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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
The Invenomic Fund returned -20.48% in Q2 2026 versus +15.28% for the S&P 1500, driven by extreme market bifurcation between AI winners and losers. The Philadelphia Semiconductor Index surged 88% in the quarter, its strongest ever, pushing semiconductor weight to nearly 20% of the S&P 500—double the dotcom peak. The manager views this as a cyclical earnings bolus being mispriced as sustainable growth. Momentum had its second-best quarter in history, fueled by record leverage: margin debt hit $1.5 trillion, hedge fund gross exposure reached the 98th percentile at 320%, and leveraged ETF assets crossed $200 billion. The Buffett Indicator registered an all-time high of 235%, while the S&P 500 dividend yield hit a record low of 1.05%. The fund is positioned long perceived AI losers and short AI winners, expecting a sharp reversal when hyperscalers cut capex. Individual stock volatility is at historic highs relative to index volatility, masking extreme risk. The manager anticipates turbulent rotation toward quality free cash flow generators as leverage unwinds.
The market is experiencing an AI-driven mania comparable to the dotcom bubble, with semiconductors and momentum stocks reaching historic extremes supported by record leverage, while individual stock volatility masks systemic risk beneath a calm index surface.
The manager expects an extremely sharp correction in the momentum factor when the AI euphoria unwinds, exacerbated by record leverage across margin debt, hedge fund positioning, and leveraged ETFs. They anticipate a turbulent rotation away from highly speculative assets towards companies with strong, durable free cash flow. The path forward will remain volatile, but the manager views this volatility as creating opportunity for their long/short investment strategy.
As of Aug 10, 2026
Ali Motamed is the Founder, Managing Partner, and Portfolio Manager at Invenomic Capital Management with over 20 years of financial industry experience. He holds degrees from UCLA and a Harvard MBA, and is a CFA charterholder. Previously, he co-managed the Boston Partners Long/Short Equity Fund (BPLEX/BPLSX) and was awarded Portfolio Manager of the Year in the Alternatives Category by Morningstar in 2014. His early career included positions in global mergers and acquisitions teams at Deutsche Bank and BT Wolfensohn. He founded Invenomic in 2015 and has consistently employed the firm's investment strategy throughout his career. The firm has grown to 18 employees serving five clients with $3.2 billion in assets under management as of March 2025.
Invenomic employs a disciplined, fundamentally-driven research process to build a diversified portfolio of primarily U.S. focused long and short equity investments designed to provide competitive performance in most market environments. The firm leverages quantitative analysis on the front end to source ideas and then applies traditional fundamental analysis. Focus on the US market allows them to mitigate valuation disparities among regional markets and minimize impact from non-core variables such as currency and regulatory environment. They believe financial statements, earnings transcripts, and company filings are the most reliable sources of information, with management meetings used primarily to understand capital deployment. Diversification serves as a paramount risk management tool while providing access to the entire spectrum of market opportunities. The firm aims to generate positive absolute returns through disciplined short selling and long positions focused on companies with strong free cash flow potential at attractive valuations.
Lead Portfolio Manager & CIO
High Conviction Bullish
Market Conviction
The manager demonstrates high conviction through specific, falsifiable claims with clear catalysts and timeframes. They explicitly short semiconductors and AI winners while going long AI losers, with 120 long and 116 short positions representing concentrated thematic bets. The letter contains declarative statements about expected outcomes (hyperscaler capex cuts triggering reversals, momentum unwinding sharply) without hedging language. They cite specific data points (SOX +88%, Buffett Indicator at 235%, margin debt at $1.5 trillion) to support their thesis. The explanation of their positioning and willingness to endure -20.48% quarterly losses while maintaining their stance demonstrates strong conviction, though the 120/116 position count prevents a score above 0.85.
Growth Outlook
Market outlook remains high conviction: Long/short equity fund positioning for AI bubble deflation through quality software longs and overvalued shorts. Manager expects hyperscaler capex cuts and massive tech IPOs to tri...
Risk Appetite
Risk appetite posture is low conviction: Long/short equity fund positioning for AI bubble deflation through quality software longs and overvalued shorts. Manager expects hyperscaler capex cuts and massive tech IPOs to tri...
Capital Deployment
No cash level changes are disclosed in the letter. The portfolio maintained 115.5% long and -93.2% short exposure during June with 120 long and 116 short positions, but there is no indication of net deployment or de-risking from prior periods. The manager describes maintaining their positioning through volatility rather than adding or reducing capital. Without cash percentage data or evidence of net exposure changes, this scores as neutral rotation activity.
Forward Guidance
Forward guidance signal: Long/short equity fund positioning for AI bubble deflation through quality software longs and overvalued shorts. Manager expects hyperscaler capex cuts and massive tech IPOs to tri...
Language Signal
The letter is dominated by bearish and risk-focused language: mania, bubble, extreme complacency, systemic risk, sharp correction, self-reinforcing selloff, euphoria unwinding, disconnected from fundamentals, unsustainable, cyclical peak. The few positive references relate only to the opportunity their strategy will have during the expected downturn. Bullish language is essentially absent except when describing market behavior they view as irrational.
Perceived Risk
Perceived risk level is evaluated as moderate conviction. Long/short equity fund positioning for AI bubble deflation through quality software longs and overvalued shorts. Manager expects hyperscaler capex cuts and massive tech IPOs to tri...
Opportunity Density
The manager characterizes the opportunity set as sparse and distorted by AI mania. They describe a bifurcated market where approximately 49% of the S&P 500 is in AI-related stocks, with extreme valuations making it difficult to find attractive longs. Their positioning reflects this scarcity—they are long perceived AI losers (companies the market has abandoned) rather than finding broad opportunities. The emphasis on patience, waiting for the euphoria to unwind, and the defensive net exposure of 22.3% all indicate a limited opportunity set in current market conditions.
Time Horizon
The manager's time horizon is medium-term and catalyst-dependent. They expect the thesis to play out when hyperscalers cut AI capex spending, which is framed as an identifiable near-to-medium term event rather than a multi-year structural shift. The focus on quarterly momentum dynamics, leverage unwinding, and specific market catalysts (capex cuts triggering reversals) suggests a 1-2 year outlook rather than permanent capital or decade-plus positioning. While they demonstrate patience in holding through -20.48% quarterly losses, the thesis is tied to specific catalysts within a defined timeframe.
Top Conviction Themes
Key Catalysts
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