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 |
|---|---|---|---|---|---|---|
Fairlight Global Small & Mid Cap Fund returned 5.2% in Q2 2026 but underperformed its benchmark by 6.3% for the quarter and 18.5% year-to-date. The fund's investment philosophy centers on quality businesses earning outsized returns on capital with characteristics allowing persistence, purchased with valuation discipline. The letter examines academic research showing companies in the top decile of asset growth delivered only 5% annual returns versus 18% for slow growers, highlighting behavioral risks where companies and investors mistake cyclical tailwinds for structural shifts. Key holding Halma exemplifies proper capital allocation, with its photonics business growing 52% in FY2026 driven by hyperscale data center demand. Rather than accelerating expansion in this narrow market, management is directing windfall cash flows into R&D and acquisitions in out-of-favor sectors with reasonable valuations, maintaining strict returns hurdles. Management guides for 30% photonics growth ahead based on order visibility rather than extrapolating hyperscaler capex, explicitly characterizing this as a cyclical tailwind while reaffirming unchanged long-term compounding ambitions for the broader group.
The fund invests in the highest quality businesses with demonstrable track records of earning outsized returns on capital, purchased with valuation discipline, while avoiding rapid asset growers that academic research shows underperform by 8-20% annually.
The fund expects Halma's photonics business to grow 30% in the coming year, well below the 52% delivered in 2026, based on near-term order visibility rather than extrapolation of hyperscaler capex. Management has been explicit that photonics growth differs from the wider group in pace, scale, and longevity, and the long-term compounding ambition for the overall group remains unchanged.
As of Jul 17, 2026
Nicholas Cregan serves as founding partner and portfolio manager with over 20 years of investment experience across domestic, US, and international markets, having previously held portfolio management positions at Evans and Partners and Schroder Investment Management in New York and Sydney. Will Dowd, CFA, is the other founding partner and portfolio manager who initially served as analyst since fund inception, bringing over a decade of investment and data analytics experience from prior roles at Evans and Partners and EY, with qualifications including Master of Finance and CFA designation. The nine-person team is employee-owned with principals investing the majority of their liquid assets in the business and fund to maximize alignment with investors and partners.
The fund employs a benchmark-unaware approach to maximize flexibility in pursuing attractive risk-adjusted investments across global small and mid-cap companies. The investment process is designed to find businesses with demonstrable track records of earning outsized returns on capital with characteristics that allow these returns to persist into the future, available at attractive valuations. The strategy emphasizes deep fundamental research of both quantitative and qualitative aspects of investee companies, targeting 30-40 concentrated holdings with market capitalizations from US$500 million to US$40 billion. The approach employs three investment styles: high-quality growth, stable compounders, and special situations. The fund operates with an ethical mindset, using hard exclusion screens to eliminate harmful industries and avoiding cyclical and interest rate sensitive businesses. ESG factors are integrated through scoring systems that generate cost of capital charges as valuation inputs, with active ownership through company engagement and proxy voting.
Lead Portfolio Manager
Moderate Conviction Bullish
Market Conviction
The fund names five top holdings and provides extensive analysis of one (Halma) with specific business details, growth figures, and management assessment. The letter demonstrates deep research into capital allocation patterns and academic evidence. However, no position sizing is disclosed beyond top 5 status, and the portfolio holds 50+ positions across Halma's subsidiaries plus other names. The detailed single-name analysis and willingness to hold through 18.5% YTD underperformance indicates moderate-high conviction, but the lack of concentration data and absence of other position-specific commentary prevents a higher score.
Growth Outlook
Market outlook remains above average conviction: Despite a challenging 2025 where GenAI panic and style drift drove an 18% relative underperformance, the portfolio's operational fundamentals remain strong, prompting insider buyin...
Risk Appetite
Risk appetite posture is moderate conviction: Despite a challenging 2025 where GenAI panic and style drift drove an 18% relative underperformance, the portfolio's operational fundamentals remain strong, prompting insider buyin...
Capital Deployment
The letter provides no information on cash levels, position additions, or capital deployment activity during the quarter. The only deployment discussion relates to Halma's internal capital allocation (directing photonics cash flows to acquisitions), not the fund's own positioning. With no evidence of the fund adding to positions, raising cash, or changing exposure, and no cash percentage data provided, the score defaults to neutral.
Forward Guidance
Forward guidance signal: Despite a challenging 2025 where GenAI panic and style drift drove an 18% relative underperformance, the portfolio's operational fundamentals remain strong, prompting insider buyin...
Language Signal
The letter uses moderately positive language around quality, compounding, and capital discipline. Terms like outsized returns, demonstrable track record, sustainable approach, and strengthening the core appear multiple times. However, this is balanced by cautionary language around risks of rapid growth, overinvestment, and the need for valuation discipline. The academic research discussion is neutral to negative on fast growers. Net balance leans mildly positive given the emphasis on quality characteristics and Halma passing the test.
Perceived Risk
Perceived risk level is evaluated as moderate conviction. Despite a challenging 2025 where GenAI panic and style drift drove an 18% relative underperformance, the portfolio's operational fundamentals remain strong, prompting insider buyin...
Opportunity Density
The letter does not discuss the broader opportunity set or screening activity. The only opportunity-related content is Halma management finding acquisitions in out-of-favor sectors with reasonable valuations, which implies selective rather than abundant opportunities. The fund's significant underperformance and lack of commentary on new ideas or deployment suggests a challenging environment for finding compelling investments. The absence of any language about screens full of ideas or multiple new positions indicates moderate-low opportunity density.
Time Horizon
The fund explicitly describes its approach as long term in nature in the investment philosophy section. The discussion of Halma focuses on four decades of compounding and unchanged long-term ambitions rather than near-term catalysts. The academic research examines 35 years of data and five-year cumulative spreads. The letter emphasizes sustainable approaches, repeatable strategies, and persistence of returns over time. However, there is no mention of permanent capital structure or decade-plus holding periods, and the fund does discuss Halma's near-term order visibility and one-year growth guidance, indicating some attention to medium-term milestones.
Top Conviction Themes
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