Happy Friday!
In this week’s letters,
– Horizon Kinetics on markets, GFC, and investments
– Horos Asset Management on AI & Anthropic’s effects
– Federated Hermes on markets benefiting from gold surge
– Elevator pitches for ATG LN, QDEL, and CGSP
Quarter in progress: 659 fund letters of 2026 Q1 are live on our database!
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Q1 2026 INVESTOR LETTER SUMMARIES
- Almost nothing in financial markets is permanent, even if permanence is defined as lasting only a few years. This applies to the popularity of an industry sector or an investing style. One great exception is crowd behavior, whose predictability appears to endure beyond any single lifetime.
- The lost decade for income investors began in 2008, during the Great Financial Crisis, when the Federal Reserve adopted its zero-interest-rate policy. To avoid negative yields, money market fund managers had to waive their fees. September 2008 was the last time, until relatively recently, that a one- or two-year Treasury yielded as much as 2%.
- Another form of inflation-hedged income investing can be found in sectors or securities that trade at persistent discounts because of artificial market segmentation or constraints. In these cases, the higher yield does not reflect fundamental risks such as excessive leverage or poor management. Instead, it reflects self-imposed investor policy limitations or preferences.
- The first companies likely to be affected by Anthropic’s announcements were the leading providers of financial data, including FactSet Research Systems, Thomson Reuters, Morningstar, and MSCI.Almost simultaneously, the market began to question the historically impregnable oligopoly of the rating agencies, particularly the dominance of its two major leaders: Moody’s and S&P Global.
- These are perhaps some of the most prominent examples in the U.S. market, along with others that may have been left out. Beyond these dramatic moves, however, there are two underlying issues that are particularly relevant for investors. First, until this year, with a few exceptions such as Adobe, the creative, marketing, and document management software company, the market had largely treated many of these businesses as structurally protected.
- From our perspective, it is unclear whether there is a real risk of a private credit crisis. It is also unclear whether, if something more severe than the current liquidity strains were to materialize, it would have a truly significant economic impact.
- A sustained rise in gold prices could significantly strengthen the economic and financial position of many emerging markets. Countries that are major gold exporters, including Ghana and Uzbekistan, would see rising prices translate into higher national income.
- Ghana, Africa’s largest gold exporter, has been a major beneficiary of the surge in global gold prices. In 2025, gold export earnings rose sharply to US$20 billion, almost double the 2024 level, making gold the dominant driver of the country’s export receipts.
- Zambia, Africa’s second-largest copper producer, finds itself at a crucial juncture. The country is emerging from drought, advancing its debt restructuring efforts, and implementing reforms aimed at stabilizing macroeconomic conditions.
- Chile, the world’s largest copper producer, is one of the principal beneficiaries of elevated copper prices. The country currently accounts for nearly 25% of global copper output, a share that is expected to rise to around 27% over the next decade.
ELEVATOR PITCHES BY FUNDS
Auction Technology (by Liontrust GF)
- Auction Technology Group (ATG, +20%) was the latest to be targeted, revealing it had received and rejected a number of unsolicited, highly conditional proposals from its largest shareholder, FitzWalter Capital. In our opinion, the mooted takeover bid – raised to 400p/share – demonstrably failed to reflect the true value of this high-quality asset even when assessed over a short-term horizon.
- We were encouraged to see ATG’s board stand firm in its conviction that this opportunistic approach undervalued the company, with FitzWalter confirming in early February that it does not intend to make a formal offer.
QuidelOrtho Corp. (by McIntyre Partnerships)
- Its business is a razor/razor blade model, where machines are sold or leased up front for minimal cost (i.e., “the razor”), and then customers commit to purchase consumables at high gross margins (the “razor blades”). ~95% of sales are consumables.
- Given the highly recurring and non-cyclical nature of their businesses, diagnostics companies typically have >25% EBITDA margins, though specific issues have held QDEL at ~22-24% recently.
- The respiratory and China businesses are worth “something.” Even an overly conservative 1x EV/Sales multiple would yield ~$730MM, or the company’s entire current market cap.
CoStar Group (by Baron Asset Fund)
- CoStar Group, Inc. is the leading provider of information and marketing services to the commercial and residential real estate industries. Shares fell due to multiple compression driven by rising fears about the potential impact of AI on the company’s business.
- The market has come to view AI as an existential risk for a growing number of industries—including software, business services, information services, and video games—despite no evidence of any fundamental impact to these sectors.
- The company also maintains a substantial cash balance, which we are hopeful will be used to aggressively repurchase shares at current depressed valuation levels.
HIGHLIGHT OF THIS WEEK
MEDIA APPEARANCES BY BSDs
Hedge-Fund Manager David Einhorn Likes These Low-Key AI Plays
- Greenlight Capital’s David Einhorn pitched two investment ideas Tuesday at the Sohn Investment Conference that he says are undervalued beneficiaries of the artificial-intelligence boom.
- Centene: The managed-care company can use AI to speed up manually repetitive processes such as claims processing, Einhorn said.
- Fluor: The market is underestimating how much the engineering and construction company will benefit from the build-out of data centers and the power plants needed to run them, according to Einhorn.
Larry Fink ‘Quite Bullish’ on Opportunity to Invest in Venezuela
- BlackRock Inc. Chief Executive Officer Larry Fink expressed optimism about investing in Venezuela following the overhaul sparked by Nicolas Maduro’s removal.
- “I’m actually quite bullish on the opportunity to invest in Venezuela,” Fink said in a panel in New York Monday, adding that the oil-rich nation could be brought “back into its glory.”
- “The demand is growing faster than supply,” Fink said. “This could be blossoming for Brazil, for many countries.”
Michael Burry Warns of Stock Crash as Tech Jump Echoes 2000 Peak
- Michael Burry, the investor made famous in The Big Short, is warning that the Nasdaq 100 Index is headed toward a dramatic reversal after a “parabolic” surge that has driven technology valuations to unsustainable heights.
- He said the Nasdaq 100, by his reckoning, is trading at 43 times earnings — well above the implied level of around 30 times — because “Wall Street may be overstating by more than 50% the earnings at our fastest growing, most highly valued companies.”
