Happy Friday!
In this week’s letters,
– Robotti Value Investors on Oil & Gas, LSB Industries and Home Building
– Rodrigo Benedetti on AI Melt-up and value
– Massif Capital on Iran war, diplomacy and possible paths forward
– Elevator pitches for SLB, KYGA LN, and PAYS
Quarter in progress: 676 fund letters of 2026 Q1 are live on our database!
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Q1 2026 INVESTOR LETTER SUMMARIES
- Oil & Gas: Accelerating the Structural Opportunity – Two significant developments last year set the stage for what we saw in the first quarter. First, the International Energy Agency (IEA), a long-time leading advocate of the clean-energy transition, released its annual World Energy Outlook with a new current-policy scenario showing oil demand continuing to rise well past 2030. Under this scenario, oil demand may continue rising through 2050.
- LSB Industries: Positioned for Multiple Tailwinds – The closure of the Strait of Hormuz has disrupted more than just oil markets. Fertilizers, ammonia, and other oil and gas derivatives have also been cut off from global markets. We have been investors in LSB Industries (“LSB”) for several years. LSB produces ammonia, some of which is sold into the merchant market, while the remainder is upgraded into nitrogen-based fertilizers and nitric acid.
- Home Building: The Market Giveth, The Market Taketh Away – As we have noted many times, Mr. Market’s manic-depressive behavior creates opportunities in both directions. Capital flows overshoot when an industry is left for dead and investors flee aggressively. When sentiment shifts, capital rushes back just as forcefully. We invest in these abandoned corners of the market and must be prepared for the discomfort that comes with the territory.
- The AI Melt-Up – I couldn’t write this letter without mentioning the historic rally in semiconductors and AI more broadly. I was a net buyer of AI-related stocks during the Iran dip, but as the market heated up, I sold my longs and even started some shorts. This has been a terrible market to manage efficiently.
- Where Is the Value at This Point? – I won’t shy away from playing some Keynesian beauty contests around the next AI bottleneck, even if the price movements make me dizzy. I also like some quality stocks that have suffered from multiple compression. For example, Visa and Mastercard are trading near the low end of their historical valuation ranges. Stablecoins will do nothing to the networks. These stocks are not “cheap cheap,” but taking a punt here seems reasonable.
- I also see a lot of value in companies and sectors that sold off because of Iran-related worries and have not recovered with the broader market. Namely, I see opportunity in non-AI Japan and Europe. Europe, including the UK, is especially interesting.
- Ten weeks into the Iran war, the global oil market is effectively running on two prices. On futures screens, Brent is hovering near $100 per barrel. That is up roughly 50% since the shooting started on February 28, but still below the April 2 spike of $128. In the physical spot market, where actual cargoes change hands, the all-in delivered cost of a prompt barrel is closer to $110–120 once war-risk insurance, longer-haul logistics, and assorted premiums are included.
- Diplomacy is moving slowly, if at all. It is hard to tell whether the process is real or performative. Iranian Foreign Minister Abbas Araghchi flew to St. Petersburg on April 27 carrying a peace offer. Putin responded by handing back satellite imagery of U.S., Gulf, and Turkish military assets, the same type of imagery Russia has reportedly shared with Tehran throughout the war.
- We see four possible paths forward, none of which is particularly appealing. The first is an eighteen-to-twenty-four-month “fig-leaf” deal that allows Iran to rebuild quietly. From a macro perspective, this would be the cleanest scenario for our portfolio. Brent would likely remain in a $90–110 corridor, the sulfuric-acid bottleneck would keep the copper cost curve steep, and the Norwegian and U.K. upstream cluster would continue compounding the position.
ELEVATOR PITCHES BY FUNDS
SLB N.V. (by First Eagle Global Fund)
- SLB is the world’s largest oilfield service company and derives approximately 80% of its revenue from international and offshore markets. The supply disruption in the Persian Gulf is driving increased interest in deepwater production as spending on shale drilling remains muted. With expertise in deepwater and offshore drilling, SLB is well-positioned to benefit from the shift, in our view.
- Given the current geopolitical tensions and energy supply constraints, demand for SLB’s specialized services should increase as energy companies seek alternative production sources.
Kerry Group (by Impax Global Fund)
- Kerry Group (Sustainable Agriculture, Ireland) underperformed as near term trading conditions remained challenging and guidance was adjusted accordingly. Even so, the company continues to hold strong competitive positions in taste and nutrition, with growing opportunities in clean label and health focused ingredients. As end-markets gradually improve, Kerry may be well placed to benefit from long term structural demand.
- The company holds strong competitive positions in taste and nutrition ingredients, with particular opportunities in clean label and health-focused products.
- The company manages the entire prepaid card lifecycle—design, issuance, and processing—generating revenue through transaction fees, cardholder fees, program management fees, and funds breakage. Paysign stock had underperformed significantly in January and February due to AI fears and pharmaceutical disruption from the Trump Administration.
- The stock remains inexpensive at 7x EV/EBITDA while growing revenues 40% last year. We believe this trajectory can continue as management executes. With their excess cashflow, we believe PAYS could begin paying a dividend or buying back shares to return capital to shareholders.
HIGHLIGHT OF THIS WEEK
MEDIA APPEARANCES BY BSDs
Big Tech software era is over, says top investor James Anderson
- British tech investor James Anderson has warned the curtain is falling on two decades of extraordinary growth among the top US software and internet stocks, as massive AI investments “implode” their cash flows to the lasting benefit of chipmakers such as Nvidia.
- The spoils of the trillion-dollar AI spending frenzy by the likes of Google, Meta, Amazon and Microsoft will flow disproportionately to a small number of dominant hardware suppliers such as Nvidia, Taiwan Semiconductor Manufacturing Company and ASML, Anderson told the FT.
Jeremy Grantham says AI is the only thing that’s prevented a recession
- The US economy would have tumbled down a difficult path were it not for AI, Jeremy Grantham says.
- The GMO founder and investing legend issued a cautious message on the state of the US economy and markets last week. Speaking on a recent episode of the Excess Returns podcast, Grantham said he believed the US probably would have slipped into a downturn and seen a steep market crash in 2023 , were it not for the huge investments being poured into AI.
Chamath warns PwC and Accenture against working with OpenAI & Anthropic
- Venture capitalist Chamath Palihapitiya said leading consulting firms will come to regret their partnerships with OpenAI and Anthropic.
- “If you are running a consulting business and you are deploying Anthropic or OpenAI directly into your organization (I’m looking at you PwC and Accenture) you are letting the fox into the hen house,” Palihapitiya wrote on X.
