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 |
|---|---|---|---|---|---|---|
Hotchkis & Wiley's Large Cap Disciplined Value Fund returned 5.65% in Q2 2026, underperforming the Russell 1000 Value Index's 13.87% return. The underperformance was driven almost entirely by the fund's lack of exposure to semiconductors and hardware, which returned 138% and 72% respectively and comprised 13% of the benchmark. The manager views the quarter as a speculative, momentum-driven rally fueled by boundless AI excitement, with valuations reaching bubble-like extremes and investor leverage spiking. While acknowledging AI as a powerful tool, the manager believes markets have overbuilt infrastructure and questions whether AI data center capex growth is sustainable if revenue payoffs disappoint. The portfolio actively avoids perceived AI beneficiaries with excessive valuations while favoring high-quality businesses where AI disruption fears are overstated, particularly enterprise software companies with strong moats and switching costs. The manager has added to defensive segments like healthcare and consumer staples, which offer attractive risk/return prospects. Key holdings include Workday, APA Corp, and health insurers Humana and Elevance. The manager expects market reversion when euphoria gives way to rational fundamentals and believes the portfolio is well positioned for that environment.
The manager believes current AI-driven market leadership represents a speculative mania with unsustainable valuations and questions whether massive data center capital expenditures will generate sufficient returns, while seeing compelling opportunities in high-quality businesses trading at attractive valuations where the market overstates AI disruption risks, particularly in enterprise software with strong switching costs and moats.
The manager expects the mania-driven market to revert when euphoria gives way to rational economic fundamentals and valuation. They believe the businesses they own—attractively valued, high quality, well capitalized, and prudently managed—are well positioned for that reversion. The tone is patient and contrarian, with conviction that current market extremes are unsustainable.
As of Jul 28, 2026
The fund targets institutional and high-net-worth investors with a $250,000 minimum investment requirement. Launched on December 31, 2012, the fund charges a net expense ratio of 0.70% with fee waivers through August 29, 2026. The fund is available only to U.S. residents and territories, distributes dividends annually, and maintains significant flexibility in market cap and geographic allocation. As an International Equity Global Large-Stock Value fund, it typically invests in companies with market capitalizations exceeding $1 billion and focuses on both domestic and international opportunities with at least 40% in non-U.S. equities.
Moderate Conviction Bullish
Market Conviction
The fund demonstrates moderate-to-high conviction through concentrated top holdings (top 10 comprise meaningful portfolio weight with Workday at 4.8%), specific position sizing language, and detailed thesis explanations for individual holdings. The manager provides falsifiable catalysts and clear reasoning for each position. However, the portfolio holds 10+ named positions across multiple sectors, includes some hedging language about market conditions, and presents multiple scenarios (AI disruption vs. overblown fears). The combination of concentrated positions with detailed theses but diversified sector exposure and some uncertainty about macro conditions justifies a score in the upper-moderate range.
Growth Outlook
Market outlook remains low conviction: Hotchkis & Wiley's small cap value fund outperformed in Q1 2026 as geopolitical turmoil drove oil prices up 100%, benefiting their overweight energy position. Small caps outperform...
Risk Appetite
Risk appetite posture is very low conviction: Hotchkis & Wiley's small cap value fund outperformed in Q1 2026 as geopolitical turmoil drove oil prices up 100%, benefiting their overweight energy position. Small caps outperform...
Capital Deployment
The manager describes adding capital to healthcare and consumer staples, indicating selective deployment. However, the overall posture is one of avoiding high-momentum areas that comprise significant benchmark weight (semiconductors at 8%, hardware/storage at 5%). The letter emphasizes what the portfolio does not own more than aggressive new deployment. With selective additions to defensive areas but active avoidance of major benchmark components, this represents modest net caution rather than aggressive deployment or de-risking, warranting a slightly negative score.
Forward Guidance
Forward guidance signal: Hotchkis & Wiley's small cap value fund outperformed in Q1 2026 as geopolitical turmoil drove oil prices up 100%, benefiting their overweight energy position. Small caps outperform...
Language Signal
The letter is dominated by risk-oriented language: speculative rally, bubble-like valuations, mania-driven market, excessive valuations, overly exuberant, leverage spiked, and rare extremes. While the manager does use some positive language around specific holdings (attractive valuations, high quality, well positioned), the overall directional language balance tilts meaningfully toward caution and risk warnings. The comparison to the dot-com bubble and discussion of unsustainable dynamics outweighs the constructive commentary on individual positions.
Perceived Risk
Perceived risk level is evaluated as moderate conviction. Hotchkis & Wiley's small cap value fund outperformed in Q1 2026 as geopolitical turmoil drove oil prices up 100%, benefiting their overweight energy position. Small caps outperform...
Opportunity Density
The manager sees selective opportunities in defined areas, particularly enterprise software, healthcare, and consumer staples where they believe the market has created mispricings. They describe enterprise software as an 'uncommon opportunity' and healthcare/staples as exhibiting 'attractive risk/return prospects.' However, the overall characterization is one of selectivity and patience rather than abundance. The manager emphasizes the difficulty of the environment (speculative rally, narrow leadership) while identifying specific pockets of value, consistent with a selective but not sparse opportunity set.
Time Horizon
The manager demonstrates a multi-year investment horizon with emphasis on waiting for market reversion and holding through short-term volatility. The statement 'quarters like this are rare, but we have been through them before' and expectation that 'history suggests the mania-driven market will revert' indicates willingness to hold positions through near-term underperformance. The discussion of enterprise software switching costs and durable moats suggests 2-5 year thesis timeframes. However, the letter does reference quarterly results and near-term catalysts (Medicare Advantage payment increases, earnings reports), preventing a score in the highest range. The multi-year patience with some quarterly monitoring justifies a score in the upper-moderate range.
Top Conviction Themes
Key Catalysts
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