6/5/2026
The China Stranglehold Nobody Is Talking About
Happy Friday!
In this week’s letters,
– Macro Ops on a new emerging theme – Solar
– Pantera Capital on AI and blockchain
– Unison Asset Management on Korea, AMAZON and AI
– Elevator pitches for SRE, RENT3 BZ and CDW
Quarter in progress: 736 fund letters of 2026 Q1 are live on our database!
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Q1 2026 INVESTOR LETTER SUMMARIES
- The Solar Thematic reminds me of Rare Earths circa 2024. Back then, investors understood China’s stranglehold on Rare Earths but didn’t truly care until China imposed export bans in late 2024/early 2025.
- Here’s what most investors miss about Solar: China has an even greater grip on the solar value chain than Rare Earths. Pair that with an Energy Security At AllCosts macro environment, and you have another potential Chinese supply chain
squeeze. - The most significant bear argument is that Solar is a terrible industry and business. Why compete with China, which always wins on price? Why bother looking at PV manufacturers after they flooded the market with inventory only to crush margins? Why not just use *insert Trump Voice* “beautiful, clean, coal.”
- Foundation For The Next Convergence – AI And Blockchain: The foundational ingredients are in place for AI and blockchain to converge. When thinking about innovation, it is always important to start with the supply of talent as a key indicator. From a talent perspective, there is a high degree of overlap. Blockchain, through cryptography, and AI, through statistics, share common roots in mathematics, and every engineer or mathematician has had at least some exposure to both.
- AI And Blockchain Fuel Each Other’s Growth: In practice, we see several ways blockchain can help accelerate AI innovation and, conversely, ways AI can accelerate blockchain adoption. On the blockchain side, the key innovations that could accelerate AI include open systems, resource aggregation, and identity.
- Bitcoin Looks Cheap Relative to AI and the Trend: When I speak to institutional investors, by far the biggest worry on their minds is: “How can I pay these valuations in AI?” Some close their eyes and participate in the private rounds taking place right now. The majority, however, cannot pull the trigger and are stressed about it. They have the nagging feeling that they may be missing something big.
- World’s biggest stock rally ignites speculative mania in Korea: South Korea’s Kospi has surged more than 200% over the past year, cementing its position as the world’s best-performing major equity market by a wide margin. The catalyst is clear: Samsung Electronics and SK Hynix sit at the center of global AI infrastructure, supplying the high-bandwidth memory that hyperscalers cannot build without. Samsung alone posted a 755% increase in profit in Q1.
- Amazon staff use AI tool for unnecessary tasks to inflate usage scores: Amazon recently rolled out an internal AI agent platform called MeshClaw, which allows employees to create agents that can initiate code deployments, triage emails, and interact with Slack on their behalf. The tool was designed to accelerate productivity.
- The returns to frontier intelligence are extremely high: Krishna Rao, Anthropic’s CFO, makes his first public appearance in a conversation that cuts to the economics of the frontier AI race. Anthropic’s thesis is that the returns to frontier intelligence are extremely high and are not slowing down. Each new model generation unlocks a wider TAM that enterprise customers can immediately monetize.
ELEVATOR PITCHES BY FUNDS
Sempra Energy (by Voss Value Fund)
- SRE is a utilities conglomerate that we believe has the opportunity to unlock significant value through simplification. Sempra’s current public structure, dominated by two California utilities that contribute more than half of earnings, masks the rapidly compounding intrinsic value of the fastest growing and largest transmission & distribution (T&D) utility in North America: Oncor Electric in Texas.
- SRE trades at a 17.8x NTM P/E multiple, which is in-line with lower-growth regulated peers.
- Sempra has already entered an agreement to sell a 45% stake in Sempra Infrastructure Partners (SIP) to KKR and CPP Investment Board for $10.0 billion cash.
Localiza Rent a Car SA (by Zeno)
- The largest of these is Localiza, a 7.3% position at quarter-end, the leading car rental business in Brazil with almost 700 thousand cars owned and rented for a total of 170 million days, spread across a continent, which need to be served, cleaned, and repaired at the lowest cost possible.
- The business model is totally different and significantly more attractive than the global rental operators like Avis or Hertz.
- Localiza has over the last fifteen years delivered a median unlevered ROIC of 15% and median ROE of 22%. Between 2012 and 2025, earnings-per-share grew north of 10% per year, while returning on average 38% of earnings back to shareholders.
CDW Corp. (by Argosy Investors)
- Pool Corporation is the dominant wholesale distributor of swimming pool and related outdoor living products, with 35-40% market share and 456 branches nationwide; the next closest competitor has 8-10% share, but was recently acquired by Home Depot as part of the SRS Distribution transaction.
- The company now sells for 15.5x forward earnings, which seems entirely too low for a high quality market leader with strong ROICs and normally mid-single digit organic growth and future consolidation optionality.
- The company is at all-time low valuations and based on the trend could be headed lower short-term.
HIGHLIGHT OF THIS WEEK
MEDIA APPEARANCES BY BSDs
Druckenmiller Leads Wall Street’s Return to Argentine Stocks
- Foreign investors led by the likes of Stanley Druckenmiller and major Wall Street banks are returning to Argentine stocks this year after some had exited ahead of 2025’s volatile midterm election cycle.
- Druckenmiller’s Duquesne Family Office, which bought and sold prior stakes in Argentine stocks, purchased $128 million in state-run energy giant YPF SA, according to first-quarter regulatory filings.
Berkshire, under new CEO Greg Abel, invests $16.8 billion in two days
- Greg Abel appears to be putting his stamp on Berkshire Hathaway (BRKa.N), opens new tab, which committed $16.8 billion over two days to buy homebuilder Taylor Morrison Home Corp (TMHC.N), opens new tab and help Google (GOOGL.O), opens new tab build out AI.
- The investments may begin satisfying investors who have clamored for Abel, who succeeded Warren Buffett as chief executive in January, to do what his predecessor did not: spend more of Berkshire’s cash.
SoftBank to build up AI data centres in France with major investment
- Japan’s SoftBank Group (9984.T), opens new tab will invest €45 billion over the next five years in a push to build up artificial intelligence infrastructure in France, the company announced on Saturday.
- SoftBank said the investment, described as the biggest of its kind so far in Europe, would be made in the northern Hauts-de-France region and deliver 3.1 GW of capacity.
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