| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Carrington Wealth Management delivered strong absolute performance in Q2 2026 despite a challenging environment dominated by semiconductor speculation and geopolitical volatility. The anticipated short-lived Iran conflict extended much longer than expected, with the Strait of Hormuz becoming a key point of leverage through tolling systems and blockades, driving oil price volatility. Semiconductor stocks experienced parabolic gains with almost every major company doubling in value, driven by retail investors and AI infrastructure demand, creating one of the most concentrated rallies in years. The manager maintained an underweight position in semiconductors due to speculation risks, which initially hurt performance but benefited as capital rotated toward value and other themes late in the quarter. The portfolio remains overweight China, UK, Europe and Asia, with conviction that these markets offer superior long-term risk-reward at lower valuations. Government bond exposure was reduced in favor of cash as recession risks diminished. The manager added to precious metals miners following the sell-off and increased Japanese small cap exposure to capture corporate governance reform opportunities. New Federal Reserve Chair Kevin Warsh faces challenges with inflation at 4.2%, well above target, as markets shift from pricing rate cuts to potential increases. The fragile Iran peace agreement has broken down, but the manager believes Trump is incentivized to reach a compromise before midterm elections. Credit spreads have widened from historically low levels, potentially creating high yield opportunities.
The manager maintains a globally diversified portfolio with structural underweights to US equities and semiconductors, and overweights to UK, Europe, and Asia (particularly China), believing that elevated US valuations and semiconductor speculation driven by retail momentum create risks, while international markets offer more attractive long-term risk-reward opportunities at lower valuations despite near-term geopolitical headwinds.
The manager expects continued volatility around the Iran conflict, with Trump likely incentivized to accept a compromise before midterm elections while presenting it as a victory. The fragile peace agreement has broken down, but a tolling system at lower levels than the proposed 20% charge may ultimately be accepted. The Federal Reserve faces a difficult balancing act with inflation at 4.2% and markets pricing potential rate increases. The manager believes portfolios are well positioned following recent changes, with limited semiconductor exposure and overweight positions in China, UK, Europe and Asia. Capital rotation away from semiconductors toward value and other themes is expected to continue benefiting portfolio performance. Credit spreads may continue widening, creating opportunities in high yield. The tone is cautiously optimistic with a focus on navigating near-term volatility while maintaining conviction in long-term positioning.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 16 2026 | 2026 Q2 | - | Asia, China, geopolitics, momentum, oil, rates, retail trading, semiconductors | - | Carrington delivered strong Q2 performance by avoiding the semiconductor speculation bubble that dominated markets, maintaining structural underweights to US equities and overweights to China, UK, Europe and Asia. The Iran conflict drove oil volatility while retail investors pushed semiconductors to extreme valuations. Capital rotation toward value late in the quarter validated the positioning. The manager added to precious metals miners and Japanese small caps while reducing bonds for cash as inflation persists above target. |
| Oct 20 2025 | 2025 Q3 | ^FTSE, ^GSPC, ^HSI, BTC-USD, GLD | AI, Asia, China, Europe, gold, rates, tariffs, Valuations | - | Carrington delivered strong Q3 returns while maintaining overweight positions in Asia and gold, underweighting expensive U.S. markets. Chinese equities outperformed significantly as valuations remain attractive. U.S. markets face concentration risk with Magnificent 7 at 40% of S&P 500. Fed began cutting rates while trade tensions persist. Portfolio emphasizes Asian equities and precious metals as hedges against macro uncertainty. |
| Apr 4 2025 | 2025 Q1 | ABBV, ACLX, ARGX, AZN, BSX, CDTX, COO, HRTX, INSM, IONS, ISRG, JNJ, LLY, MASI, RDNT, ROIV, SYK, TMO, UNH, WAT, XENE | AI, Biotechnology, GLP1, healthcare, M&A, Medical Devices, Pharmaceuticals | - | Baron Health Care Fund gained 5.39% in Q3 2025, driven by strong biotechnology stock selection led by argenx and Insmed. AI-driven healthcare solutions also contributed positively. Healthcare equipment and pharmaceutical holdings weighed on performance. The manager added 16 new positions, capitalizing on sector underperformance. Long-term outlook remains positive given aging demographics and technological advances in healthcare. |
| Feb 9 2026 | 2024 Q4 | - | Artificial Intelligence, asset allocation, Market Concentration, policy risk, Valuation discipline | - | |
| Oct 9 2024 | 2024 Q3 | - | Defensive Assets, Geopolitical Risk, Gold Exposure, Market Volatility, Regional Allocation | - | |
| Jan 9 2024 | 2023 Q4 | GLXY.TO, LRCX, META, MSFT, MU, SOXX, V, VOO | AI, Fed policy, Global Markets, large cap, Portfolio Management, semiconductors, technology | - | Alpine Capital maintains concentrated exposure to AI infrastructure beneficiaries and semiconductors following successful Q3 rotations. With Fed rate cuts supporting risk assets and AI spending by mega-caps backed by strong cash flows, the manager stays disciplined in patient capital deployment. Despite acknowledging semiconductor sector risks and geopolitical tensions, they position for long-term outperformance through quality selection and volatility acceptance. |
| Apr 12 2023 | 2023 Q1 | - | consumer, earnings, Fed policy, inflation, Markets, Trade Policy | - | Strong Q2 2025 equity performance driven by cooling inflation and robust earnings, with S&P 500 up 10.2% and NASDAQ gaining 16.7%. Fed maintains patient stance on rates while trade policy shifts create selective volatility. Technology sectors outperformed dramatically while consumer confidence concerns and trade uncertainty present ongoing risks to sustained market momentum. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
Semiconductor CycleSemiconductor stocks dominated Q2 with parabolic gains as AI hyperscalers paid substantial premiums to secure critical components. Almost every major semiconductor company doubled in value during the quarter, driven by retail investors and momentum. The manager maintained an underweight position in semiconductors due to speculation and retail-driven momentum risks, which initially hurt performance but benefited as capital rotated away from the sector toward the end of the quarter. |
AI Infrastructure Memory Chips Retail Trading Momentum Valuations |
Geopolitical RiskThe anticipated short-lived war continued much longer than expected, with Iran using the Strait of Hormuz as leverage by implementing a tolling system. The US imposed a blockade, leading to a fragile peace agreement that has since broken down. Markets constantly reassessed the conflict's impact on inflation and economic effects. The manager believes Trump is incentivized to bring the conflict to an end before midterm elections but may ultimately need to accept a compromise involving some form of tolling system. |
Iran Strait of Hormuz Oil Prices Trump Middle East | |
ChinaChina remains an overweight position reflecting long-term conviction despite recent underperformance as capital rotated to South Korea and Taiwan semiconductor companies. China has limited semiconductor export exposure but remains a global leader in EVs and robotics. Chinese equities remain inexpensive relative to US technology companies while offering a more attractive long-term risk-reward opportunity, supporting the overweight position. |
Renewable Energy EVs Robotics Valuations Rare Earths | |
RatesNew Federal Reserve Chair Kevin Warsh faces a significant challenge with inflation at 4.2%, well above the 2% target. Markets shifted from pricing rate cuts to pricing a potential rate increase later this year. Interest rates often prove sticky on the way up, and some of last year's rate cuts may need to be reversed if economic data continues to outperform expectations. |
Federal Reserve Inflation CPI Rate Cuts Kevin Warsh | |
MomentumThe quarter saw one of the most concentrated rallies in many years, driven largely by retail investors who place less emphasis on valuations. Citadel Securities reported retail equity trading volumes more than doubled their 2024 average, with nine of the ten busiest retail trading days occurring within the past two months. The manager includes hedge fund Invenomic with a short momentum strategy to provide protection when market leadership changes sharply, which has been a headwind during the rally but demonstrated its ability to respond quickly with single-day gains exceeding 5% when momentum reversed. |
Retail Trading Concentration Citadel Securities Invenomic Market Leadership | |
OilOil prices fell 15% during the quarter following the peace agreement, finishing below pre-war levels. The manager continues to limit oil exposure within portfolios as it can introduce significant short-term volatility and the outlook remains extremely difficult to assess. The fragile peace agreement has broken down with the US blockade returning alongside a 20% charge on cargo values. |
Energy Strait of Hormuz Volatility FTSE 100 | |
Gold MinersThe significant sell-off in precious metals miners provided an opportunity to increase the position that was trimmed last year. The manager's conviction in the sector remains strong, and the patient approach enabled adding to the holding at what they believe are attractive valuations. |
Precious Metals Valuations Patient Capital | |
Risk AppetiteUS earnings optimism remains exceptionally strong with long-term earnings growth expectations reaching very elevated levels. The risk is that earnings forecasts have become too optimistic, leaving valuations increasingly stretched. Foreign investment into US equities remains at record levels as global investors continue seeking exposure and are reluctant to miss further gains. Credit spreads had tightened to historically low levels before the conflict but have since widened as the risk of defaults increased. |
Valuations Earnings Credit Spreads Foreign Investment US Equities | |
| 2025 Q3 |
AsiaAsia remains a large overweight position with attractive valuations and strong company balance sheets. Chinese equities were standout performers supported by renewed confidence in the domestic economy. The firm maintains constructive views on China given its solid economic position, low inflation, and healthy growth outlook. |
China Valuations Growth Stimulus |
GoldGold remains an overweight position despite some profit-taking in Q2. It continues to climb higher due to rising long-term inflation expectations, falling interest rates, and ongoing geopolitical uncertainty. Gold miners have performed very strongly and still have a strong outlook while providing a hedge against potentially worsening tariff sentiment. |
Inflation Rates Geopolitical Hedge Miners | |
Trade PolicyTariff headlines dominated market sentiment with President Trump escalating trade tensions with China. The full impact of new tariffs remains uncertain due to lagging economic data. Many US companies accelerated imports earlier in the year and continue to draw down inventories purchased before tariffs took effect, distorting key economic indicators. |
Tariffs China Trade Inflation Inventories | |
AIThere is rising concern about the longevity of AI capital expenditure which is yet to deliver consistent profits amid fierce competition. The Magnificent 7 now account for roughly 40% of total S&P 500 market capitalization, raising concentration and systemic risk. China continues to make meaningful progress in AI technology without the excessive capital expenditure seen in the US. |
Capex Profits Competition Concentration Technology | |
RatesFed Chair Powell announced a 25 basis point interest rate cut in September, marking the first reduction since December 2024. The decision was driven by a weakening labor market rather than progress on inflation. The ECB has been cutting consistently since June 2024 from 4.25% to 2.15% to stimulate the Euro area. |
Fed Labor ECB Stimulus Policy | |
| 2025 Q1 |
BiotechnologyStrong stock selection in biotechnology contributed the vast majority of relative gains, with main drivers being argenx SE and Insmed Incorporated. The quarter saw several positive biotechnology clinical data readouts, a strong rebound in biotechnology funding, and an acceleration in M&A activity. |
FcRn inhibitors Autoimmune Pulmonary diseases Clinical trials Drug approvals |
GLP1Eli Lilly's GLP-1 treatments for diabetes and obesity remain a key focus. The manager expects the GLP-1 drug class to become the standard of care for diabetes and obesity, ultimately representing a $150 billion-plus market, with continued uptake driving a near doubling of Lilly's total revenues by 2030. |
Diabetes Obesity Oral therapy Standard of care Market expansion | |
AIAI-driven solutions are creating value across healthcare, with Heartflow's AI-driven coronary artery disease management platform and RadNet's AI capabilities highlighted. The manager sees margin expansion opportunities as AI algorithms improve with scale and data, enabling reduced employee hours in real-time workflows. |
Medical imaging Diagnostic accuracy Workflow automation Scale benefits Margin expansion | |
Biopharma M&AThe third quarter saw an acceleration in M&A activity in biotechnology. The manager references Roivant's proven model with Telavant's sale to Roche for $7.1 billion and expects several data readouts to de-risk multiple blockbuster opportunities, further proving business models and generating upside. |
Deal activity Valuations Pipeline assets Strategic buyers Value realization | |
| 2023 Q4 |
AIOrganizations must prioritize AI investments to avoid obsolescence, with hyperscalers like Amazon, Google, and Microsoft redirecting infrastructure spending toward AI initiatives. AI promises cost reductions and technological breakthroughs while displacing human labor and unlocking novel efficiencies. The current AI spending dynamic is backed by robust cash flows rather than debt, enabling sustained commitment and tremendous agility. |
Data Centers Cloud Semiconductors Technology Infrastructure |
SemiconductorsThe manager executed a rotation from Micron to the iShares Semiconductor ETF and added Lam Research, viewing the semiconductor sector as benefiting from AI infrastructure spending. While the Micron sale proved bittersweet as it continued rallying, the semiconductor ETF still outperformed the benchmark. |
Semi Equipment Memory Technology AI | |
RatesThe Fed executed its first rate cut of the cycle in September to a 4.00%-4.25% range amid cooling inflation and rising unemployment concerns. Two additional 25bps cuts are anticipated this year, with the Fed pivoting focus from inflation to the labor market, creating a supportive environment for risk assets. |
Liquidity Inflation Growth | |
| 2023 Q1 |
InflationBoth Consumer Price Index and Producer Price Index showed meaningful cooling, with CPI declining 0.1% in June 2025 marking the first monthly drop since May 2020. Core CPI rose just 0.1% in June, the smallest increase since August 2021, supporting valuations across sectors. |
CPI PPI Disinflation Core Prices |
Trade PolicyNewly imposed tariffs on select imports, particularly in tech and renewable energy sectors, reshaped investor expectations. Markets interpreted these trade policy shifts as manageable and potentially stimulative to domestic production in the medium term. |
Tariffs Imports Trade Policy Domestic | |
RatesFederal Reserve maintained benchmark interest rate unchanged at 5.25% to 5.50%, with Chair Powell emphasizing the need for greater confidence that inflation is moving sustainably toward 2% before considering rate cuts. The Fed remains data-dependent on future policy moves. |
Fed Interest Powell Monetary Policy |
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