| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 20% | 39.8% | 33.6% |
Laughing Water Capital returned 39.8% net in Q2 2026, bringing year-to-date returns to 33.6% and 10-year annualized returns to 20.0%. The exceptional quarter was driven by three portfolio company acquisitions (Theravance, Avanos, SECURE Waste) and the doubling of the largest position. The manager emphasizes that timing was largely coincidental, but the process of identifying mispriced opportunities in forgotten corners of the market remains sound. The portfolio is currently more concentrated than typical, with a double-digit cash position providing flexibility for future deployment. New position AnaptysBio represents a special situation with 50-80% upside potential over the next 4-6 weeks, as the company faces litigation with GSK over Jemperli royalties that could result in settlement or outright acquisition. Other key positions include Liquidia awaiting a favorable patent ruling, Nextnav awaiting FCC spectrum approval, and Lifecore evaluating strategic alternatives. The manager continues to focus on idiosyncratic healthcare and special situation investments largely removed from the real economy, with distinct catalysts on the horizon to surface value while ignoring macro headlines.
Laughing Water Capital generates exceptional returns by identifying mispriced special situations in forgotten corners of the investment universe, focusing on good businesses led by good people dealing with operational, optical, or structural problems that markets improperly value, and patiently waiting for catalysts to surface value.
Manager has no deep thoughts on what will come next for equity markets and suggests skepticism toward those who claim to know. The biggest determinant of future success will be the performance of individual businesses and behavior of management partners. Portfolio is well positioned with companies largely removed from the real economy and distinct value-surfacing events on the horizon. Best path forward is to ignore scary headlines while focusing on owned businesses and their operators, with confidence that patience will be rewarded over time regardless of bumps along the way.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 14 2026 | 2026 Q2 | ANAB, AVNS, GFL, GSK, LFCR, LQDA, LRN, NN, SES.TO, TBPH, UTHR | Biopharma M&A, catalysts, healthcare, Litigation, royalties, small caps, special situations, value | - | Laughing Water Capital delivered 39.8% net returns in Q2 2026 as three portfolio companies were acquired and the largest position doubled. The concentrated portfolio now holds significant cash following exits, with new position AnaptysBio offering 50-80% upside as GSK litigation approaches trial in July. Manager continues hunting mispriced special situations in healthcare and other forgotten corners, focusing on catalyst-driven opportunities with limited macro exposure. |
| Apr 20 2026 | 2026 Q1 | LFCR, LQDA, LRN, NN, PAR, SES.TO, TBPH, VTY.L | Biotechnology, Concentration, small cap, special situations, value | - | Laughing Water Capital's concentrated small cap portfolio has shifted toward shorter timeline special situations with strong balance sheets. Key holdings include biotech royalty plays and recovery stories trading at attractive valuations. After ten years of large cap dominance, manager sees potential reversal favoring small caps given record valuation spreads and expected earnings outperformance. |
| Jan 13 2026 | 2025 Q4 | LFCR, LQDA, NN, PAR, SES.TO, THRY, UTHR, VTY.L, WCN | Biotechnology, contrarian, defense, Factor Investing, small caps, value |
LFCR LQDA NN SES CN VTY LN |
Laughing Water Capital's value-oriented small cap strategy faced factor headwinds in 2025, returning 3.9% versus 17.9% for S&P 500. Manager maintains conviction in fundamental approach despite market preference for size, growth, and momentum. Key positions in biotech, defense spectrum, and waste management show strong operational progress. Expects eventual factor rotation and fundamental recognition to drive outperformance. |
| Oct 16 2025 | 2025 Q3 | CLAR, DISH, LFCR, NN, PAR, T, THRY, VTY.L | concentrated, fundamentals, Patience, Private Market, small caps, undervalued, value |
CLAR US LFCR US NN US PAR US THRY US VTY LN |
Laughing Water Capital's concentrated value strategy underperformed in Q3 despite thesis-validating developments across portfolio companies. Holdings like Clarus, Lifecore, NextNav, PAR, Thryv, and Vistry all showed fundamental progress but were punished by short-term focused markets. Manager increases personal investment, confident that patient capital will be rewarded as earnings power and sentiment improve. |
| Jul 21 2025 | 2025 Q2 | CDMO, CLAR, CTLP, GFL, HUBS, LFCR, NN, PAR, PLYA, SES.TO, THRY, VTY.L, WCN | Biotech, Buybacks, Canada, Oil Services, small caps, value, Waste management |
CLAR SES CN LFCR NN PAR VTY LN THRY CLAR SES.TO LFCR NN PAR VTY.L |
Laughing Water delivered 13.1% in Q2 despite tariff noise, adding Clarus and SECURE at attractive valuations. The quantitative-dominated market creates opportunities in transitioning businesses that screen poorly but offer fundamental value. Recent buyouts validate the strategy while small cap discount provides future tailwind. Focus remains on aligned management teams executing during uncertainty. |
| Apr 24 2025 | 2025 Q1 | CTLP, HGV, LFCR, NN, PAR, PLYA, THRY, VTY.L, XPOF | Biotechnology, Buybacks, Resilience, small caps, software, Spectrum, tariffs, value |
XPOF CDMO LFCR NN VTY.L PAR |
Laughing Water Capital's -13% Q1 return was driven by NextNav weakness despite positive regulatory progress on spectrum monetization. Manager views Trump tariff uncertainty as largely posturing, maintains double-digit cash position while selectively adding to recession-resilient holdings in biotechnology CDMOs, enterprise software, and wireless spectrum. Portfolio positioned for earnings power growth over intermediate term despite near-term macro noise. |
| Jan 16 2025 | 2024 Q4 | CDMO, CTLP, HUBS, LFCR, NN, PAR, THRY, TTAN, VTY.L, VZ | Biotech, Concentration, small caps, software, Spectrum, technology, value | - | Laughing Water Capital's concentrated small-cap strategy delivered 39.5% returns in 2024, driven by five key positions including spectrum play NextNav and CDMO Lifecore Biomedical. The manager sees rich opportunities ahead in off-the-beaten-path equities, with underperforming holdings executing well and positioned for recognition as temporary issues resolve. Strong alignment with permanent capital structure supports patient value realization. |
| Jul 17 2022 | 2024 Q2 | APG, CDMO, CTLP, ERIC, HALO, HGV, LFCR, LMB, NN, THRY, VTY.L, XPOF | Biotechnology, contrarian, Franchising, momentum, quantitative, small caps, value |
CTLP XPOF |
Laughing Water Capital delivered 11.1% year-to-date returns through contrarian small cap investing during a period when the strategy is deeply out of favor. The manager targets businesses trading at single digit free cash flow multiples with temporary problems, adding Cantaloupe and Xponential Fitness while maintaining conviction in CDMO holdings positioned for earnings inflection points. |
| May 3 2024 | 2024 Q1 | CDMO, CTLT, HALO, LFCR, NN, NVDA, PAR, TACT, THRY | Biotechnology, Capacity, CDMO, long-term, Manufacturing, small caps, value | - | Small cap value fund with concentrated CDMO exposure betting on industry consolidation and capacity utilization. Portfolio companies trading below intrinsic value due to temporary transitions, positioned for earnings growth and multiple expansion. Manager sees opportunity in record small cap discount while large caps become overextended safety trade. |
| Jan 25 2024 | 2023 Q4 | ALC, APG, BVH, CDMO, DGX, ENZ, HGV, LFCR, LH, LMB, NN, RCL, THRY, VNDA, VTY.L, VZ | Buybacks, concentrated, long-term, small caps, value | ANNX | Laughing Water Capital's concentrated small-cap value strategy delivered 11.8% returns in 2023 despite trailing large-cap indices. Manager sees significant opportunity as portfolio companies demonstrated strong fundamental improvements without corresponding stock price appreciation. Holdings like Thryv, HGV, and new position Nextnav offer compelling risk-adjusted returns as short-term headwinds resolve and normalized earnings power emerges. |
| Oct 19 2023 | 2023 Q3 | APLS, CDMO, HGV, LFCR, THRY | Biotechnology, Cloud, Macro, small caps, value, volatility |
CDMO THRY |
Laughing Water Capital's Q3 decline reflects macro-driven market volatility rather than fundamental deterioration in portfolio companies. The manager sees compelling value in small caps trading at Financial Crisis-level multiples, particularly in holdings like Avid Bioservices and Thryv that offer clear paths to earnings power improvement despite near-term uncertainty around timing. |
| Jul 17 2023 | 2023 Q2 | APG, CDMO, CTLT, DGX, ENZ, HGV, LFCR, LH, NVR, TACT, THRY, VTY.L | Biotech, Buybacks, Homebuilders, small caps, software, value | - | Small cap value fund outperforming major indices by focusing on undervalued businesses with solvable operational problems while mega-cap tech dominates markets. Portfolio companies executing buybacks and improving fundamentals despite macro headwinds. Manager sees exceptional opportunity set in small caps left behind by AI mania, positioned for eventual market breadth expansion. |
| Oct 5 2023 | 2023 Q1 | BAX, CDMO, LFCR, SCTL, WST | Biotechnology, CDMO, distressed, M&A, small cap, value | - | Small-cap value manager substantially increased position in distressed CDMO Lifecore Biomedical after 66% decline from loan covenant default. Views this as balance sheet problem, not business problem, with secular biologics tailwinds intact. Expects strategic sale at premium multiple given asset scarcity and Morgan Stanley advisory process, targeting 5x upside potential. |
| Jan 31 2023 | 2022 Q4 | AIM CN, APG, CDMO, HGV, LDE GR, THRY, VTY LN | - | - | |
| Apr 1 2022 | 2022 Q1 | AIM.TO, CSP.L, HMHC, NVR, TACT, THRY | activism, Buybacks, Homebuilders, small caps, software, special situations, value |
AIM.TO CSP.L HMHC THRY TACT |
Laughing Water Capital's Q1 underperformance reflects special situations portfolio lagging market rallies, but manager remains confident in long-term prospects. Despite macro headwinds from inflation, rates, and geopolitical risks, portfolio companies show insider buying and share repurchases. Forced HMHC sale provides cash for new opportunities in attractive small-cap value situations. |
| Apr 1 2021 | 2021 Q1 | GME, ITI, PAR, RMNI | Concentration, small caps, software, Transformation, value |
RMNI PAR ITI |
Laughing Water Capital delivered 25.8% Q1 returns by investing in undervalued transformation stories where COVID accelerated divestitures of weak divisions. The concentrated portfolio targets companies transitioning to recurring revenue software models with strong competitive moats. Despite market excess elsewhere, significant bargains remain in boring corners where patient capital can capitalize on management-driven value creation. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
Biopharma M&AThree portfolio companies were acquired during the quarter (Theravance, Avanos, SECURE Waste). AnaptysBio represents a special situation where GSK may settle litigation or acquire the company outright to retain control of Jemperli and their oncology roadmap. Manager expects settlement or acquisition within weeks, with potential 50-80% upside. |
Royalties Litigation Settlement Oncology PD-1 |
OncologyJemperli (dostarlimab) is a blockbuster PD-1 inhibitor generating significant royalties for AnaptysBio. The drug is expanding into front-line endometrial cancer treatment and multiple combination therapies. GSK views it as capable of far more than $2.7B in sales, with potential to reach $3.7B or higher at peak. |
PD-1 Jemperli Immunotherapy Cancer Blockbuster | |
Specialty PharmaLiquidia's YUTREPIA launch has been fantastic, with the company pursuing additional indications that will greatly increase addressable market and revenue potential. Despite litigation overhang causing shares to trade at 10-12x forward P/E versus normal 20-30x for similar launches, manager expects significant re-rating following judge's ruling. |
PAH Launch Patent Royalty Valuation | |
Wireless InfrastructureNextnav awaits FCC approval for 5G spectrum use. Company has cleaned up balance sheet by calling SPAC warrants and converting debt to equity, which should trigger short covering when quants see the cash-rich balance sheet. FCC approved testing around US Capitol Building, suggesting confidence in technology. Spectrum value continues to rise with satellite direct-to-device communications. |
Spectrum 5G GPS FCC Regulatory | |
ValueManager continues to sift through forgotten corners of the investment universe to find companies characterized by shorter timelines, value underpinned by rock solid balance sheets and near-term cash flows, and limited event path risk. Portfolio is concentrated in idiosyncratic ideas largely removed from the real economy, with distinct events on the horizon to surface value. |
Special Situations Catalyst Mispricing Concentration Event-driven | |
Small CapsPortfolio consists of forgotten, under-followed companies in healthcare, waste services, education technology, and contract manufacturing. Manager seeks good businesses led by good people dealing with operational, optical, or structural problems that lead markets to improperly value the business. Strategy is different by design with no expectation to mirror indexes. |
Inefficiency Patience Mispricing Idiosyncratic Concentration | |
| 2026 Q1 |
BiotechnologyManager has significant exposure to biotech through Theravance Biopharma and Liquidia Corp. Theravance represents a special situation following failed Phase III trial, now essentially a royalty stream for sale. Liquidia continues strong drug launch performance despite ongoing patent litigation. |
Biotech Royalties Patent FDA Drug Launch |
Special SituationsPortfolio increasingly focused on shorter timeline special situations with limited event path risk. Examples include Theravance's strategic review process and SECURE's acquisition by GFL Environmental. Manager emphasizes rock solid balance sheets and near-term cash flows. |
Activism M&A Strategic Review Event Driven | |
Small CapsManager notes small cap stocks have been out of favor during fund's first ten years while large caps dominated. Believes historical relationship may be reversing, with small cap valuations at record spreads to large caps despite expected earnings outperformance. |
Small Cap Valuations Outperformance Spreads | |
Education SoftwareNew position in Stride Inc, the largest K-12 virtual school operator. Company faced software implementation issues causing enrollment problems and 50% stock decline. Manager believes problems are fixable and shares will re-rate as fixes take hold. |
Virtual Schools Software Enrollment Recovery | |
| 2025 Q4 |
AIManager believes market's assessment of AI risk differs from their own, with approximately 60% of underperformance attributed to positions where AI impact concerns drove stock declines. Portfolio companies deemed AI-losers declined 15% despite 10% revenue growth and 15% EPS growth, representing valuation compression rather than fundamental deterioration. |
Artificial Intelligence Disruption Valuation Technology Software |
QualityFund exclusively invests in businesses with superior characteristics including high barriers to entry, sustainable competitive advantages, and durable growth prospects. Manager emphasizes that Earnings Quality factor performance was in 100th percentile, demonstrating the portfolio's high-quality nature despite recent underperformance. |
Quality Investing Competitive Advantages Earnings Quality Sustainable Growth | |
Small CapsStrategy of owning competitively advantaged small and medium-sized businesses remained out of favor for most of the quarter. Fund focuses on businesses that were small-cap at time of purchase and have grown through stock appreciation, with weighted average holding period of 18.6 years. |
Small Cap Growth Long Term Compounding | |
| 2025 Q3 |
ValueManager focuses on businesses trading below private market value with clear catalysts for value realization. Multiple portfolio companies are undergoing strategic reviews or have management incentivized to maximize shareholder value through potential sales. |
Private Market Value Strategic Review Undervalued Value Realization Asset Sales |
BiotechnologyPortfolio includes fill-finish CDMO Lifecore with excess capacity in high-demand industry. FDA prioritizing domestically manufactured drugs and potential tariffs on foreign production create favorable regulatory tailwinds for domestic capacity. |
CDMO Fill-Finish Domestic Manufacturing FDA Priority Operating Leverage | |
Enterprise SoftwareHoldings include PAR Technology for restaurant software and Thryv for small business software. Both companies serve markets transitioning from manual processes to software-driven operations with strong recurring revenue models. |
Restaurant Software Small Business SaaS Digital Transformation Recurring Revenue | |
HomebuildersVistry Group is the largest affordable housing provider in the UK by a factor of 5. New £39B government funding program over ten years creates significant growth opportunity in capital-light partnerships model. |
Affordable Housing UK Housing Government Funding Partnerships Model Housing Shortage | |
DefenseNextNav provides wireless spectrum and alternative GPS capabilities that address critical national security needs. FCC Chairman has highlighted the urgent need for terrestrial GPS backup systems. |
GPS Backup National Security Wireless Spectrum FCC Approval Critical Infrastructure | |
| 2025 Q2 |
Waste ManagementSECURE Waste Infrastructure represents a transformation from cyclical oil services to recurring waste management with 80% of cash flows now recurring versus 60% previously cyclical. The company benefits from regulatory moats, geographic advantages, and stable demand from Western Canadian oil production. Management is aggressively repurchasing shares at attractive valuations. |
Waste Management Oil Services Recurring Revenue Western Canada Share Buybacks |
BuybacksMultiple portfolio companies are executing aggressive share repurchase programs. SECURE repurchased 19% of shares in 2024 and continues aggressive buybacks in 2025. Management teams are properly incentivized to shrink share counts when trading below intrinsic value, creating value for remaining shareholders through capital allocation discipline. |
Share Repurchases Capital Allocation Management Incentives Value Creation Float Reduction | |
ValueThe strategy focuses on identifying good businesses led by properly incentivized people during periods of uncertainty when attractive purchase prices emerge. Recent buyouts of portfolio companies at significant premiums validate the approach of buying undervalued assets that eventually get recognized by public or private markets. |
Undervalued Assets Uncertainty Management Quality Private Market Recognition Intrinsic Value | |
Small CapsSmall cap stocks remain approximately 30% cheaper than their larger peers, creating a persistent headwind that should eventually become a tailwind based on historical patterns. The portfolio benefits from this valuation discount while waiting for mean reversion in relative valuations. |
Small Cap Discount Relative Valuation Mean Reversion Historical Patterns Valuation Gap | |
| 2025 Q1 |
Trade PolicyManager discusses Trump administration's tariff plans and their potential economic impact, noting uncertainty around implementation and suggesting much may be posturing. Believes Trump will likely declare victory on tariffs with minimal actual changes to avoid losing midterm elections. |
Tariffs Trump Policy Uncertainty Negotiation |
BiotechnologyPortfolio includes multiple biotech-related investments including Lifecore Biomedical (fill-finish CDMO) and previously owned Avid Bioservices (acquired by private equity). Manager sees strong demand acceleration in pharmaceutical manufacturing and expects significant operating leverage as capacity utilization improves. |
CDMO Pharmaceuticals Capacity Operating Leverage Demand | |
Enterprise SoftwareHoldings include PAR Technology (restaurant software with 20% organic growth expected) and Thryv (SMB software achieving rule of 40 status). Manager sees strong tailwinds from digital transformation, particularly as baby boomer business owners retire and next generation embraces software solutions. |
SaaS Digital Transformation SMB Restaurant Growth | |
Wireless TelecomNextNav represents largest position focused on next-generation GPS and wireless spectrum. Recent positive regulatory developments with FCC Chairman Carr's support for GPS alternatives and 911 improvements. Company refinanced debt and added strategic investors including Michael Milken's family office. |
GPS Spectrum FCC Regulation Infrastructure | |
| 2024 Q4 |
Wireless TelecomNextNav represents a next-generation GPS and wireless spectrum investment with significant upside potential. The company is awaiting FCC approval for its petition to update 900 MHz spectrum band rules, which would enable terrestrial GPS and 5G spectrum creation. Recent valuation markers suggest the spectrum could be worth approximately $40 per share if approved. |
Spectrum GPS FCC 5G Terrestrial |
CRO & CDMOLifecore Biomedical is positioned as the last remaining small public CDMO focused on injectable drugs. Under new management, the company is targeting $300M annual revenue with tremendous operating leverage on fixed costs. Management internally believes there is an 80% chance of a change of control event by 2028, with comparable transaction multiples suggesting over 100% upside potential. |
Injectable Manufacturing Biomedical Leverage Acquisition | |
Enterprise SoftwarePAR Technology continues its evolution toward being the best-in-class technology partner for enterprise scale restaurants. Following the sale of its Defense business, PAR is now a pure play with expectations for continued 25% growth while operating expenses have remained flat for two years, creating substantial free cash flow potential. |
Restaurant Technology Software Growth Cashflow | |
HomebuildersVistry Group is transitioning from traditional homebuilding to an asset-light Partnerships model. Despite recent accounting issues and credibility damage, shares trade below tangible book value while historically UK homebuilders traded at 1.5x book value. The company expects finite legacy business problems to resolve by 2026. |
UK Partnerships Transition Valuation Recovery | |
Small CapsThe manager focuses on smaller, off-the-beaten-path equities where the opportunity set remains rich. The portfolio typically owns around 15 stocks, with success coming from concentrated positions in businesses dealing with temporary problems that are not readily apparent to the market. |
Concentration Mispriced Temporary Opportunity Undervalued | |
| 2024 Q2 |
ValueManager focuses on contrarian investing in businesses trading at single digit multiples of free cash flow, believing good businesses led by incentivized people will not trade at these levels forever. The strategy targets hidden corners of the market with optical, operational, or structural problems that are likely temporary. |
Contrarian Free Cash Flow Multiples Hidden Value Undervalued |
Small CapsPortfolio concentrated in small cap stocks that are wildly out of favor. Manager notes small caps have not been this undervalued relative to large caps since the dot-com bubble, with the R2000 having its worst first half relative to the SP500 in history. |
R2000 Undervalued Out of Favor Relative Performance Dot-com | |
CRO & CDMOTwo Contract Drug Manufacturing Organizations in portfolio tied to biologic drugs. Avid Bioservices has newly added capacity not yet generating revenue but favorable industry dynamics and competitive advantages. Lifecore focuses on filling vials and syringes with injectable drugs, benefiting from GLP-1 demand explosion. |
Biologics Capacity FDA GLP-1 Biotech | |
FitnessXponential Fitness is a franchisor of boutique fitness concepts including Club Pilates and Pure Barre. The business model benefits from guaranteed future growth as global licenses sold far exceed currently open studios, providing cushion during economic downturns. |
Franchising Boutique Licenses Studios Growth | |
| 2024 Q1 |
CRO & CDMOLarge portion of portfolio invested in Contract Drug Manufacturing Organizations focused on biologics. Both Lifecore and Avid positioned to benefit from industry consolidation as Catalent is acquired by Novo Holdings and Chinese CDMOs face regulatory restrictions. Companies have available capacity during industry shortage and should benefit from tremendous operating leverage as capacity fills. |
Biologics Manufacturing Capacity FDA Biosecure |
BiotechnologyCDMO investments tied to biologic pharmaceutical development where more than half of drugs in development are large molecule. Industry benefits from recession-resistant late-stage business and extremely sticky customer relationships due to FDA review requirements for manufacturer changes. |
Large Molecule Drug Development FDA Approval Sticky Customers | |
Small CapsPortfolio focused on small cap investments trading at attractive valuations while large caps have become the flight to safety trade. Manager notes small caps outperformed in 1970s inflationary environment and believes current spread between large and small caps is at record levels, creating opportunity for pendulum to swing. |
Valuation Multiple Expansion Flight to Safety Record Spreads | |
ValueInvestments in businesses going through transitions that prevent true economics from being reflected in trailing GAAP earnings. Portfolio companies not operating at full power by design, available at attractive prices with expectation of dual forces of earnings growth and multiple expansion over time. |
Intrinsic Value Earnings Power Transition GAAP Earnings | |
| 2023 Q4 |
Small CapsManager focuses on small and very small cap stocks despite recent underperformance. Notes that small caps have significantly underperformed large caps, with micro cap ETF returning only 8% in 2023. Believes this creates opportunity as small caps are only 4% expensive vs 20-year average while large caps are 88% expensive. |
Small Cap Micro Cap Valuation Outperformance |
ValueManager emphasizes buying businesses at attractive valuations relative to normalized future earnings power. Focuses on identifying companies where market has not recognized fundamental improvements due to short-term concerns. Believes current holdings are very cheap and will rapidly make up for lost returns. |
Valuation Normalized Earnings Fundamental Value | |
BuybacksMultiple portfolio companies engaged in aggressive share repurchase programs. Vistry aims to return 1 billion GBP over three years, HGV targets $100M per quarter in buybacks (9% of company annually). Manager views buybacks as key driver of long-term compounding returns. |
Share Repurchases Capital Return Compounding | |
| 2023 Q3 |
BiotechnologyManager discusses Avid Bioservices as a biologic contract drug manufacturer facing near-term headwinds from biotech spending slowdown but positioned to benefit from favorable industry dynamics including patent cliff, outsourcing trends, and supply-demand imbalance. Expects significant cash flow generation as new capacity gets filled over 4-5 years. |
CDMO Biologics Outsourcing Capacity Patent Cliff |
CloudThryv represents the global trend of small and medium businesses moving operations from manual systems to cloud-based software. Manager sees this as inevitable modernization with Thryv having competitive advantages through low customer acquisition costs and superior product offering at attractive pricing. |
SMB Software Modernization SaaS Digital Transformation Referrals | |
Small CapsManager notes small caps are trending toward third consecutive year of underperformance versus large caps, representing the worst three-year stretch since tech bubble. P/E multiples have compressed to Financial Crisis levels, creating attractive opportunities for patient investors. |
Underperformance Valuation Compression Opportunity R2000 | |
| 2023 Q2 |
Small CapsManager believes small cap stocks have been left behind by a market focused on mega-cap tech and AI exposure, creating an attractive opportunity set. The fund does not own any mega-cap tech stocks and has benefited from focusing on individual small businesses with idiosyncratic problems that management teams can solve over 3-5 years. |
Small Cap Value Opportunity |
BuybacksMultiple portfolio companies are executing or planning aggressive share repurchase programs. HGV authorized a new $500M repurchase plan, and Vistry is expected to move toward aggressive share repurchases following a capital allocation review and the addition of a board member from NVR, a company known for combining high returns with share buybacks. |
Share Repurchases Capital Allocation Value Creation | |
CRO & CDMOThe fund owns two contract development and manufacturing organizations (CDMOs) - Avid Bioservices and Lifecore Biomedical. Despite near-term headwinds from reduced early-stage biotech spending, the manager sees long-term value from capacity shortages in the industry and CDMO's track record with late-stage projects that can quickly move to commercial production. |
Contract Manufacturing Biotech Capacity | |
| 2023 Q1 |
CRO & CDMOManager has significant exposure to the CDMO space through both Lifecore Biomedical and Avid Bioservices, viewing the sector as benefiting from massive secular tailwinds including the growth of biologics from 43% of US pharma sales to 55% of drugs in development. The CDMO business model offers high normalized margins, low normalized capex, high switching costs, and predictable long-term cash flows despite quarterly lumpiness. |
Biologics Fill-finish Manufacturing Outsourcing Pharmaceuticals |
BiotechnologyThe manager emphasizes the explosive growth in biologic drugs, noting that 55% of all drugs in development are now biologics compared to just 43% of current US pharmaceutical sales being biologics. This structural shift creates sustained demand for specialized manufacturing capabilities, particularly for injectable biologics and prefilled syringes which are growing faster than the broader injectables market. |
Biologics Drug Development Injectables Pharmaceuticals | |
DistressedManager significantly increased position in Lifecore Biomedical after a 66% single-day decline due to technical default on loan covenants. Views this as a balance sheet problem rather than business problem, with equity recovery likely even in bankruptcy scenarios. The distressed situation creates asymmetric risk-reward with potential 5x upside despite the technical default. |
Bankruptcy Covenant Default Balance Sheet Restructuring | |
Biopharma M&AManager expects strong M&A activity for high-quality CDMO assets, citing recent transactions at premium multiples including potential 20x EBITDA valuations. Notes that Lifecore has hired Morgan Stanley for strategic review and believes the company will attract multiple bidders given the scarcity of specialized fill-finish assets and 3-4 year replacement timeline. |
M&A Strategic Review Valuations CDMO | |
| 2022 Q1 |
Special SituationsManager emphasizes that much of the portfolio is invested in special situations or quasi special situations, which have limited downside but meaningful upside potential tied to individual companies. These investments are expected to perform well over intermediate and long term despite recent declines. |
Distressed Restructuring Activism Turnaround Value |
BuybacksMultiple portfolio companies are actively repurchasing shares, with about a third taking advantage of recent weakness to buy back stock. Countryside Partnerships committed to using proceeds to repurchase shares, potentially retiring 36-50% of float over next 2 years. |
Share Repurchase Capital Return Float Reduction | |
Small CapsManager focuses on smaller companies which come with distinct advantages over longer periods, though currently facing headwinds from headlines. Small cap indexes entered bear market and are down over 12 months despite S&P 500 near highs. |
Small Cap Russell 2000 Undervalued | |
HomebuildersCountryside Partnerships is transitioning from asset-heavy to asset-light model, cloning NVR's successful strategy. Despite near-term pain from kitchen-sinking bad news, the company plans to double earnings power while repurchasing significant float. |
Construction Asset Light UK | |
| 2021 Q1 |
Enterprise SoftwareManager is investing in companies transitioning to Software as a Service models with recurring revenue streams. Company 1 is developing a SaaS business line growing 100% year-over-year with razor/razor blade components. Company 2 is evolving from a legacy business to a recurring revenue software story for small businesses. |
SaaS Recurring Revenue Enterprise Software Software Transition |
Business TransformationThe fund focuses on companies dealing with operational or structural problems, particularly 'good co. / bad co.' situations where COVID has accelerated management plans to divest underperforming divisions. This allows proper market valuation of the remaining quality businesses. |
Restructuring Divestitures Operational Improvement Corporate Transformation | |
ValueDespite pockets of market excess, the manager sees incredible bargains in boring corners of the market. The strategy targets businesses in transition that are misunderstood by quantitative screening tools due to consolidated financials obscuring quality underlying assets. |
Value Investing Mispriced Assets Contrarian Deep Value |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 13, 2026 | Fund Letters | Matthew Sweeney | LFCR | Lifecore Biomedical, Inc. | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | Capacity, CDMO, Injectables, Margins, Utilization | Login |
| Jan 13, 2026 | Fund Letters | Matthew Sweeney | LQDA | Liquidia Corporation | Health Care | Biotechnology | Bull | NASDAQ | Adoption, Approvals, Biotech, litigation, Pah | Login |
| Jan 13, 2026 | Fund Letters | Matthew Sweeney | NN | NextNav Inc. | Communication Services | Wireless Telecommunications | Bull | NASDAQ | Gps, Nationalsecurity, Optionality, Regulation, Spectrum | Login |
| Jan 13, 2026 | Fund Letters | Matthew Sweeney | SES CN | Secure Waste Infrastructure Corp. | Industrials | Environmental Services | Bull | New York Stock Exchange | buybacks, cashflow, energy, mispricing, waste | Login |
| Jan 13, 2026 | Fund Letters | Matthew Sweeney | VTY LN | Vistry Group PLC | Consumer Discretionary | Homebuilding | Bull | New York Stock Exchange | buybacks, homebuilding, Housing, recovery, valuation | Login |
| Oct 16, 2025 | Fund Letters | Matthew Sweeney | CLAR US | Clarus Corporation | Consumer Discretionary | Sporting Goods | Bull | NASDAQ | Insiders, M&A, Margins, retail, Sporting goods, turnaround, Value | Login |
| Oct 16, 2025 | Fund Letters | Matthew Sweeney | LFCR US | Lifecore Biomedical, Inc. | Health Care | Biotechnology & Life Sciences Tools | Bull | NASDAQ | Biotech, CDMO, GLP-1, growth, manufacturing, pharma, Regulation, U.s. | Login |
| Oct 16, 2025 | Fund Letters | Matthew Sweeney | NN US | NextNav, Inc. | Information Technology | Telecommunications | Bull | NASDAQ | 5G, Fcc, Gps, growth, Regulation, Spectrum, Telecom, U.s. | Login |
| Oct 16, 2025 | Fund Letters | Matthew Sweeney | PAR US | PAR Technology Corp. | Information Technology | Application Software | Bull | NYSE | enterprise, growth, Margins, pipeline, Restaurants, SaaS, Software | Login |
| Oct 16, 2025 | Fund Letters | Matthew Sweeney | THRY US | Thryv Holdings, Inc. | Communication Services | Application Software | Bull | NASDAQ | growth, Margins, SaaS, SMB, Software, turnaround, valuation | Login |
| Oct 16, 2025 | Fund Letters | Matthew Sweeney | VTY LN | Vistry Group plc | Consumer Discretionary | Homebuilding | Bull | NYSE | Affordable, construction, growth, Housing, insider buying, Policy, UK, valuation | Login |
| Jul 21, 2025 | Fund Letters | Matthew Sweeney | CLAR | Clarus Corp. | Consumer Discretionary | Leisure Products | Bull | NASDAQ | brands, Options, Outdoor, restructuring, sale | Login |
| Jul 21, 2025 | Fund Letters | Matthew Sweeney | SES CN | SECURE Waste Infrastructure Corp. | Industrials | Environmental & Facilities Services | Bull | Toronto Stock Exchange | buybacks, infrastructure, Margins, rerating, waste | Login |
| Jul 21, 2025 | Fund Letters | Matthew Sweeney | LFCR | Lifecore Biomedical Inc. | Health Care | Pharmaceuticals | Bull | NASDAQ | acquisition, CDMO, Injectables, Reshoring, tariffs | Login |
| Jul 21, 2025 | Fund Letters | Matthew Sweeney | NN | NextNav Inc. | Information Technology | Communications Equipment | Bull | NASDAQ | Gps, Nationalsecurity, Optionality, Regulation, Spectrum | Login |
| Jul 21, 2025 | Fund Letters | Matthew Sweeney | PAR | PAR Technology Corp. | Information Technology | Application Software | Bull | New York Stock Exchange | Operatingleverage, pipeline, POS, Restaurants, SaaS | Login |
| Jul 21, 2025 | Fund Letters | Matthew Sweeney | VTY LN | Vistry Group PLC | Consumer Discretionary | Homebuilding | Bull | New York Stock Exchange | Bookvalue, Grants, Housing, Partnerships, recovery | Login |
| Jul 21, 2025 | Fund Letters | Matthew Sweeney | THRY | Thryv Holdings Inc. | Information Technology | Application Software | Bull | NASDAQ | Optimism, SaaS, SMB, Transition, valuation | Login |
| Jul 16, 2025 | Fund Letters | Laughing Water Capital | CLAR | Clarus Corp. | Consumer Discretionary | Leisure Products | Bull | NASDAQ | Asset Sale, brand value, Chairman Alignment, Consumer products, Outdoor Gear, turnaround, Value | Login |
| Jul 16, 2025 | Fund Letters | Laughing Water Capital | SES.TO | SECURE Waste Infrastructure Corp | Industrials | Environmental & Facilities Services | Bull | TSX | Canada, EBITDA margins, multiple expansion, Oil Services, recurring revenue, Share Buybacks, waste management | Login |
| Jul 16, 2025 | Fund Letters | Laughing Water Capital | LFCR | Lifecore Biomedical Inc. | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | Biosecure Act, Biotech, CDMO, Fill-Finish, M&A Target, Re-shoring, tariffs | Login |
| Jul 16, 2025 | Fund Letters | Laughing Water Capital | NN | NextNav Inc. | Communication Services | Wireless Telecommunication Services | Bull | NASDAQ | 5G, Fcc, Gps, Mobile Networks, national security, regulatory catalyst, Spectrum | Login |
| Jul 16, 2025 | Fund Letters | Laughing Water Capital | PAR | PAR Technology Corp | Information Technology | Technology Hardware, Storage & Peripherals | Bull | NYSE | Burger King, M&A, Multi-product, Pipeline Growth, Restaurant technology, SaaS | Login |
| Jul 16, 2025 | Fund Letters | Laughing Water Capital | VTY.L | Vistry Group PLC | Consumer Discretionary | Homebuilding | Bull | LSE | affordable housing, asset-light, Discount to book, government funding, recovery, UK housing | Login |
| Apr 16, 2025 | Fund Letters | Laughing Water Capital | XPOF | Xponential Fitness | Consumer Discretionary | Leisure Facilities | Bull | NASDAQ | Boutique Fitness, Club Pilates, franchise development, Franchisor, Management Transition, Regulatory Overhang, Sum-of-parts | Login |
| Apr 16, 2025 | Fund Letters | Laughing Water Capital | CDMO | Avid Bioservices | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | Bioprocessing, Capacity utilization, CDMO, NOLs, operating leverage, Pharmaceutical, Private Equity Buyout | Login |
| Apr 16, 2025 | Fund Letters | Laughing Water Capital | LFCR | Lifecore Biomedical Inc | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | Capacity utilization, CDMO, Fill-Finish, operating leverage, sale process, Tariff Beneficiary, turnaround | Login |
| Apr 16, 2025 | Fund Letters | Laughing Water Capital | NN | NextNav Inc | Communication Services | Wireless Telecommunication Services | Bull | NASDAQ | 900 MHz, 911 System, FCC Rulemaking, GPS alternative, national security, regulatory catalyst, Wireless Spectrum | Login |
| Apr 16, 2025 | Fund Letters | Laughing Water Capital | VTY.L | Vistry Group PLC | Consumer Discretionary | Homebuilding | Bull | LSE | affordable housing, asset-light, government investment, insider buying, Partnerships Business, turnaround, UK Homebuilder | Login |
| Apr 16, 2025 | Fund Letters | Laughing Water Capital | PAR | PAR Technology Corp | Information Technology | Application Software | Bull | NYSE | ARR growth, M&A Pipeline, operating leverage, Point of Sale, restaurant software, SaaS, TAM expansion | Login |
| Jul 1, 2024 | Fund Letters | Laughing Water Capital | CTLP | Cantaloupe Inc. | Information Technology | Application Software | Bull | NASDAQ | EBITDA growth, operating leverage, Payments, recurring revenue, Self-Service Retail, Software, Technology Solutions, Value, Vending | Login |
| Jul 1, 2024 | Fund Letters | Laughing Water Capital | XPOF | Xponential Fitness | Consumer Discretionary | Leisure Facilities | Bull | NYSE | Boutique, contrarian, EBITDA multiple, Fitness, franchise, growth, Short squeeze, turnaround, Value | Login |
| Jan 1, 2024 | Fund Letters | Laughing Water Capital | ANNX | Nextnav Inc. | Communication Services | Wireless Telecommunication Services | Bull | NASDAQ | 5G, broadband, Fcc, Gps, infrastructure, SPAC, Spectrum, telecommunications, Value, Wireless | Login |
| Oct 1, 2023 | Fund Letters | Laughing Water Capital | CDMO | Avid Bioservices | Health Care | Life Sciences Tools & Services | Bull | NASDAQ | Biologic Manufacturing, Biosimilars, biotechnology, capacity expansion, CDMO, contract manufacturing, Free Cash Flow, operating leverage, Outsourcing, Patent cliff, pharmaceuticals | Login |
| Oct 1, 2023 | Fund Letters | Laughing Water Capital | THRY | Thryv Inc. | Information Technology | Application Software | Bull | NASDAQ | cloud migration, Customer Acquisition, Digital transformation, operating leverage, recurring revenue, Referral Business, SaaS, small business, SMB software, Yellow Pages | Login |
| Apr 1, 2022 | Fund Letters | Laughing Water Capital | AIM.TO | Aimia Inc | Specialty Chemicals | Diversified Consumer Services | Bull | New York Stock Exchange | asset monetization, Canada, Catalyst-Driven, holding company, Loyalty Programs, share repurchase, Special Situation | Login |
| Apr 1, 2022 | Fund Letters | Laughing Water Capital | CSP.L | Countryside Partnerships | Other | Homebuilding | Bull | New York Stock Exchange | activist, asset-light, Float Reduction, homebuilder, NVR Model, share repurchase, turnaround, UK | Login |
| Apr 1, 2022 | Fund Letters | Laughing Water Capital | HMHC | Houghton Mifflin Harcourt | Other | Education Services | Bear | NASDAQ | Curriculum, governance issues, K-12 Education, Management Conflict, private equity, takeover, tender offer | Login |
| Apr 1, 2022 | Fund Letters | Laughing Water Capital | THRY | Thryv Inc | Software - Application | Application Software | Bull | NASDAQ | Digital transformation, high-margin, Misclassification, Post-Bankruptcy, recurring revenue, SaaS, SMB software, Yellow Pages | Login |
| Apr 1, 2022 | Fund Letters | Laughing Water Capital | TACT | TransAct Technologies | Computer Hardware | Technology Hardware & Equipment | Bull | NASDAQ | activist investors, asset monetization, Gaming Equipment, Pure-Play, recurring revenue, restaurant software, supply chain | Login |
| Apr 1, 2021 | Fund Letters | Laughing Water Capital | RMNI | Rimini Street | Software - Application | Systems Software | Bull | NASDAQ | competitive moat, Enterprise software, Litigation Overhang, Market share dominance, Oracle, recurring revenue, SAP, Third-party maintenance | Login |
| Apr 1, 2021 | Fund Letters | Laughing Water Capital | PAR | PAR Technology | Software - Application | Application Software | Bull | New York Stock Exchange | acquisition strategy, Back office software, Customer loyalty, enterprise customers, Integrated Platform, Point of Sale, Restaurant technology | Login |
| Apr 1, 2021 | Fund Letters | Laughing Water Capital | ITI | Iteris Inc | Other | Electronic Equipment & Instruments | Bull | NASDAQ | Data Collection, Infrastructure Technology, Intelligent transportation, sale process, Smart cities, strategic value, takeover target, Traffic Management | Login |
| TICKER | COMMENTARY |
|---|---|
| ANAB | AnaptysBio is a special situation that I expect will resolve itself very quickly. In brief, following the recently completed taxable spinoff of their developmental drug assets, Anaptys is now an asset light royalty company primarily collecting tolls on the sales of Jemperli, a fast-growing cancer drug that is being commercialized in partnership with GSK. If this were where the story ended, I believe we would have purchased our shares at a reasonable discount to the present value of the future royalty payments. However, AnaptysBio has the potential for lotto ticket upside in the near-immediate future as they have accused GSK of violating the terms of their commercial agreement, and a trial has been set for July 14-17. My read of the situation suggests that GSK is in a very weak position with a lot to lose because if AnaptysBio is successful at trial, they could recover the entirety of Jemperli. In this low probability scenario, ANAB shares could be worth nearly $300, vs our average purchase price of below $60. A much higher probability scenario is that GSK chooses to settle before trial, or perhaps even buy Anaptysbio outright. I expect that these scenarios could result in 50-80+% upside for our investment. |
| TBPH | Theravance Biopharma was introduced in our Q1'26 letter. Following the failure of a Phase III drug trial the company was a special situation tied to a drug-related royalty stream, and the company announced that a strategic review committee was considering all options to create value for shareholders. I believed the most likely outcome would be a sale of the company at a price somewhere between $17 and $25 at some point in the next few months. News of a sale came in near quarter end at the low end of my expected range. The Theravance buyout came at the bottom end of my fair value estimate range. |
| AVNS | Avanos was acquired for a 72% premium. In brief, Avanos was a good co / bad co situation, where the good co. operated with ~20% margins as the leading provider of feeding tubes to hospitals and other medical facilities, and the bad co. struggled with profitability while operating in the pain management space. This bad co. obscured the attractiveness of the good company through consolidated financials, but a new CEO had made it clear that he intended to surface this value, which he of course did. Avanos came at a price that I am more happy with. |
| SES.TO | SECURE Waste Infrastructure was owned for just over a year. SECURE had transitioned from oil services to waste services tied to the Canadian oil industry. This transition combined with some wonky accounting explained why the opportunity existed, and shortly after the accounting was cleaned up the company was snatched up by GFL Environmental, a larger waste player, in a cash and stock deal. Quite frankly I am disappointed by the price and would have preferred to own SECURE for the long term. From my perspective, it seems as if the deal was forced by a private equity fund that owned a large stake in SECURE, and put their liquidity needs in front of the long-term opportunity. |
| LQDA | Liquidia makes YUTREPIA, a drug that launched one year ago to treat Pulmonary Arterial Hypertension (PAH) and Pulmonary Hypertension Interstitial Lung Diseases (PH-ILD). The launch has been nothing short of fantastic, and more recently the company has shared that they plan to pursue additional indications, which will greatly increase the addressable market and revenue potential. However, the company remains mired in litigation with United Therapeutics (UTHR), who has alleged patent infringement. The litigation concluded almost a year ago, but the judge has still not issued his ruling. Several details of the case – as well as the long-delayed ruling – suggest that a worst-case outcome where the drug could be pulled from the market for treatment of PH-ILD is off the table. I believe that at this point a bad outcome would likely be a royalty payment of ~10% of PH-ILD linked sales. This would approximate a 5% decline in total sales, which while unfortunate, would be far from catastrophic. In my view, Liquidia can earn somewhere between $6 and $8 per share next year. Given the pace of the launch, competitive environment, and likely future indications, normally one would think a company like this would trade at 20-30x+ EPS. However, at present shares trade for a forward P/E of 10-12x, likely due to the legal overhang. This suggests that even if a royalty payment is imposed there should be plenty of remaining upside for LQDA shareholders, despite some likely near-term volatility. The timing on the judge's ruling is unknowable, but court watchers believe that the judge had been waiting for a previous case that he oversaw to be ruled on by the Supreme Court. This ruling came down in early June, and appears favorable to Liquidia. I thus expect Judge Andrews to rule on Liquidia any day now. Following the ruling I expect shares to re-rate significantly higher. |
| NN | Nextnav, our terrestrial backup to GPS / spectrum play remains in limbo as we await a Notice of Proposed Rule Making (NPRM) from the Federal Communications Commission (FCC) that will allow Nextnav to use its wireless spectrum for 5G communication. Despite the regulatory delay, the company has made significant progress in cleaning up its balance sheet. Notably, during the quarter the company's SPAC warrants were called and convertible debt was converted to equity. In the near-term events such as these can weigh on share price due to arbitrage opportunities and hedging. However, in the intermediate term when the quants that dominate the markets next see a Nextnav balance sheet they will be looking at a cash rich company rather than a highly levered company. It would not surprise me to see short covering on this change. Moving away from trading dynamics and toward political tea leaves, during the quarter Nextnav CEO Miriam Sorond testified in front of the U.S. House Energy and Commerce Subcommittee on Communications & Technology, alongside representatives of several of the groups that oppose Nextnav's plan. Not surprisingly the opposition warned of interference risks if Nextnav's plan is granted, while Sorond noted that recent real-world testing showed no interference. Following this meeting Nextnav asked the FCC for permission to run tests that will demonstrate that their proposed 5G operations can coexist with existing technologies in the 902-928 MHz band in and around the actual U.S. Capital Building. I do not think the FCC would approve this request if they were not strongly in favor of Nextnav's technology and confident that this test will not result in interference problems. The value of Nextnav's spectrum continues to rise as the idea of satellite direct to device communications continues to take hold, and I continue to believe that patiently waiting for the wheels of government to grind forward is our best path forward. |
| LFCR | Lifecore, our under-utilized fill-finish Contract Drug Manufacturing Organization, continues to win new business at an impressive rate, and the market continues to not care. I continue to believe that when the new business wins translate into revenue the operating leverage will be massive, and Lifecore will generate significant cash. Of note, following the end of the quarter the company issued an 8K noting that holders of Series A Preferred Stock were redeeming their shares, and also that the company is evaluating strategic alternatives. I think that a sale of the company is likely in the not-too-distant future. |
| LRN | Stride, our K-12 virtual education business, continues on its quest to level up their technology stack, following a change last year that led to problems with enrollment and user experience. All signs suggest that they continue to make progress. However, in the negative column, Stride lost a school in Texas that will not be renewing. Historically when this has happened the vast majority of affected students have re-enrolled in another Stride school, limiting the impact. However, the market tends to extrapolate the risk of further loss rather than the likely re-enrollment, and shares suffered on the news. Stride trades at a single digit multiple of cash flow while providing recession resilient services to a student/customer base that continues to grow. Further, the company has a large buyback in place, and I am hopeful that they are being aggressive. I continue to believe that if the company can fix their technology problems they will return to growth and shares will rapidly re-rate higher. |
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