips Capacity Valuation | |
Small CapsSmall caps rallied 21.5% in the quarter with the Russell 2000, outpacing large caps. However, non-earning small caps outperformed profitable small caps, indicating speculative bias. Small caps have not outperformed large caps on a calendar year basis since 2020, raising the question of whether 2026 will be the year small caps regain leadership. The manager is positioning for this potential rotation while maintaining discipline. |
Russell 2000 Valuation Speculation | |
ValueValue stocks are leading growth on a year-to-date basis despite growth outperforming in the second quarter. The manager is reallocating capital from expensive technology positions into companies with robust cash flows, strong balance sheets, and reasonable valuations. This reflects the emergence of valuation disparities as enormous capital flows into popular themes, creating opportunities elsewhere in the market. |
Cash flows Balance sheets Valuation disparities | |
FinancialsFinancials represents the largest sector allocation at approximately 21% of portfolio capital. Holdings generated positive returns but trailed the index due to weakness in Lazard and Cboe Global Markets. Lazard experienced a slowdown in M&A activity and modest revenue shortfall in asset management, though it remains well-positioned for a rebounding M&A cycle. Cboe's resilient exchange business model offers revenue visibility and complements credit-sensitive bank holdings despite recent AI disruption fears. |
M&A Exchanges Banks | |
IndustrialsIndustrial holdings outpaced the index by a wide margin in the quarter, with sharp rebounds in WillScot Holdings and ACV Auctions after a difficult year. WillScot is seeing improved demand trends from datacenters as a market leader in modular offices for construction sites. ACV reported strong top-line growth and announced a large share buyback program. These represent niche but essential business models discoverable in the smaller cap segment. |
Data Centers Construction Buybacks | |
| 2026 Q1 |
AIAI disruption fears are pressuring software companies and asset-light businesses. The fund views AI as a threat to certain business models but sees opportunities in HALO companies (high asset, low obsolescence) that cannot be easily disrupted by AI technology. |
Disruption Software HALO |
ValueValue stocks provided downside protection during the quarter while growth stocks struggled. The rotation from asset-light to physical economy stocks reflects investor preference for tangible cash-generating businesses over speculative companies with limited profit prospects. |
Rotation Physical Economy Downside Protection | |
Private CreditPrivate credit is showing signs of struggle with defaults and loan markdowns. The combination of abundant liquidity and willingness to take risks that banks passed on contributed to explosive growth that is now facing challenges, potentially constraining business investment. |
Defaults Credit Availability Liquidity | |
OilOil prices rose from mid-$60s to over $100 due to Middle East conflict, benefiting energy sector operators. However, energy companies are largely price-takers and prices are likely to drop with any sign of de-escalation, limiting the fund's willingness to chase performance. |
Middle East Geopolitical Price Volatility | |
Semiconductor CycleThe fund believes semiconductor demand trends are poised to inflect higher from current levels. ON Semiconductor is trading at trough margins due to extended COVID-driven inventory cycle, with additional catalyst from upcoming datacenter architectural shift increasing power semiconductor content. |
Cycle Timing Inventory Power Semis | |
| 2025 Q4 |
AIAI has been integrated into RGA's research process over three years, serving as force multipliers for human judgment rather than replacements. The firm uses AI tools like NotebookLM, Gems in Gemini, and Claude Code for efficiency and risk analysis. While acknowledging AI's transformative potential, they believe current market narratives swing to unhelpful extremes, creating investment opportunities. |
Artificial Intelligence Machine Learning Automation Technology Innovation |
SoftwareSoftware companies face structural headwinds from AI lowering barriers to entry and increasing customer bargaining power. Many companies have been running with excess headcount and may experience pricing pressure that can be countered with lower costs to serve. The market is pricing in these headwinds as evidenced by significant downward re-rating of major financial data and software providers. |
Software Technology SaaS Enterprise Software Pricing | |
SemiconductorsLattice Semiconductor represents an under-appreciated AI winner with immediate gains and longer-term optionality. The company's focus on efficiency rather than maximal performance positions it favorably for AI servers, particularly in security functions as Root of Trust chips. Their FPGAs are the only Post-Quantum Cryptography secure chips on the market, future-proofing against quantum attacks. |
Semiconductors FPGAs AI Infrastructure Security Chips | |
LogisticsAmazon's logistical prowess represents one of the foremost moats in business today and will be enhanced with AI through better orchestration of logistics assets and buildout of more sophisticated robotics. Amazon is uniquely positioned to dominate the coordination layer across its entire logistics network with AI's help, representing an application layer opportunity built on AI infrastructure. |
Logistics Supply Chain Automation E-commerce Infrastructure |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 29, 2026 | Fund Letters | Cambiar SMID Fund | ON | ON Semiconductor | Semiconductors | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | Cyclical, datacenter, Power management, semiconductors, technology, turnaround, Value | Login |
| Apr 29, 2026 | Fund Letters | Cambiar SMID Fund | SOLV | Solventum | Medical Instruments & Supplies | Health Care Equipment & Supplies | Bull | New York Stock Exchange | 3M, Dental, Free Cash Flow, Health IT, Healthcare Technology, medical equipment, spinoff | Login |
| Apr 29, 2026 | Fund Letters | Cambiar SMID Fund | PHR | Phreesia | Health Information Services | Health Care Technology | Bull | New York Stock Exchange | digital health, EBITDA, healthcare software, Hospital Networks, patient engagement, Pricing power, SaaS | Login |
| Jan 26, 2026 | Fund Letters | Ania A. Aldrich | COO | The Cooper Companies, Inc. | Health Care | Health Care Supplies | Bull | New York Stock Exchange | capacity expansion, Contac tlenses, Medical devices, recurring revenue, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| LSCC | The portfolio had exposure to the rallying semiconductor industry via our holdings in Lattice Semi and On Semiconductor, which helped to offset a pullback in Dolby Laboratories. |
| ON | The portfolio had exposure to the rallying semiconductor industry via our holdings in Lattice Semi and On Semiconductor, which helped to offset a pullback in Dolby Laboratories. |
| DLB | The portfolio had exposure to the rallying semiconductor industry via our holdings in Lattice Semi and On Semiconductor, which helped to offset a pullback in Dolby Laboratories. The weakness in Dolby is a function of the company's exposure to consumer electronics end markets – which has incurred a drop in sales due to higher memory prices. Although Dolby is insulated by their unique IP licensing business model (where they benefit from higher product prices), total industry growth has been disappointing, and this has filtered into a below-expectations growth forecast. We continue to maintain a position but are closely monitoring the situation. |
| WSC | We were particularly encouraged by the sharp rebounds in WillScot Holdings and ACV Auctions – as these two positions have struggled over the past year but may be turning the corner. WillScot is a market share leader in modular offices for construction sites and is seeing improved demand trends (e.g., datacenters), while ACV (wholesale car auctions) rebounded after reporting strong top-line growth and announced a large share buyback program. WillScot and ACV are good examples of niche (but essential) business models that can be discovered in the smaller cap segment of the equity market. |
| ACVA | We were particularly encouraged by the sharp rebounds in WillScot Holdings and ACV Auctions – as these two positions have struggled over the past year but may be turning the corner. WillScot is a market share leader in modular offices for construction sites and is seeing improved demand trends (e.g., datacenters), while ACV (wholesale car auctions) rebounded after reporting strong top-line growth and announced a large share buyback program. WillScot and ACV are good examples of niche (but essential) business models that can be discovered in the smaller cap segment of the equity market. |
| LAZ | At a company level, drawdowns in Lazard and Cboe Global Markets weighed on results. The decline in Lazard was due to a slowdown in M&A activity as well as a modest revenue shortfall in their asset management segment. Despite the recent setback, Lazard remains a well-managed business and should be in a good position to participate in a rebounding M&A cycle. |
| CBOE | At a company level, drawdowns in Lazard and Cboe Global Markets weighed on results. Cboe is a securities and derivatives exchange; their resilient business model offers a heightened level of revenue/earnings visibility and serves as a good complement to the portfolio's more credit-sensitive bank holdings. The recent weakness is due to a combination of AI disruption fears (Cboe has a software segment) and the more recent approval of perpetual futures ('perps') trading in prediction markets. We view these risks to be overstated, and continue to maintain our investment in this quality franchise. |
| DINO | Cambiar's sole holding in the sector is HF Sinclair, which sidestepped the sector weakness and posted a solid gain for the quarter. Sinclair's refining segment has been a notable bright spot for the company, as supply disruptions have led to a blowout in crack spreads (what refiners earn for converting crude oil into gasoline and diesel products). While these elevated margins will likely come down as supply comes back online, it could take a couple more quarters before conditions normalize. |
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