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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
Arquitos returned 64.8% net in Q2 2026 and 52.9% year-to-date, driven primarily by Liquidia, the fund's largest position over the past year. Liquidia shares rose fivefold from $12.46 to $79.73 as its PAH and PH-ILD drug Yutrepia achieved one of the most successful recent drug launches. The manager expects shares to reach $140 if Liquidia wins its pending patent trial against United Therapeutics outright, with a decision imminent. Abivax, a new 10% position, rebounded from $70 to above $140 after safety data dispelled cancer concerns around its ulcerative colitis drug, and the manager expects a buyout above $200 per share. Finch Therapeutics was sold through bankruptcy for a disappointing low double-digit return. The manager emphasizes that Arquitos' concentrated approach—holding only 3-5 positions for 3-6 years each—has consistently produced a strong slugging percentage where the largest, highest-conviction positions deliver the best returns. The fund has generated 17.4% annualized returns since inception by waiting for perfect pitches and swinging for the fences only when downside is protected and upside is substantial.
Arquitos generates superior returns through extreme concentration in 3-5 high-conviction, deeply undervalued small-cap positions held for multi-year periods, with the largest positions consistently delivering the strongest returns due to superior knowledge, conviction, and valuation discipline.
The manager remains confident in current portfolio holdings and continues to see opportunities in the market for the rest of 2026. He is actively fundraising and seeking to grow the fund. The portfolio is positioned for potential near-term volatility around the Liquidia patent decision but with conviction that outcomes will be favorable, and for an expected Abivax acquisition above current levels.
As of Jul 22, 2026
Steven Kiel founded Arquitos Capital Management in 2009 after a distinguished 21-year military career in the Army Reserves, retiring as Major following deployment in Iraq during Operation Iraqi Freedom. He combines legal training from George Mason School of Law with extensive investment management experience, having previously founded Willow Oak Asset Management. Kiel serves on the board of directors of ENDI Corp and has been featured in major financial publications including The Wall Street Journal, Bloomberg, and Forbes. His approach emphasizes concentrated special situation investing with a focus on small-cap companies undergoing meaningful change.
Arquitos Capital's philosophy is rooted in selectivity, waiting patiently for truly exceptional opportunities and only investing in situations where the potential reward meaningfully outweighs the risk. Their search is unconstrained by sector or geography, going wherever the odds of success are most favorable. The strategy turns disciplined analysis into decisive action, investing in companies at pivotal moments when they are undergoing meaningful change. By pairing patience with conviction, they capitalize on market inefficiencies while protecting against permanent capital loss through a rigorous, risk-aware approach that builds enduring value.
Lead Portfolio Manager
High Conviction Bullish
Market Conviction
This letter demonstrates extreme conviction. The portfolio holds only 3-5 concentrated positions with Liquidia as the largest holding for the past year, sized using long-dated in-the-money call options to amplify exposure. The manager provides specific price targets ($140 for Liquidia clean win, $123 for royalty scenario, above $200 for Abivax buyout) and states he would be 'an aggressive buyer' on weakness. He explicitly defends concentration as risk-reducing when positions represent best-known, highest-conviction opportunities. The 14-year track record of only four big winners held 3-6 years each demonstrates unwavering commitment to this approach. Position sizing is explicit (10% Abivax allocation), catalysts are named and dated (imminent patent decision), and the manager's willingness to hold through volatility is stated directly. This is textbook high conviction, scoring 0.92.
Growth Outlook
The market outlook is scored at 0.50 because the manager does not offer any explicit views, forecasts, or sentiment regarding the direction of the broader macro market, focusing entirely on bottom-up special situations and company-specific litigation outcomes.
Risk Appetite
The risk appetite is scored at 0.75 as the manager remains net long, actively buying additional shares in their favored themes, and expressing a willingness to assume activist roles if the right opportunity arises.
Capital Deployment
The manager opened a new 10% position in Abivax during the quarter at $80 per share, representing moderate deployment. However, no cash level changes are disclosed, and the Finch position was exited through bankruptcy sale, potentially generating proceeds. The letter describes selective adding (Abivax) rather than broad-based deployment, and the manager is actively fundraising to grow the fund rather than deploying existing cash aggressively. The net activity appears to be moderate deployment into one new name while harvesting another, supporting a score of +0.40.
Forward Guidance
Forward guidance is scored at 0.75. The manager notes they are currently buying additional, unnamed positions within their liquidation theme and expects near-term resolutions for both Finch Therapeutics in early June and Liquidia's patent litigation.
Language Signal
The letter is dominated by positive directional language: 'most successful drug launches in recent history,' 'outstanding results,' 'very strong' efficacy, 'extremely well,' shares 'should be worth $140,' buyout 'likely to be above $200,' and 'pleased with our recent results.' The manager describes Liquidia's commercial success as exceeding expectations and Abivax's safety data as vindicating his thesis. Negative language is limited to the Finch disappointment, which is framed as an acceptable outcome given protected downside. The net balance is clearly bullish, scoring +0.70.
Perceived Risk
Perceived risk is scored at 0.30 as there is no mention of macro-level risks, systemic crises, or economic headwinds. Risk discussion is limited to company-specific issues, such as litigation outcomes and lease obligations.
Opportunity Density
The manager states he 'continues to see opportunities in the market' for the rest of 2026 and is actively fundraising to deploy capital, indicating a constructive view of the opportunity set. However, the letter focuses on existing concentrated holdings rather than describing a broad pipeline of new ideas. Only one new position (Abivax) was added during the quarter, and the manager's approach requires waiting for 'perfect pitches' rather than continuous deployment. This suggests selective opportunities in defined areas rather than a rich, broad opportunity set, supporting a score of 0.55.
Time Horizon
The manager explicitly describes a multi-year holding period, stating that the four big winners in the fund's history were each held for 3-6 years. He emphasizes waiting for perfect pitches and holding through volatility, consistent with a patient, long-term approach. However, the letter also focuses heavily on near-term catalysts: the imminent Liquidia patent decision and expected Abivax buyout. The use of call options on Liquidia suggests some catalyst dependency within a multi-year framework. The combination of 3-6 year typical holding periods with near-term catalyst focus supports a score of 0.72, reflecting a medium to long-term horizon with some catalyst awareness.
Top Conviction Themes
Key Catalysts
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