Happy Friday!
In this week’s letters,
– Claret Asset Management on geopolitics and markets during war
– Boyar Value Group on AI and valuation;
– Appalaches Capital on the payment-rails ecosystem
– Elevator pitches for KEX; OVV; FP CN
Quarter in progress: 308 fund letters of 2026 Q1 are live on our database!
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Q1 2026 INVESTOR LETTER SUMMARIES
- Geopolitical shocks rarely derail the structural trajectory of the global economy permanently. Once the initial shock is absorbed and priced in, the market typically shifts its focus back to its core drivers: corporate earnings, inflation trends, central bank interest-rate policy, and the broader macroeconomic cycle. Historical precedents include World War II in 1941, the Gulf War in 1991, the Iraq War in 2003, and Russia’s invasion of Ukraine in 2022.
- The pandemic year of 2020 marked the end of a four-decade era defined by steadily declining interest rates and highly accommodative monetary policy. By contrast, the 2025–2026 landscape is defined by normalized borrowing costs and elevated macroeconomic uncertainty. The unpredictability of global trade policy, AI-driven market distortions, and the inherent difficulty of short-term macroeconomic forecasting have all raised the cost of capital for economic participants.
- For years, structurally declining interest rates artificially inflated asset prices and helped bail out heavily leveraged businesses. Today’s higher-rate environment changes the calculus entirely. Capital is no longer free, which means businesses must rely on genuine operational profitability rather than cheap debt to survive.
- Artificial intelligence was one of the quarter’s defining themes, as investors increasingly questioned whether the enormous sums being committed to AI would ultimately generate adequate returns. Microsoft was a good example of these crosscurrents.
- A decline of 30%, 50%, or even more does not automatically make a stock cheap. Some companies may never regain their previous highs because their underlying business economics or competitive positions have changed. Others may have simply been overvalued to begin with.
- History is filled with examples of investors paying such high prices for “quality” that even excellent companies ultimately produced disappointing returns. The Nifty Fifty era of the early 1970s was one example. The late 1990s provided another, when investors crowded into beloved blue-chip companies at valuations that assumed years of perfection. In both cases, the businesses often remained strong, but the stocks proved poor investments because the starting prices were simply too high.
- Initially, our investment was made after the Credit Card Competition Act was reintroduced in January of this year. Senators Durbin and Marshall are effectively seeking to introduce manufactured competition into the payment-rails ecosystem in order to limit the fees charged by Visa and Mastercard. Among other proposals, the bill would require large card-issuing banks to offer unaffiliated alternative networks for credit-card transaction routing.
- I believe part of the bill’s political appeal is rooted in a misunderstanding of how card networks actually operate, or at least in a convenient obfuscation of the economics behind transaction fees. Interchange fees are typically around 2–3%, depending on the transaction, and the networks do serve as the governing authorities that set these rates.
- The second question is what the likely impact would be on the card networks if the bill were actually enacted. Fortunately, the Durbin Amendment provides useful historical precedent. Debit cards have had multiple routing networks for roughly fifteen years, yet Visa and Mastercard have maintained a strong grip on the market.
ELEVATOR PITCHES BY FUNDS
Kirby Corp. (by Meridian Growth Fund)
- Kirby Corp. is the largest domestic tank barge operator in the United States, transporting petrochemicals, refined products, and agricultural chemicals through its inland and coastal marine fleets, with an additional distribution and services segment.
- The company benefits from a disciplined supply environment in the inland market and a rapidly expanding power generation backlog.
- During the quarter, shares advanced as strong performance in the coastal marine and power generation businesses more than offset ongoing pricing pressure in the inland market, while the substantial backlog provided confidence in forward growth visibility.
Ovintiv Inc. (by Hotchkis & Wiley)
- Ovintiv is an independent E&P with leading positions in the Permian and Montney basins that trades at a discount despite high-quality, long-life unconventional assets.
- We own Ovintiv for exposure to an energy market generating significant free cash flow, with assets positioned favorably on the global cost curve. Ovintiv outperformed in the first quarter as oil prices surged following the Strait of Hormuz closure, with Brent crude peaking near $127.
- The company’s Permian and Montney assets benefited from the geopolitical risk premium, while its disciplined capital allocation and shareholder return framework resonated with investors seeking cash flow generation.
FP Newspapers (by HalvioCapital)
- FP owns 49% of a partnership that owns the leading newspaper in Canada’s 6th largest town, Winnipeg, called the Winnipeg Free Press and some other smaller news outlets.
- The Winnipeg Free Press is extremely embedded in the 803,000 residents of Winnipeg with 46% of Winnipeg adults reading the Free Press on a weekly basis. While print advertising has declined most years, circulation revenue has remained extremely resilient.
- FP uses the equity accounting method for its main asset which makes it hard to screen for as a quick glance or view of the financial statements won’t tell the whole story.
MEDIA APPEARANCES BY BSDs
Leon Cooperman warns markets are ‘too expensive’
- I look around the world, and I say between Iran and the lack of leadership in Washington and the lack of integrity in Washington, that the market doesn’t deserve to be where it’s selling. It’s too expensive.
- Markets may be acting as though conditions are more stable than they really are — even as the underlying environment becomes more fragile.
Billionaire Bill Ackman unveils bold IPO plan to Robinhood CEO
- During the conversation, Ackman told Tenev that he plans to pump billions of dollars into large- and mega-cap stocks within weeks as he believes that since the beginning of the war in Iran, some of the world’s best businesses have become available at some of the lowest valuations in their history.
- The billionaire highlighted the artificial intelligence (AI) infrastructure boom, the infrastructure legislation during the tenure of former president Joe Biden, the tax legislation during the current Donald Trump administration, and $18 trillion in investment deals as massive drivers of demand, jobs, and economic progress.
Jeremy Grantham warns of ‘painful’ consequences from the oil spike
- Nothing is ever sustained, but that is clearly painful and will create balancing effects — markets get weak, demands gets less, etc.You know, things can get bad in a real hurry.
- If you think the future looks one of two or three best futures that we have ever had in the last hundred years, you’re smoking dope. This is a fraught, dangerous, growth-limiting world now.
