| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.48% | 2.21% | 2.21% |
The Cambiar SMID Fund posted a 2.21% return in Q1 2026, underperforming the Russell 2500 Value Index's 4.77% gain due to company-specific healthcare and industrial drawdowns and lower energy sector allocation. The quarter saw notable style rotation as value stocks provided downside protection while growth stocks struggled amid AI disruption fears and geopolitical tensions from Middle East conflict. The fund made seven new purchases and six liquidations, including swapping Amdocs for ON Semiconductor and closing CF Industries after a 58% gain. Key risks include elevated market valuations, private credit stress, and AI disruption pressures on software companies. However, the fund sees opportunities in HALO companies with hard assets that cannot be easily disrupted. Looking ahead, the team maintains focus on quality companies with pricing power and strong balance sheets while emphasizing diversification as market priorities shift from upside participation to margin of safety in an increasingly uncertain environment.
Focus on quality companies with pricing power, capital discipline, and balance sheet strength while emphasizing broad diversification across sectors, as market priorities shift from growth to margin of safety in an uncertain environment.
The fund expects continued uncertainty from Middle East conflict affecting economic growth projections and company earnings. AI disruption concerns will likely affect a smaller subset of companies. Market priorities are shifting from upside participation to margin of safety mindset, favoring diversification and quality companies with pricing power and balance sheet strength.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 29 2026 | 2026 Q1 | ALGN, BOKF, CF, CLX, HF, LUV, ON, PHR, SAIA, SOLV, WBS | AI, diversification, energy, Geopolitical, Quality, SMID Cap, value |
ON SOLV PHR |
Cambiar SMID Fund returned 2.21% in Q1 2026, lagging the value index due to healthcare headwinds and lower energy exposure. The fund capitalized on volatility with seven new buys including ON Semiconductor, viewing the semiconductor cycle as poised to inflect higher. Focus remains on quality companies with pricing power as markets shift toward margin of safety. |
| Jan 26 2026 | 2025 Q4 | ACVA, ALGN, BOKF, COO, EEFT, FNF, GOOGL, JBHT, LAZ, MAS, NVDA, WFC, WSC | AI, Credit Stress, financials, healthcare, Quality, small caps, value | COO | Cambiar SMID Fund struggled in 2025's speculative environment that favored momentum over quality, but fourth quarter showed encouraging signs as value sectors outperformed growth. With Financials as the largest allocation at 22% and Healthcare overweight, the fund is positioned for potential benefits from steepening yield curves and continued value rotation in 2026. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI disruption fears are pressuring software companies and asset-light businesses. The fund views AI as a threat to certain business models but sees opportunities in HALO companies (high asset, low obsolescence) that cannot be easily disrupted by AI technology. |
Disruption Software HALO |
ValueValue stocks provided downside protection during the quarter while growth stocks struggled. The rotation from asset-light to physical economy stocks reflects investor preference for tangible cash-generating businesses over speculative companies with limited profit prospects. |
Rotation Physical Economy Downside Protection | |
Private CreditPrivate credit is showing signs of struggle with defaults and loan markdowns. The combination of abundant liquidity and willingness to take risks that banks passed on contributed to explosive growth that is now facing challenges, potentially constraining business investment. |
Defaults Credit Availability Liquidity | |
OilOil prices rose from mid-$60s to over $100 due to Middle East conflict, benefiting energy sector operators. However, energy companies are largely price-takers and prices are likely to drop with any sign of de-escalation, limiting the fund's willingness to chase performance. |
Middle East Geopolitical Price Volatility | |
Semiconductor CycleThe fund believes semiconductor demand trends are poised to inflect higher from current levels. ON Semiconductor is trading at trough margins due to extended COVID-driven inventory cycle, with additional catalyst from upcoming datacenter architectural shift increasing power semiconductor content. |
Cycle Timing Inventory Power Semis | |
| 2025 Q4 |
AIAI has been integrated into RGA's research process over three years, serving as force multipliers for human judgment rather than replacements. The firm uses AI tools like NotebookLM, Gems in Gemini, and Claude Code for efficiency and risk analysis. While acknowledging AI's transformative potential, they believe current market narratives swing to unhelpful extremes, creating investment opportunities. |
Artificial Intelligence Machine Learning Automation Technology Innovation |
SoftwareSoftware companies face structural headwinds from AI lowering barriers to entry and increasing customer bargaining power. Many companies have been running with excess headcount and may experience pricing pressure that can be countered with lower costs to serve. The market is pricing in these headwinds as evidenced by significant downward re-rating of major financial data and software providers. |
Software Technology SaaS Enterprise Software Pricing | |
SemiconductorsLattice Semiconductor represents an under-appreciated AI winner with immediate gains and longer-term optionality. The company's focus on efficiency rather than maximal performance positions it favorably for AI servers, particularly in security functions as Root of Trust chips. Their FPGAs are the only Post-Quantum Cryptography secure chips on the market, future-proofing against quantum attacks. |
Semiconductors FPGAs AI Infrastructure Security Chips | |
LogisticsAmazon's logistical prowess represents one of the foremost moats in business today and will be enhanced with AI through better orchestration of logistics assets and buildout of more sophisticated robotics. Amazon is uniquely positioned to dominate the coordination layer across its entire logistics network with AI's help, representing an application layer opportunity built on AI infrastructure. |
Logistics Supply Chain Automation E-commerce Infrastructure |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 29, 2026 | Fund Letters | Cambiar SMID Fund | ON | ON Semiconductor | Semiconductors | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | Cyclical, datacenter, Power management, semiconductors, technology, turnaround, Value | Login |
| Apr 29, 2026 | Fund Letters | Cambiar SMID Fund | SOLV | Solventum | Medical Instruments & Supplies | Health Care Equipment & Supplies | Bull | New York Stock Exchange | 3M, Dental, Free Cash Flow, Health IT, Healthcare Technology, medical equipment, spinoff | Login |
| Apr 29, 2026 | Fund Letters | Cambiar SMID Fund | PHR | Phreesia | Health Information Services | Health Care Technology | Bull | New York Stock Exchange | digital health, EBITDA, healthcare software, Hospital Networks, patient engagement, Pricing power, SaaS | Login |
| Jan 26, 2026 | Fund Letters | Ania A. Aldrich | COO | The Cooper Companies, Inc. | Health Care | Health Care Supplies | Bull | New York Stock Exchange | capacity expansion, Contac tlenses, Medical devices, recurring revenue, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| CLX | Recent additions covered a wide range of industries, from Clorox to Southwest Airlines. |
| LUV | Recent additions covered a wide range of industries, from Clorox to Southwest Airlines. |
| ON | We also made a swap within the Tech sector, selling IT services provider Amdocs in favor of ON Semiconductor. With the recent announcement of a CEO transition and fairly muted upside at current valuations, we sold Amdocs in favor of ON, which we view to offer a more attractive return profile. ON Semi is a company we are very familiar with – having a successful ownership experience in the late 2018-mid 2022 timeframe. ON produces power semiconductors and is guided by what we view to be a best-in-class management team. The company is trading at trough margins due to an extended COVID-driven inventory cycle. Successful ownership in semis is all about timing the cycle, and we believe demand trends are poised to inflect higher from current levels. ON also has an additional catalyst via an upcoming datacenter architectural shift that will represent a material increase in power semi content. If we are correct in our assessment, earnings power for ON is set to move materially higher in the coming years. |
| SOLV | Solventum was spun off from 3M in 2024 and has three business segments: surgical equipment, dental solutions, and health IT systems. As a standalone company, Solventum is doing all the right things - positive organic growth across all units, deleveraging the balance sheet, and generating positive free cashflow. The recent price weakness is due to AI-related fears pressuring the company's HCIT unit, which accounts for -16% of sales. We remain constructive on the company and continue to maintain a position. |
| PHR | AI disruption fears also contributed to the drawdown in Phreesia, which is a software provider with a key niche in the healthcare space. The company's in-patient registration/check-in services and digital engagement platform are well-entrenched in hospital networks and specialty practices. Some of the pain in the stock was in response to a guide-down in advertising revenue, as customers such as vaccine providers and GLP-1 companies have scaled back their spending. With that said, Phreesia maintained their full-year EBITDA guidance, pointing to continued client growth and stronger pricing. With a strong balance sheet and customer base of over 5K providers/100K physicians, we believe that Phreesia offers strong upside potential from current levels. |
| WBS | Our focus on diversification served the Fund well; individual outperformers included regional banks Webster Financial and BOK Financial. |
| BOKF | Our focus on diversification served the Fund well; individual outperformers included regional banks Webster Financial and BOK Financial. |
| CF | Cambiar holding CF Industries is a US-based producer of various ammonia and nitrogen fertilizers; the company benefits from lower feedstock inputs (e.g., natural gas) and higher global average selling prices, resulting in elevated profits/cashflow. Similar to oil prices, we anticipate that fertilizer prices will come down once the Strait reopens; with the stock up over 58% in the quarter, we closed out our position. |
| ALGN | Yet AI cannot be a substitute for necessary hydrocarbons provided by HF Sinclair, replace key assets such as Saia's logistics networks, or provide teeth-straightening technology (e.g., Align Technology). |
| HF | Yet AI cannot be a substitute for necessary hydrocarbons provided by HF Sinclair, replace key assets such as Saia's logistics networks, or provide teeth-straightening technology (e.g., Align Technology). |
| SAIA | Yet AI cannot be a substitute for necessary hydrocarbons provided by HF Sinclair, replace key assets such as Saia's logistics networks, or provide teeth-straightening technology (e.g., Align Technology). |
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