| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.6% | -8.3% | -8.3% |
Broadleaf's Growth Equity Portfolio declined 8.3% in Q1 2026 versus the S&P 500's 4.3% decline as markets grappled with three key headwinds. War in Iran created binary geopolitical risks affecting commodity markets and the Strait of Hormuz. Private credit market blowups raised systemic concerns, though experts view these as isolated credit cycle events rather than banking system threats. AI fatigue emerged among investors, particularly toward the Magnificent Seven, morphing into a Disruption Virus that decimated software valuations and stressed tech employment. Despite hyperscaler commitment to continued AI investment, investors question return adequacy while bidding up beneficiary sectors across energy, hardware, industrials, and financials. The manager notes the paradox of questioning hyperscaler spending while supporting spending beneficiaries. Given these binary paths and opposing market clues, the portfolio maintains a waiting strategy, lacking conviction to act on daily trade considerations. Historical analysis shows 25% of quarters experience declines, with 70% rebounding the following quarter, supporting patience during uncertain periods.
In an environment of binary risks including Iran war, private credit concerns, and AI fatigue, the manager adopts a patient waiting strategy while maintaining conviction that underlying fundamentals remain strong for technology spending beneficiaries and hyperscalers despite near-term uncertainty.
Manager adopts waiting strategy given binary market paths and lack of conviction. Expects continued rotational dynamics rather than outright cash raising. Believes fundamentals will remain strong for both AI spending beneficiaries and spenders.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 31 2026 | 2026 Q1 | - | AI, Credit Cycle, geopolitics, growth, large cap, private credit, technology | - | Broadleaf declined 8.3% in Q1 2026 amid Iran war, private credit blowups, and AI fatigue morphing into software sector disruption. Manager adopts waiting strategy given binary risks and lack of conviction despite daily trade considerations. Believes fundamentals remain strong for AI spending beneficiaries and hyperscalers long-term. |
| Jan 6 2026 | 2025 Q4 | NVDA, ORCL, PLTR | AI, Concentration, credit, growth, innovation, large cap, technology | - | Broadleaf posted solid 14.5% gains in 2025 despite Q4 weakness from AI bubble fears. The manager remains bullish on artificial intelligence as a generational technology still in early stages, maintaining concentrated growth positioning while acknowledging elevated risks and preparing for potential volatility in an increasingly capex-intensive economy. |
| Oct 6 2025 | 2025 Q3 | CI, COST, FE | AI, Fed policy, growth, inflation, large cap, rates | - | Broadleaf's Growth Equity Portfolio outperformed in Q3 2025 driven by AI and broad market strength. Rising inflation concerns since tariff announcements conflict with mixed employment signals, creating Fed policy uncertainty. The manager favors holding rates steady to preserve policy flexibility while maintaining focus on sustainable growth businesses rather than monetary policy speculation. |
| Jun 30 2025 | 2025 Q2 | PLTR | AI, growth, large cap, Patience, technology, volatility | - | Broadleaf delivered 21.3% in Q2 2025 during the Big Beautiful Bounce. The manager emphasizes AI and data organization themes, highlighting Palantir's ontology leadership. Despite market volatility and geopolitical uncertainty, patience remains the key investing virtue. The concentrated growth strategy focuses on large-cap positions while monitoring Economic, Innovation, and Credit cycles. |
| Mar 31 2025 | 2025 Q1 | - | consumer, earnings, Employment, growth, inflation, tariffs, uncertainty | - | Growth stocks suffered in Q1 2025's momentum unwind, but underlying fundamentals remain solid with strong earnings and stable employment. Policy-induced uncertainty from tariffs has reached crisis-level anxiety, yet the manager views this as temporary self-inflicted drama rather than structural economic weakness, maintaining long-term conviction despite elevated near-term risks. |
| Dec 31 2024 | 2024 Q4 | - | AI, Deregulation, growth, Politics, productivity, rates, tariffs, Valuations | - | Broadleaf delivered 31% returns in 2024 driven by AI innovation, Fed rate cuts, and political stability. The manager remains bullish for 2025, expecting strong earnings growth from AI productivity gains, lower inflation, and deregulation benefits. While watching for market melt-up risks, they believe current high valuations are justified by the bright fundamental outlook ahead. |
| Jul 31 2024 | 2024 Q2 | AMZN, CSCO, MSFT, NVDA | AI, Concentration, growth, large cap, semiconductors, technology | - | Broadleaf delivered strong Q2 performance through concentrated exposure to AI and technology infrastructure plays. The fund draws parallels between today's AI boom and the dot-com era but sees better fundamentals this time. Despite macro headwinds, US tech offers the best growth opportunities in a scarce environment, with companies like Nvidia providing critical AI infrastructure. |
| Jan 18 2024 | 2023 Q4 | MSFT, NVDA | Economy, Fed, innovation, Markets, rates, technology | - | Broadleaf Partners expects 2024 to bring continued economic expansion with potential Fed rate cuts, but believes innovation will drive market returns more than economic factors. AI transformed tech in 2023, and companies now face pricing pressure requiring innovation-driven growth. Political risks from the 2024 election and China's deflationary path pose key concerns. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI fatigue emerged in Q1 2026 as investors grew exhausted with the space, particularly the Magnificent Seven. This morphed into a Disruption Virus decimating software sector valuations and stressing white collar tech employment. Hyperscalers continue aggressive investment despite investor concerns about adequate returns. |
Hyperscalers Software Disruption Technology Investment |
Private CreditHigher profile blowups in loans funded outside traditional banking caused concern from leaders like Jamie Dimon about systemic risks. Experts believe these are isolated events typical of credit cycles rather than systemic issues. Growing redemption requests reflect investor misunderstanding of liquidity value versus non-correlated returns. |
Credit Cycle Banking Liquidity Redemptions Systemic Risk | |
GeothermalWar in Iran emerged as a binary geopolitical risk affecting markets in Q1 2026. Opening the Strait of Hormuz is crucial to avoiding longer-term economic effects, particularly commodity inflation. Trump's willingness to change views and listen to markets provides uncertainty about conflict duration. |
Geopolitics Commodities Oil Inflation Binary Risk | |
| 2025 Q4 |
AIAI remains central to economic growth and portfolio positioning despite bubble concerns. Manager believes AI development is in infant stages requiring long-term investment, comparing it to the internet's transformative potential. Views current volatility as noise in a once-in-generation technology shift. |
Artificial Intelligence Data Centers Technology Innovation Productivity |
Capital MarketsFinancial sector led by banks has started outperforming for the first time in years. Debt markets both public and private are becoming more popular funding sources. Credit cycle contributing more significantly to economic growth as AI spending requires sustained capital investment. |
Banks Credit Debt Markets Financial Sector | |
Infrastructure SpendingMassive AI-related capex is driving economic growth across multiple sectors including industrials and financials. Manager sees this as necessary investment in America's future, contrasting with Wall Street's historical disdain for capital expenditure. Views capex as signal of opportunity from wealth creators like Larry Ellison. |
Capex Infrastructure Industrial Investment | |
| 2025 Q3 |
AIAI continues to be a main driver of portfolio performance and is accelerating globally. The AI boom is contributing to economic resilience and driving increased energy demand for new AI datacenters, which is reflected in elevated energy costs. |
Artificial Intelligence Data Centers Technology Growth Performance |
InflationInflation has been steadily increasing since tariff announcements in April and has not been below the Fed's 2% target since February 2021. Almost all measures of inflation are now running closer to 3% and trending upwards, with companies like Costco, Cigna, and First Energy noting elevated cost environments. |
Price Increases Cost Trends Monetary Policy Healthcare Costs Energy Costs | |
RatesThe Fed faces a challenging dual mandate of balancing employment with managing inflation. The manager debates arguments for and against further rate cuts, ultimately concluding they would adopt a wait-and-see posture to retain valuable dry powder for when the economy truly needs support. |
Federal Reserve Interest Rates Monetary Policy Employment Economic Policy | |
| 2025 Q2 |
AIThe manager discusses AI extensively, focusing on data organization challenges and the importance of human wisdom versus machine learning. Companies are struggling to organize their data for AI implementation, with Palantir highlighted as a leader in this space through their ontology process. The manager questions whether AI can develop human-like judgment and wisdom from experience. |
Data Palantir Ontology Machine Learning |
| 2025 Q1 |
EarningsQ4 2024 earnings were strong with 13% growth for large caps, beating expectations by 7%. 2025 guidance appears solid but conservative due to tariff uncertainty. Management teams are guiding prudently with expectations for a strong back half of the year. |
Guidance Expectations Growth |
InflationConsumer sentiment hit lowest levels since 2022 as consumers expect inflation to pick up again. Management teams indicated re-inflation fears may be justified with prices paid for goods beginning to trickle up. Latest data showed inflation trickling up month over month. |
Consumer Prices Re-inflation | |
Trade PolicyTariff uncertainty is creating significant business environment volatility. Companies are importing goods rapidly before tariff implementation, leading to negative Q1 GDP growth estimates. Economic policy uncertainty is near COVID and Great Recession levels due to tariffs and DOGE. |
Tariffs Uncertainty Policy | |
| 2024 Q4 |
AIInnovation and the prospect of productivity-enhancing AI technologies have driven valuations close to record highs. The manager believes AI could be a rather deflationary force that impacts future interest rate policy. Strong productivity gains driven by AI are expected to help support earnings growth in 2025. |
Productivity Innovation Deflation Technology |
RatesAfter a historically steep interest rate hiking cycle, the Fed finally began to lower interest rates this year. However, longer-term rates have risen as the Fed cuts short-term rates, causing the yield curve to steepen. The manager remains malleable on rate views given AI's potential deflationary impact. |
Fed Yield Curve Monetary Policy Borrowing Costs | |
Trade PolicyThe market has begun parsing winners and losers of proposed tariff policy and de-globalization. While tariffs may stoke inflation, the manager questions if they are more bark than bite, noting Chinese firms are already skirting tariffs through Mexico. Shifts will likely be gradual rather than an immediate unwind of globalism. |
Tariffs Globalization China Mexico Inflation | |
| 2024 Q2 |
AIThe fund views AI as a trend worth investing in, comparing it to the dot-com boom. They see massive opportunities despite risks, noting that AI companies are driving the strongest earnings trends in an environment where growth is increasingly scarce. The fund believes AI will prove monetizable but acknowledges hiccups could create headaches for investors. |
Artificial Intelligence Machine Learning Data Centers GPUs Technology |
SemiconductorsNvidia is highlighted as the star of the AI boom with a stranglehold on the GPU market needed for training AI models. The fund draws parallels to Cisco during the dot-com era, noting that semiconductors represent the critical infrastructure for modern datacenters, similar to pickaxes during the gold rush. |
GPUs Chips Infrastructure Hardware Computing | |
Data CentersData centers are positioned as critical infrastructure for AI development, with companies investing heavily in datacenter buildouts. The fund notes that semiconductors, networking equipment, and energy solutions are essential for datacenter infrastructure, echoing the hardware investment needs of the early internet era. |
Infrastructure Cloud Computing Hardware Technology | |
| 2023 Q4 |
AIArtificial intelligence rescued the entire tech sector in 2023, taking management teams by surprise. ChatGPT captured investor imagination and unleashed massive capital spending campaigns by companies like Microsoft on new data center architectures. The Innovation Cycle will likely have greater impact on returns than the Economic Cycle in 2024, as companies can no longer raise prices and innovation becomes more vital for market success. |
Data Centers Innovation Technology Capital Spending |
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