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 |
|---|---|---|---|---|---|---|
The Hotchkis & Wiley Mid-Cap Value Fund returned 4.67% in Q2 2026, underperforming the Russell Midcap Value Index which gained 13.40%, as the market rewarded speculative momentum stocks while fundamentally stable businesses lagged. The fund avoided technology hardware and semiconductors that led the index, with the hardware and storage group returning 84% and semiconductors up 51%. The managers express deep concern about valuations exceeding dot-com bubble levels and question the sustainability of earnings growth driven by $850 billion in AI data center capital expenditures against minimal revenue generation. Energy holdings detracted as oil prices retreated following the reopening of the Strait of Hormuz, though the managers maintain conviction in a structurally undersupplied global energy market. Healthcare was the largest positive contributor, with Centene beating earnings by 48% and raising guidance. The managers increased exposure to non-cyclicals including healthcare and consumer staples amid improving relative valuations. They remain focused on quality businesses with strong balance sheets and attractive valuations, believing the mania-driven market will revert when euphoria gives way to rational fundamentals, positioning their portfolio for that inevitable reversion.
The fund maintains a disciplined value approach focused on quality businesses with strong balance sheets, shareholder-friendly management, and attractive valuations that provide a margin of safety, while actively avoiding the speculative momentum-driven segments of the market trading at excessive valuations despite unsustainable earnings growth driven by AI data center capital expenditures.
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, quality, well capitalized, and prudently managed—are well positioned for that reversion. The tone is patient and contrarian, with conviction that their value-oriented approach will be rewarded when market conditions normalize.
As of Jul 28, 2026
The Mid-Cap Value Fund is managed by a three-person team led by Executive Chairman George Davis, who has 37 years at Hotchkis & Wiley and 41 years in the investment industry, along with Stanford MBA credentials and extensive experience in equity research. Stanley Majcher serves as portfolio manager since 1997, specializing in energy companies and coordinating day-to-day portfolio management with expertise in energy and financials sectors, holding CFA and Georgetown University credentials. Hunter Doble joined as portfolio manager in 2019, focusing on banks and financial companies with additional expertise in healthcare, holding CFA designation and degrees from Georgetown University and NYU Stern. The team collectively brings decades of value investing experience with deep sector expertise in financials and energy. The management approach emphasizes bottom-up fundamental research, concentrated high-conviction investing, and long-term value creation. Hotchkis & Wiley Capital Management is an employee-owned firm managing $32 billion in assets with over 45 years of investment management experience since 1980.
The Hotchkis & Wiley Mid-Cap Value Fund employs a fundamental value investing approach that seeks to exploit market inefficiencies created by irrational investor behavior. The fund normally invests at least 80% of its net assets in equity securities of mid-capitalization companies, typically those with market capitalizations similar to the Russell Midcap® Index. The investment process focuses on identifying 50-80 undervalued mid-sized companies with sustainable cash flow, strong balance sheets, and potential for long-term capital appreciation. The fund tends to invest in industries and companies that may be temporarily overlooked due to cyclical or transient factors, seeking to capitalize on market inefficiencies. The team evaluates general and industry-specific Environmental, Social, and Governance (ESG) factors that they believe to be financially material to a company's enterprise value. The strategy employs a concentrated portfolio approach with high conviction investments and maintains a buy-and-hold philosophy evidenced by low turnover rates.
Lead Portfolio Manager
Moderate Conviction Bullish
Market Conviction
The fund demonstrates moderate-high conviction through concentrated positions in named holdings with detailed thesis explanations. Top ten holdings represent meaningful portfolio weights, with Workday at 4.2%, AIG at 3.7%, and energy positions KOS and APA each at 3.5%. The manager provides specific, falsifiable theses for each holding with clear catalysts and valuation frameworks. However, the portfolio holds at least 10+ positions based on the top ten disclosure, suggesting moderate diversification rather than extreme concentration. The language is declarative about their value discipline and willingness to underperform during speculative periods, stating their process will struggle to keep pace but expressing confidence in eventual reversion. The detailed attribution analysis and specific position commentary demonstrate strong conviction in individual holdings, though the overall portfolio structure prevents a score above 0.75.
Growth Outlook
Manager expresses cautious optimism, noting that despite meaningful geopolitical disruptions, equity market reaction has been relatively muted with Russell Midcap down only 5%. They see opportunities in controversy but acknowledge ongoing uncertainties around rates and policy.
Risk Appetite
Portfolio maintains meaningful energy exposure that paid off during crisis, and manager expresses strong conviction in select themes. However, they emphasize appropriate diversification and disciplined approach, suggesting measured rather than aggressive risk-taking.
Capital Deployment
The manager describes increasing exposure to non-cyclicals including healthcare and consumer staples, which indicates some reallocation activity. However, this appears to be rotation rather than net deployment, as they are shifting from one area to another rather than reducing cash to add positions. The letter does not provide specific cash level changes, but the language suggests selective repositioning within existing exposure rather than aggressive deployment of new capital. The emphasis on patience and waiting for market reversion, combined with avoidance of the leading momentum sectors, suggests a cautious stance on net deployment. The score reflects modest rotation activity with a slight defensive tilt.
Forward Guidance
Manager indicates continued focus on finding opportunities in controversial market segments and maintains conviction in current themes. Language suggests selective deployment rather than aggressive capital allocation, with emphasis on patience and discipline.
Language Signal
The letter is dominated by risk-oriented language including mania, speculation, excessive valuations, bubble, unsustainable, and warnings about market excesses. Terms like overstate, overly exuberant, and concerning appear frequently. While there is some bullish language around specific holdings like attractive valuations, strong assets, and well positioned, the overall balance tilts significantly toward cautionary and bearish framing. The manager uses historical parallels to the dot-com bubble and describes current conditions as rare extremes, which are inherently negative signals.
Perceived Risk
Manager acknowledges meaningful risks including geopolitical turmoil, supply shocks, policy uncertainty around healthcare, and AI disruption concerns. However, these are discussed as manageable or temporary rather than systemic threats requiring defensive positioning.
Opportunity Density
The manager describes a challenging environment for finding opportunities within their value discipline, stating their process will struggle to keep pace when markets reward risk and speculation. However, they do identify selective opportunities in non-cyclicals where relative valuations have improved, and maintain conviction in specific holdings like energy and healthcare. The language suggests opportunities exist but require significant selectivity and patience. They favor select quality businesses where the market overstates AI threats, indicating a narrow but identifiable opportunity set. The environment is characterized as requiring discipline rather than being rich with obvious ideas, placing opportunity density in the moderate-low range.
Time Horizon
The manager demonstrates a multi-year investment horizon with emphasis on waiting for market reversion to rational fundamentals rather than near-term catalysts. They describe holding through quarters where their process struggles, suggesting willingness to endure short-term underperformance. Specific holdings like Olin reference a five-plus year supply/demand outlook, and the overall value discipline implies patience for valuations to normalize. However, some positions like Centene and Humana have nearer-term catalysts around margin recovery and repricing cycles within 12-18 months. The fund structure as a mutual fund with quarterly reporting and redemption capability prevents a score above 0.75, but the language and approach clearly indicate a 2-4 year thesis horizon for most holdings.
Top Conviction Themes
Key Catalysts
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