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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
GDS Investments has been actively repositioning the portfolio during Q2 2026 to take advantage of a growing disconnect between price and value across the market. While a small group of AI-related technology companies continued to attract outsized investor attention, many high-quality businesses have fallen out of favor despite little change in their long-term competitive positions. The manager views this as an opportunity to upgrade the portfolio by exchanging good businesses for equally strong or stronger businesses trading at materially more attractive valuations. Early signs suggest the AI bubble is leaking rather than popped, with investors beginning to discriminate between businesses benefiting from current spending trends versus those facing higher costs and tighter margins. The manager has focused on cyclically out-of-favor opportunities like housing, acquiring businesses with durable competitive advantages, strong balance sheets, and capable management teams at prices reflecting 52-week or multi-year lows. The portfolio is positioned to benefit as market leadership broadens and valuation discipline returns as the dominant force driving returns.
The market is beginning to shift from indiscriminate AI enthusiasm toward valuation discipline, creating opportunities to acquire high-quality, cyclically out-of-favor businesses at attractive prices that provide a meaningful margin of safety.
The manager does not know precisely when market leadership will broaden further or when valuation discipline will once again become the dominant force driving returns, but believes early signs suggest the market is beginning to move in that direction. The manager expects the shifting tide away from indiscriminate AI enthusiasm will favor companies that have been neglected, and remains confident that every company in the portfolio is a viable business protected in terms of what they do, who their customers are, and the value proposition they deliver.
As of Jul 28, 2026
Lead Portfolio Manager
Moderate Conviction Bullish
Market Conviction
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