The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
Diranko Capital returned 7.7% net in Q2 2026, recovering Q1 losses but lagging the MSCI World Small Cap's 16.6% return. Since inception in November 2024, the fund has delivered 15.7% annualized after fees versus 12.5% for the small-cap benchmark. Manager David Diranko describes the current market as overheated, citing extreme valuations in space companies, memory chip makers, and large tech firms issuing massive equity. The letter focuses extensively on risk management philosophy, emphasizing that investment success requires taking risk only when expected reward materially outweighs survivable downside. The fund manages risk through three levels: requiring idiosyncratic company-specific drivers at the strategy level, demanding meaningful margin of safety at stock selection, and limiting position sizes to 5-10% at portfolio construction. Diranko views speculation as concentrated in large-cap equities with valuations reflecting extraordinary optimism, while small, overlooked companies offer one of the most attractive opportunity sets available as capital chases the AI narrative. The manager maintains all family capital invested alongside partners.
Diranko Capital runs a concentrated portfolio of 10-15 small-cap holdings selected for idiosyncratic, company-specific return drivers rather than macro or sector exposure, with each investment offering meaningful margin of safety and recovery value if thesis proves wrong.
Manager does not believe incremental upside from higher multiples or slightly stronger long-term growth in large-cap equities justifies the risk of a lost decade should expectations disappoint. Views current universe of small, overlooked, and underappreciated companies as offering one of the most attractive opportunity sets available as capital continues to chase the AI narrative. Tone is cautious on broad market but optimistic on small-cap opportunity set.
As of Jul 6, 2026
David Diranko is the founder and Chief Investment Officer of Diranko Capital, bringing over six years of experience in public equity markets with a dedicated focus on value investing principles. He demonstrates strong alignment of interests by investing his entire liquid net worth alongside investors, emphasizing personal commitment to the investment strategy. His educational background includes an MSc in Mathematics in Data Science from the Technical University of Munich and a BSc in Business Mathematics from LMU Munich, providing a strong quantitative foundation for investment analysis. Prior to founding Diranko Capital, he worked in data science and analytics roles at prominent institutions including IBM and MEAG (Munich RE's asset management arm). David maintains an active research profile, having researched over 1,000 microcap companies in a single year, and describes microcaps as a goldmine for value opportunities. He operates under the philosophy of analyzing companies through the lens of a business owner, performing individual company deep dives to value equity using fundamental analysis principles. David is also active in the media circuit, frequently contributing insights through podcasts, conferences, and a regularly updated blog called Contrarian Cashflows. The firm completed its first full calendar year of operation for the managed account strategy in 2025, marking a significant operational milestone under his leadership.
Diranko Capital's investment approach is grounded in traditional value investing principles inspired by Benjamin Graham and Warren Buffett, with a focus on long-only publicly listed equities. The firm employs a six-pillar strategy: (1) investing exclusively in publicly listed equities for superior risk-adjusted returns and liquidity; (2) maintaining a global scope to diversify and seek attractive valuations worldwide; (3) concentrating on small-cap companies (market cap under €5 billion) where inefficiencies are more prevalent; (4) selecting high-quality businesses to reduce risk and increase potential for long-term returns; (5) acquiring stocks at attractive prices to minimize downside risk and enhance earnings yield; and (6) maintaining a concentrated portfolio of 10-20 companies to maximize returns while managing company-specific risk. The firm focuses exclusively on long-only investments in publicly listed equities, targeting small companies worldwide with robust business models and strong balance sheets, acquired at attractive valuations. Given that high-quality companies are seldom available at bargain prices, they maintain a concentrated portfolio typically consisting of 10 to 20 positions. The investment process narrows a universe of roughly 55,000 companies to a focused, high-conviction portfolio through rigorous fundamental analysis.
Lead Portfolio Manager
Moderate Conviction Bullish
Market Conviction
Manager runs a concentrated portfolio of just 10-15 holdings with position sizes of 5-10%, demonstrating high structural conviction. Explicitly states all family capital is invested alongside partners. However, no individual positions are named or sized in this letter, and the discussion focuses on process and philosophy rather than specific investment theses. The concentrated structure and clear articulation of investment criteria support a high-moderate conviction score, but the absence of named holdings with specific catalysts prevents a score above 0.80.
Growth Outlook
We assign a score of 0.50, which represents a neutral outlook. While the manager discusses broad market headwinds, including the war in the Middle East and quantitative firm pressure, they do not make any directional predictions for the market itself. Instead, they focus on bottom-up stock-picking and the long-term intrinsic value of their holdings.
Risk Appetite
We assign a score of 0.75, showing a strong risk-on posture. The portfolio is almost fully invested in equities across growth, deep value, and special situations, with only a small remaining cash position. The manager is actively seeking out mispriced opportunities and is comfortable taking the other side of short-term panics.
Capital Deployment
No specific information provided about cash level changes or net deployment activity during Q2 2026. Manager discusses maintaining concentrated portfolio and describes attractive opportunity set in small caps, but provides no evidence of actual capital deployment or de-risking during the quarter. Without cash percentage data or explicit statements about adding or trimming positions, the score defaults to neutral.
Forward Guidance
We assign a score of 0.50 to indicate a neutral guidance bias. While the manager has already redeployed proceeds from selling half of Western Investment Company of Canada into a new holding, they do not outline specific upcoming trading actions or macro signals. They enter Q2 with established target allocations across their three investment categories.
Language Signal
Language is mixed with significant bearish framing around market conditions (overheated, speculation, extraordinary optimism, risk of lost decade, permanent capital impairment) balanced against bullish language about small-cap opportunities (most attractive opportunity set, overlooked, underappreciated). Risk-focused language dominates the letter with extensive discussion of drawdowns, permanent loss, and risk management. However, the positive framing of the small-cap opportunity set and confident tone about the strategy prevent a more negative score.
Perceived Risk
We assign a score of 0.65, representing moderate perceived risk. The manager identifies geopolitical conflicts in the Middle East and its pressure on global energy markets as a key source of volatility. They also highlight the operational risk of short-term quantitative selling pressure on U.S. holdings.
Opportunity Density
Manager explicitly states that the universe of small, overlooked, and underappreciated companies offers one of the most attractive opportunity sets available. This is presented as a direct result of capital flowing toward the AI narrative and away from small caps. However, manager also emphasizes selectivity and the need for meaningful margin of safety, suggesting opportunities exist but require careful selection. The strong positive language about the small-cap opportunity set combined with emphasis on selectivity supports a high-moderate score.
Time Horizon
Manager explicitly addresses long-term investing, stating that if you invest with someone running a concentrated small-cap portfolio, you should be a long-term investor. Emphasizes that short-term volatility is a feature, not a bug, and uses decade-long examples in risk management discussion (35% drawdown once every decade, 80% drawdown once every decade). However, no specific multi-year catalysts or permanent capital structure mentioned. The emphasis on long-term thinking and acceptance of short-term volatility supports a moderately high score, but lack of explicit permanent capital or decade-plus horizon prevents a higher score.
Top Conviction Themes
Key Catalysts
Every insight in this database connects to the original source. Read the actual thesis, see the actual concerns, and make your own call.
Buyside Digest has no business relationship, partnership, agency, sponsorship, endorsement, or affiliation with Diranko Capital or any other manager whose content appears on the Service, except where expressly stated. We do not receive Manager Content directly from managers in most cases; content is collected from publicly available sources. Managers have not necessarily reviewed, approved, authorized, or endorsed our display of their content, our editorial commentary, our metadata extraction, or our classifications. Use of a manager’s name is for accurate attribution and identification purposes only, under principles of nominative fair use.
Buyside Digest does not independently verify the regulatory status, registrations, licensing, qualifications, credentials, or professional standing of managers whose content appears on the Service. We do not represent that managers are properly registered with applicable regulatory bodies, that their content complies with applicable securities laws, or that their performance representations are accurate. Inclusion of a manager in our database is based on the publicly available nature of their content, not on our verification of their regulatory status or content compliance. Users are responsible for conducting their own due diligence on any manager.
Performance data, returns, assets under management (“AUM”), and similar figures displayed on this page are sourced from publicly available manager communications (including investor letters), public filings, or other third-party sources. Buyside Digest does not independently verify performance figures, calculate returns, or audit manager-reported data. Such figures: May be selectively reported by the manager; May use non-standard calculation methodologies; May not reflect fees, expenses, taxes, or other costs; May be inconsistent across reporting periods; May be outdated. Past performance is not indicative of future results. Performance figures should not be relied upon for investment decisions without independent verification. Users should request audited performance data directly from the manager and conduct their own due diligence.
