| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.3% | -13.8% | -13.8% |
SGA's Global Growth Portfolio returned -13.6% gross in Q1 2026, underperforming the MSCI ACWI's -3.2% return as AI-disruption narratives drove widespread weakness in software, payments, and information services. Geopolitical tensions in the Middle East caused oil prices to spike from $70 to over $120 per barrel, creating economic headwinds reminiscent of 1970s oil shocks. Despite market turbulence, portfolio fundamentals remained strong with two-thirds to three-quarters of holdings meeting or exceeding earnings and revenue expectations. Top contributors included Arm Holdings, TSMC, and Canadian Pacific Kansas City, while Adyen, HDFC Bank, and Microsoft were primary detractors. The firm initiated a position in American Express while exiting Gartner and UnitedHealth due to fundamental concerns. SGA's portfolio of quality compounders now trades at its steepest discount to the market since inception, while cyclicals trade at peak multiples. Management believes conditions are building for rotation toward quality growth as AI investment cycle matures and energy headwinds persist.
SGA builds high-conviction portfolios focused on quality growth businesses anticipated to achieve consistent mid-teens earnings growth with reduced variability, supported by predictable revenue and cash flow generation, designed to protect and reliably compound client wealth over time.
SGA believes conditions for a meaningful rotation towards quality compounders are building as energy headwinds mount and the AI investment cycle matures. The firm has high conviction in its positioning and believes it sets the stage for attractive risk-adjusted returns in the quarters ahead, with portfolios trading at steepest ever discount to market while owning high-quality businesses that are growing and strengthening competitive positions.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 28 2026 | 2026 Q1 | ADYEN.AS, ARM, AXP, CP, HDB, IT, MSFT, TSM, UNH | AI, Geopolitical, Global Growth, payments, Quality, semiconductors, valuation |
ARM TSM CP ADYEY HDB MSFT AXP |
SGA's quality growth strategy underperformed in Q1 2026 as AI disruption and Middle East geopolitical tensions drove market volatility. Despite strong portfolio fundamentals with most holdings exceeding expectations, the strategy suffered from rotation away from proven compounders toward cyclical AI plays. Portfolio now trades at record discount to market, positioning for potential outperformance as conditions normalize. |
| Feb 8 2026 | 2025 Q4 | 1299.HK, 9983.T, ADYEN.AS, ALC, AMZN, AON, ARM, AVGO, BABA, CMG, CP, CRM, DHR, EXPN.L, GOOGL, HDB, INFY, INTU, IT, MELI, META, MSFT, NFLX, NOW, NVDA, SAP, SE, SNPS, SPGI, STE, TSM, UMG.AS, UNH, V, WM | AI, cyclicals, global, growth, Quality, valuation |
GOOG TSM 9983 JP AVGO NFLX SE MSFT MELI ARM NOW INFY |
SGA's Global Growth portfolio faced challenging Q4 2025 conditions as momentum and cyclicals dominated quality growth strategies. Despite underperformance, the portfolio's quality companies trade at historically attractive valuations while generating strong fundamental growth. With AI CapEx growth expected to moderate and cyclicals at peak multiples, SGA sees favorable setup for 2026 as market leadership broadens. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI-disruption narratives significantly impacted markets in Q1, driving weakness in software, information services, payments, and insurance brokers. The enormous AI CapEx cycle faces a more demanding environment with geopolitical tensions. Companies like Alphabet, Amazon, Microsoft, and Meta are reinvesting most cash generation into data center infrastructure. If global growth slows, the payback period on AI investments lengthens and market willingness to capitalize future AI earnings at premium multiples will be questioned. |
Data Centers CapEx Hyperscalers Infrastructure |
GeopoliticalQ1 2026 was defined by re-emergence of acute geopolitical risk with partial blockade of Strait of Hormuz, daily missile exchanges across Middle East, and opaque peace negotiations driving oil prices from $70 to peaks above $120 per barrel. These conditions invite comparison with oil shocks of 1973 and 1979. The direction of risk is clearly negative for growth and positive for inflation, and investors are right to be cautious. |
Oil Middle East Sanctions Inflation | |
SemiconductorsTSMC was a top contributor as its central role in AI-driven semiconductor demand continued. The company delivered resilient margins and reaffirmed roughly 30% revenue growth for the year. TSMC raised its AI revenue growth outlook to mid-to-high-50% CAGR through 2029, underscoring its integral role in accelerating AI infrastructure demand. Arm Holdings also contributed positively with strong fiscal Q3 results and accelerating data center adoption. |
TSMC Foundries AI Infrastructure Data Centers | |
PaymentsBroad weakness in payments businesses led to initiation of new position in American Express. Adyen was a detractor following Q4 results and more cautious 2026 outlook, with revenue guidance lowered from low-to-mid 20s to 20-22%. Despite disappointment, SGA remains confident in Adyen's long-term outlook given strong pricing power and highly repeatable revenues underpinned by billions of transactions annually. |
Adyen American Express FinTech Transaction Processing | |
QualitySGA's portfolio of reliable compounders is trading at its steepest ever discount relative to the MSCI ACWI P/E, while many cyclicals are trading at peak multiples just as CapEx growth is poised to slow. The proven, predictable compounders and established software businesses that form the core of portfolios have continued to be overlooked despite delivering strong fundamental results. Between two-thirds and three-quarters of holdings have met or exceeded both internal expectations and consensus forecasts. |
Compounders Valuation Fundamentals Discount | |
| 2025 Q4 |
AIManager believes market's assessment of AI risk differs from their own, with approximately 60% of underperformance attributed to positions where AI impact concerns drove stock declines. Portfolio companies deemed AI-losers declined 15% despite 10% revenue growth and 15% EPS growth, representing valuation compression rather than fundamental deterioration. |
Artificial Intelligence Disruption Valuation Technology Software |
QualityFund exclusively invests in businesses with superior characteristics including high barriers to entry, sustainable competitive advantages, and durable growth prospects. Manager notes their focus on leading businesses in sectors has been foundation of strategy since inception, though this approach was out of favor in 2025 as investors sold higher-quality investments to buy riskier stocks. |
Quality Competitive Advantages Margins Returns Durability | |
Small CapsStrategy of owning competitively advantaged small and medium-sized businesses remained out of favor for most of the quarter. Fund observed improvement in early December as investors showed renewed enthusiasm for high-quality stocks that populate the portfolio, with significant divergence between consistent earnings growth and recent performance creating compelling valuations. |
Small Cap Growth Valuation Performance Russell |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 28, 2026 | Fund Letters | SGA - Global Growth | HDB | HDFC Bank | Banks - Regional | Banks | Bull | New York Stock Exchange | asset quality, banking, brand strength, deposit growth, Emerging markets, Equity, India, loan growth, operating leverage | Login |
| Apr 28, 2026 | Fund Letters | SGA - Global Growth | MSFT | Microsoft | Software - Infrastructure | Systems Software | Bull | NASDAQ | AI, Azure, Cloud computing, enterprise, Equity, productivity, recurring revenue, Software, technology platform | Login |
| Apr 28, 2026 | Fund Letters | SGA - Global Growth | AXP | American Express | Credit Services | Consumer Finance | Bull | New York Stock Exchange | Affluent Customers, billings growth, consumer finance, credit cards, Equity, international expansion, Merchant Network, operating leverage, Payments | Login |
| Apr 28, 2026 | Fund Letters | SGA - Global Growth | ARM | Arm Holdings | Semiconductors | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | AI, CSS Platform, data center, Equity, hyperscalers, Mobile computing, Power Efficient Computing, royalties, semiconductors | Login |
| Apr 28, 2026 | Fund Letters | SGA - Global Growth | TSM | Taiwan Semiconductor Manufacturing Company | Semiconductors | Semiconductors & Semiconductor Equipment | Bull | New York Stock Exchange | AI, Equity, Foundry, Geographic Diversification, manufacturing, Process Nodes, semiconductors, Taiwan, technology leadership | Login |
| Apr 28, 2026 | Fund Letters | SGA - Global Growth | CP | Canadian Pacific Kansas City | Railroads | Rail Transportation | Bull | New York Stock Exchange | Cross-border Trade, Equity, Freight, margin expansion, Nearshoring, Psr, Rail Transportation, share repurchase, Tri-national Network | Login |
| Apr 28, 2026 | Fund Letters | SGA - Global Growth | ADYEY | Adyen | Software - Infrastructure | Data Processing & Outsourced Services | Bull | - | Authorization Rates, e-commerce, Equity, Fintech, Fraud prevention, global expansion, Omnichannel, Payments, platform | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | MSFT | Microsoft Corporation | Information Technology | System Software | Bull | NASDAQ | Artificial Intelligence, CapEx, cloud, Enterprise software, recurring revenue | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | MELI | MercadoLibre, Inc. | Consumer Discretionary | E-commerce | Bull | NASDAQ | e-commerce, Fintech, Latin America, Logistics, scale | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | ARM | Arm Holdings plc | Information Technology | Semiconductors | Bull | NASDAQ | data centers, margin compression, R&D, royalties, semiconductor IP | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | NOW | ServiceNow, Inc. | Information Technology | Application Software | Bear | New York Stock Exchange | growth deceleration, Integration, M&A, Valuation risk, workflow automation | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | INFY | Infosys Limited | Information Technology | IT Consulting & Other Services | Bear | New York Stock Exchange | Artificial Intelligence, enterprise spending, IT services, Outsourcing, Tariff Uncertainty | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | GOOG | Alphabet Inc. | Communication Services | Internet Content & Information | Bull | NASDAQ | Artificial Intelligence, Cloud computing, digital advertising, Margins, Search | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | TSM | Taiwan Semiconductor Manufacturing Co. Ltd. | Information Technology | Semiconductor Foundries | Bull | New York Stock Exchange | Artificial Intelligence, CapEx, Foundry, Pricing power, semiconductors | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | 9983 JP | Fast Retailing Co., Ltd. | Consumer Discretionary | Apparel Retail | Bull | New York Stock Exchange | Apparel, Brand, Global Retail, Margins, supply chain | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | AVGO | Broadcom Inc. | Information Technology | Semiconductor Designers | Bull | NASDAQ | Custom Asics, inference, Margins, Networking, recurring revenue | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | NFLX | Netflix, Inc. | Communication Services | Streaming Services | Bull | NASDAQ | advertising, Free Cash Flow, Pricing power, Streaming, Subscriptions | Login |
| Feb 8, 2026 | Fund Letters | HRISHIKESH (HK) GUPTA | SE | Sea Limited | Consumer Discretionary | E-commerce | Bull | New York Stock Exchange | e-commerce, Emerging markets, Fintech, Logistics, platform | Login |
| TICKER | COMMENTARY |
|---|---|
| ARM | Arm Holdings was a top contributor to returns during the quarter. Shares responded positively following strong fiscal third quarter results, with revenue and royalty growth exceeding expectations, driven by accelerating data center adoption, and rising penetration of Arm's CSS platform in smartphone, automotive, and infrastructure segments. Importantly, management reiterated confidence in sustaining approximately 20% royalty growth longer term, reinforcing the market's confidence in Arm's structural growth profile. |
| TSM | Taiwan Semiconductor Manufacturing Company (TSMC) was a top contributor to performance during the quarter as its central role in AI-driven semiconductor demand continued. The company delivered margins that proved more resilient than feared and management reaffirmed roughly 30% revenue growth for the year. The company also raised its AI revenue growth outlook to a mid-to-high-50% CAGR through 2029, underscoring its integral role in accelerating AI infrastructure demand. |
| CP | CPKC was a contributor to performance during the quarter, as solid operational execution helped offset end-of-year volume softness. While certain end markets such as automotive, forest products, and intermodal remained pressured by macro factors and supply chain disruptions, strong Precision Scheduled Railroading (PSR) execution drove meaningful margin strength. |
| ADYEN.AS | Adyen was a detractor from performance during the quarter following fourth quarter results and a more cautious 2026 outlook. Fourth quarter revenue missed expectations by 2-3 pts, and 2026 revenue guidance was lowered from low-to-mid 20s to 20-22%, less than three months following the company's capital markets day, raising concerns regarding the consumer spending environment and competition. |
| HDB | HDFC Bank was a detractor from performance during the quarter following earnings as deposit growth fell short of market expectations. Sentiment was further pressured by the unexpected resignation of the bank's non-executive chairman, which contributed to elevated volatility despite swift action by regulators and the board to reaffirm confidence. |
| MSFT | Microsoft was a detractor from performance during the quarter as investor expectations around cloud acceleration and AI-driven upside moderated. While revenue grew 15% and EPS was up 21% in constant currency, Azure growth modestly missed elevated expectations, and management commentary suggested cloud growth is being actively managed through capital allocation rather than demand constrained. |
| AXP | We initiated a new position in leading global payments and financial services company American Express during the quarter following a break in the stock price driven in part by market concerns around the potential impact of artificial intelligence on white collar employment and the downstream implications for credit card spending which we believe are overblown. |
| IT | During the quarter we made the decision to exit our position in Gartner after another disappointing quarter and several interactions with management which led us to conclude that the company's priorities and actions did not align with the strategic direction we had advocated for. Over the past year growth decelerated, which we ascribed largely to political and macroeconomic factors such as efforts by DOGE and tariff-related disruptions. |
| UNH | Our position in UnitedHealth was based on our view that the company would deliver durable growth due to its ability to manage the rising healthcare costs given its scale advantages. Over 2025 the stock suffered due to execution missteps which were exacerbated by government payment cuts to Medicare Advantage programs which were initiated under the Biden administration. |
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