| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.8% | 2.1% | 6.5% |
Pelican Bay Capital Management's Concentrated Value portfolio returned 2.1% net in Q2 2026 versus the Russell 1000 Value Index's 13.8% gain, marking the widest relative underperformance since Q1 2020. The benchmark surge was driven by AI exuberance, with semiconductor and hardware stocks contributing 10.5% to the index return. The portfolio had minimal AI exposure outside of a small Cisco position, which jumped 63.5% and was subsequently trimmed. Despite the relative underperformance, the manager maintains unchanged expectations, emphasizing that the portfolio holds higher-quality companies trading at substantial discounts to intrinsic value with superior financial metrics versus the benchmark. Top contributors included Elevance Health, which recovered from Medicare market weakness, and Royalty Pharma, now the largest holding. The manager added a new position in Devon Energy, increasing total energy exposure to 15%, based on the thesis that energy assets are materially mispriced given Strait of Hormuz supply shocks and expected U.S. natural gas price convergence with international markets as new LNG export capacity comes online and data center electricity demand surges.
Pelican Bay Capital Management invests in high-quality companies with durable competitive advantages, high returns, growing cash flows, and solid balance sheets that trade at steep discounts to intrinsic value, providing above-market return opportunity and capital protection through a wide margin of safety.
The manager maintains unchanged expectations from the beginning of the year despite Q2 underperformance. The portfolio continues to hold high-quality companies with strong cash flows, defensible business models, healthy balance sheets, and substantial discounts to intrinsic value. The manager believes the gap between the portfolio's superior financial metrics and its discount to the benchmark should close over time, providing strong opportunity to deliver alpha for investors.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Aug 12 2026 | 2026 Q2 | ACM, BLDR, CBOE, CSCO, DVN, ELV, EOG, FANG, FIS, GNRC, ODFL, RPRX, SLB, TOL, ULTA, ZTS | AI, Concentration, energy, healthcare, Homebuilders, Quality, value | DVN | Pelican Bay's concentrated value portfolio underperformed in Q2 2026 as AI euphoria drove the benchmark 13.8% higher while the portfolio gained just 2.1%. The manager maintains conviction in high-quality holdings trading at steep discounts to intrinsic value with superior metrics versus the index. New energy positions were added on the thesis that supply shocks and surging data center electricity demand create material mispricing opportunities. |
| Apr 20 2026 | 2026 Q1 | BLDR, ELV, EOG, FANG, FDS, FIS, MU, SLB, ULTA, ZM | Concentration, energy, oil, Quality, software, value | ZM | Pelican Bay delivered strong Q1 outperformance driven by energy sector gains as oil spiked on Middle East tensions. Manager recycled capital from fully valued winners, exiting Micron and adding to FactSet during software weakness. New Zoom position reflects conviction that AI fears are overdone for specialized enterprise software with embedded workflows. |
| Jan 22 2026 | 2025 Q4 | ACM, BF.B, BLDR, CME, CSCO, FDS, GNRC, Gold, GOOG, MU, ODFL, ON, TOL, ZTS | AI, concentrated, healthcare, Homebuilders, Quality, semiconductors, technology, value |
ACM FDS ZTS ONON GOOGL |
Pelican Bay delivered 8.5% quarterly returns driven by AI and commodities exposure, particularly 95% gains in Micron Technology. The manager maintains disciplined value investing, exiting Alphabet above fair value and initiating positions in AECOM, FactSet, and Zoetis. Despite homebuilding weakness from mortgage rate headwinds, they added to positions believing in housing shortage fundamentals and attractive valuations. |
| Oct 20 2025 | 2025 Q3 | CPAY, CVS, ELV, EOG, FANG, FIS, GOOGL, KNSL, MU, ODFL, ON, TOL, ULTA, UNH | AI, energy, gold, healthcare, insurance, technology, Trucking, value |
MU ODFL ELV MU GOOG ODFL ELV |
Pelican Bay's Concentrated Value strategy rebounded strongly in Q3 with 7.8% returns, driven by gold miners and AI-benefiting technology stocks. Strategic moves included replacing Kinsale with freight leader Old Dominion and initiating Elevance Health amid health insurance sector dislocation. The value-focused approach continues targeting quality companies at steep discounts to intrinsic value. |
| Jul 11 2025 | 2025 Q2 | BF.B, BLDR, CSCO, EXPE, GNRC, MU, ON, RPRX, SLB, ULTA, VZ | concentrated, energy, semiconductors, Spirits, technology, Travel, value |
SLB BF/B VZ BF-B |
Pelican Bay's Concentrated Value strategy rebounded 5.89% in Q2 2025, driven by semiconductor recovery and strong tech performance. The manager opportunistically added to energy positions during weakness and initiated Brown-Forman at cyclical lows, viewing the spirits decline as temporary. Portfolio positioned for continued outperformance with disciplined value approach targeting quality companies at steep discounts. |
| Apr 23 2025 | 2025 Q1 | BRK-A, CBOE, CME, CPAY, EXPE, GNRC, Gold, GOOGL, ON, RPRX, SLB, TOLL, ULTA, VZ | Exchanges, gold, Pharmaceuticals, Quality, value, volatility | RPRX | Pelican Bay's value-focused portfolio outperformed during Q1's 19% market correction, benefiting from defensive positioning in high-quality companies. Key contributors included Barrick Gold and exchanges CME/CBOE, while cyclical holdings underperformed. The manager added Royalty Pharma at attractive valuations and increased cash to capitalize on market dislocations, maintaining disciplined focus on quality companies trading below intrinsic value. |
| Jan 22 2025 | 2024 Q4 | CBOE, CPRI, CSCO, EXPE, GNRC, GOOG, KNSL, MU, TPR, ULTA | AI, Concentration, insurance, Quality, semiconductors, technology, value |
MU KNSL |
Pelican Bay's concentrated value strategy faced headwinds in Q4 as markets favored AI stocks, with a costly Capri Holdings merger bet contributing to 5.5% quarterly decline. New positions in Micron and Kinsale Capital target AI memory demand and specialty insurance growth. The disciplined value approach continues seeking quality companies at steep discounts despite challenging market conditions. |
| Oct 23 2024 | 2024 Q3 | BLDR, CPRI, CSCO, CVS, EOG, FANG, GOOGL, MO, SLB, TOL, ULTA | Concentration, energy, Homebuilders, Oil Services, Quality, value |
MO CVS SLB |
Pelican Bay's concentrated value strategy delivered 11.8% in Q3 as homebuilders rebounded on declining rates and value stocks outperformed. The manager actively repositioned the portfolio, trimming energy exposure while adding to technology and initiating oil services exposure through Schlumberger. Strong stock selection and tactical positioning drove outperformance in an improving value environment. |
| Jul 23 2024 | 2024 Q2 | ALB, BLDR, CPAY, CPRI, CVS, EXPE, FANG, FIS, GNW, GOOG, TOLL, TPR, ULTA | Concentration, Homebuilders, Quality, retail, technology, value | ULTA | Concentrated value fund underperformed in Q2 due to earnings disappointments from key holdings, but manager remains confident in portfolio quality. Companies trade at 13.5x forward P/E with superior margins and returns versus benchmark. Added Ulta Beauty as new position while repurchasing Builders FirstSource on weakness. Expects higher-quality companies to eventually command valuation premiums. |
| Apr 25 2024 | 2024 Q1 | BLDR, BRK-B, CBOE, CPRI, EOG, EXPE, FANG, FIS, Gold, GOOG, ON, RSG, TOL, TPR, VZ | Concentration, energy, gold, Homebuilders, Quality, value | Gold | Pelican Bay's concentrated value strategy delivered 7.6% in Q1 despite some earnings disappointments, led by strong homebuilding and energy performance. The manager maintains disciplined value investing, exiting overvalued positions like Republic Service while adding Barrick Gold. With Builder's FirstSource as the largest holding and optimism on oil prices, the portfolio reflects conviction in quality companies trading below intrinsic value. |
| Jan 16 2024 | 2023 Q4 | APAM, BLDR, CPRI, CSCO, EOG, EXPE, GNRC, GOOGL, MO, NTR, ON, PXD, TOL, XOM | concentrated, energy, Fertilizers, Homebuilders, Quality, semiconductors, Travel, value |
6ON GR EOG |
Concentrated value strategy delivered exceptional 28.6% annual returns by owning higher-quality companies at cheaper valuations than the benchmark. Portfolio benefited from falling interest rates driving homebuilding stocks higher and successful restructuring at Expedia. Manager tactically rotated from fertilizer exposure to semiconductor growth story while maintaining disciplined focus on fundamental analysis and attractive valuations with margin of safety. |
| Oct 24 2023 | 2023 Q3 | CPRI, FANG, GNRC, GOOGL, PSX, PXD, TPR, VZ, XOM | buyouts, Concentration, dividends, energy, oil, Quality, value |
CPRI GNRC BVZN SW FANG DIPSX PXD |
Concentrated value strategy delivered strong Q3 outperformance driven by Capri Holdings buyout and energy strength. Portfolio trades at 13.4x forward earnings with superior quality metrics versus 17.6x benchmark multiple. Oil supply-demand imbalances support energy positioning. Quality companies at discount valuations provide margin of safety with multiple expansion opportunity as valuation gaps close over time. |
| Jul 26 2023 | 2023 Q2 | AAPL, AMZN, APAM, BATRA, BLDR, CPRI, EXPE, FLT, GNRC, GOOGL, META, MSFT, NTR, NVDA, PSX, TOL, TSLA | Fertilizers, Homebuilders, Speculation, Travel, Valuations, value | - | Pelican Bay's concentrated value strategy delivered strong Q2 outperformance driven by homebuilders and travel exposure while avoiding speculative mega-cap euphoria. The manager views current market recovery as potentially temporary, comparing it to the eye of a hurricane, and maintains focus on high-quality companies trading at steep discounts to intrinsic value. |
| Apr 12 2023 | 2023 Q1 | BLDR, CBOE, CPRI, CSCO, CVS, EOG, FANG, FIS, GOOG, PSX, RIO, TOL | Banking, energy, healthcare, Homebuilders, technology, value, volatility | - | Pelican Bay's value strategy outperformed its benchmark in Q1 despite market volatility driven by banking panic and speculative growth surge. The manager sees S&P 500 valuations as too optimistic and continues building a concentrated portfolio of high-quality companies trading at attractive discounts, adding positions in CBOE, CVS, Cisco, and Alphabet while maintaining discipline. |
| Jan 20 2023 | 2022 Q4 | CPRI, FIS, GNRC, PSX | - | - | |
| Oct 12 2022 | 2022 Q3 | ATUS, BLDR, EOG, RSG, VZ | - | - | |
| Jul 13 2022 | 2022 Q2 | CPRI, TOL, VZ | - | - | |
| Apr 12 2022 | 2022 Q1 | APAM, ENDP, EOG, NTR, QUAD, TOL, VRNO | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIThe Russell 1000 Value Index surged 13.8% in Q2 2026, with semiconductor and hardware-related stocks contributing 10.5% to the index return as exuberance for the AI trade flourished. The portfolio had minimal exposure outside of a small Cisco position, which jumped 63.5% in sympathy with other AI hardware companies. The manager views this as temporary benchmark distortion driven by AI data center buildout euphoria. |
Semiconductors Data Centers Hardware |
EnergyThe manager increased energy exposure to just under 15% of the portfolio through a new position in Devon Energy, alongside existing holdings in Diamondback and EOG. The thesis centers on materially mispriced energy assets given supply shocks from the Strait of Hormuz closure, and expected convergence of U.S. natural gas prices with international pricing as new LNG export capacity comes online and data center electricity demand surges. |
Natural Gas LNG Oil Exploration & Production | |
Managed CareElevance Health continued to recover from a weak Medicare Insurance market as management successfully repriced plans to account for higher medical costs. The company is exiting unprofitable Medicaid programs, shifting pharmaceutical spending to its in-house PBM, and taking market share from UnitedHealthcare in the Commercial Insurance space. |
Medicare Medicaid PBMs Insurance | |
HomebuildersToll Brothers benefited from exposure to affluent clients who have gained significantly from years of strong stock market performance. Because these buyers largely pay cash for their homes, they are insulated from the headwinds of elevated mortgage rates, making Toll a rare bright spot in the industry today. |
Luxury Mortgage Residential | |
Pet CareZoetis fell sharply after its first-quarter earnings report as legacy dermatology treatments and parasite franchises continue to lose share to lower-priced competition, with pet owners struggling with macroeconomic headwinds trying to reduce veterinary spending. Despite the sell-off, the manager believes animal health spending will increase and Zoetis is well positioned with a strong product pipeline to support high single-digit sales growth for years to come. |
Veterinary Animal Health Biotechnology | |
ValueThe portfolio holds high-quality companies trading at substantial discounts to intrinsic value with superior financial metrics versus the benchmark: 14.6x forward P/E versus 18.9x, 24.1% operating margin versus 13.0%, 13.0% ROIC versus 5.8%, and 1.4x net debt/EBITDA versus 2.2x. The manager believes over time, higher-quality companies should not trade at a discount and that gap should close, providing strong opportunity to deliver alpha. |
Quality Intrinsic Value Margin of Safety Discount | |
| 2026 Q1 |
OilEnergy sector was a primary driver of outperformance with EOG Resources, Schlumberger, and Diamondback Energy as standout performers. Crude oil prices averaged over $72 per barrel and spiked toward $90 in March due to escalating Middle East conflicts that heightened global supply concerns. |
Energy Crude Oil WTI Supply |
AIManager views AI fears around software replacement as overdone, particularly for specialized companies like FactSet. Believes Zoom benefits from AI integration through note-taking and task coordination features. Sees AI-generated software as a low threat to video communications. |
Artificial Intelligence Software Enterprise | |
ValuePortfolio follows disciplined value investment strategy seeking high-quality companies with durable competitive advantages trading at steep discounts to intrinsic value. Recent quarter involved recycling capital from fully valued winners into new opportunities. |
Intrinsic Value Margin of Safety Quality | |
| 2025 Q4 |
TechnologyThe Fund invests at least 80% of net assets in technology companies across multiple sub-industries including IT consulting, internet services, application software, communications equipment, semiconductors, and interactive media. The portfolio focuses on companies with sector-leading cash flows, attractive valuations, and sustainable profitability prospects. |
Software Hardware Semiconductors Internet Communications |
| 2025 Q3 |
Gold MinersGold miners benefited from heightened investor excitement as bullion prices increased 17% in Q3. Barrick Mining jumped 60% and contributed 3.4% to portfolio returns. Despite strong gains, current stock prices still reflect an underlying gold price of $3,000-$3,400 per ounce, well below the current spot price of $4,300 per ounce. |
Gold Mining Barrick Bullion Commodities |
AITechnology stocks benefited from AI demand with Micron gaining 36% on inference and agentic AI applications driving High Bandwidth Memory orders. Alphabet gained 41% as Gemini AI surpassed ChatGPT and Tensor Processing Chips became viable alternatives to Nvidia GPUs in AI data centers. |
Artificial Intelligence Memory Data Centers Semiconductors Cloud | |
TruckingOld Dominion Freight Lines represents the undisputed leader in Less-Than-Truckload freight with 20% operating margins and high returns on invested capital. The company's ability to invest through cycles creates competitive advantages, allowing market share gains when the freight market recovers from the current recession. |
Freight Transportation Logistics Cyclical Infrastructure | |
Managed CareHealth insurance industry faced pressure from aggressive pricing and higher utilization of behavioral health, GLP-1 drugs, and elective surgeries. Elevance Health maintained disciplined pricing and is positioned to benefit from Medicare/Medicaid pricing increases of 20-25% in 2026 and potential market share gains from UnitedHealth's fraud issues. |
Healthcare Insurance Medicare Medicaid Regulation | |
| 2025 Q2 |
Semiconductor CycleTechnology stocks, particularly semiconductors Micron and On Semiconductor, were primary performance drivers with gains of 42% and 29% respectively during the quarter. The manager views this as recovery from previous underperformance. |
Memory Semiconductors Technology Cyclical Recovery |
AlcoholThe manager initiated a position in Brown-Forman, believing the spirits industry decline is cyclical rather than structural. They expect return to long-run growth rates as economy improves and spirits gain market share from beer and wine. |
Spirits Whiskey Tequila Premiumization Cyclical | |
Oil ServicesEnergy-related companies were the weakest performers with Schlumberger falling 18%. The manager increased their position during weakness, believing the company is worth $50-$96 per share versus current $36 trading price. |
Oilfield Services Energy Contrarian Valuation Cyclical | |
TravelThe manager exited Expedia due to concerns about government spending cuts and deteriorating business confidence disproportionately impacting travel. They observed significant declines in real-time analytics for airline tickets and hotel bookings. |
Online Travel Discretionary Economic Sensitivity Consumer Cyclical | |
| 2025 Q1 |
ValueThe portfolio focuses on high-quality companies trading at steep discounts to intrinsic value, seeking wide margins of safety. The manager emphasizes identifying significant differences between market value and intrinsic value as the core investment opportunity. |
Intrinsic Value Discount Quality Margin of Safety |
VolatilityMarket volatility has surged with the VIX hitting 60 and the S&P 500 experiencing daily moves exceeding 2% on seven occasions in April. The portfolio historically outperforms during volatile periods due to its focus on high-quality companies with robust balance sheets. |
VIX Market Stress Outperformance Quality | |
GoldBarrick Gold was one of the top contributors to portfolio returns during the quarter, benefiting from the market correction and flight to quality assets during periods of heightened uncertainty. |
Barrick Gold Safe Haven Market Correction | |
| 2024 Q4 |
AIArtificial intelligence is driving demand for High Bandwidth Memory (HBM), with market projections suggesting HBM demand could surge to over $100 billion by 2028 from $16 billion in 2024. AI agents require specialized memory systems, positioning companies like Micron as technological leaders in this space. |
HBM Memory Data Centers Semiconductors Growth |
SemiconductorsThe memory semiconductor market is becoming more oligopolistic with only three major players capable of producing advanced DRAM, NAND, and HBM chips. High fabrication costs and complexity have limited new entrants and reduced historical cyclicality, creating a more resilient industry with sustained growth potential. |
Memory DRAM NAND Cyclicality Oligopoly | |
P&C InsuranceThe Excess and Surplus insurance market has expanded from $30 billion in 2018 to over $100 billion today, driven by complex insurance needs and newly identified risks. This specialized segment is experiencing double-digit growth with continued expansion expected due to rising catastrophic events. |
E&S Insurance Underwriting Technology Market Share Growth | |
ValueThe portfolio follows a concentrated value strategy seeking high-quality companies with durable competitive advantages trading at steep discounts to intrinsic value. This approach creates a wide margin of safety and focuses on companies with strong balance sheets and shareholder-focused management. |
Intrinsic Value Margin of Safety Quality Concentration Discount | |
| 2024 Q3 |
HomebuildersHome builders rebounded significantly as interest rates declined, offsetting weak first-half performance. Companies like Builders FirstSource and Toll Brothers contributed 3.8% to portfolio gains as two of the largest holdings. |
Interest Rates Housing Construction Rebound |
Oil ServicesInitiated position in Schlumberger as the leading oil services provider positioned to benefit from increasing upstream E&P spending by major oil companies focusing on deepwater and conventional projects after a decade of underinvestment. |
Upstream Deepwater Conventional Underinvestment Consolidation | |
EnergyOil-related holdings declined with falling oil prices. Reduced positions in US shale producers Diamondback Energy and EOG Resources. Sees shift from US shale to conventional oil projects benefiting oil services. |
Shale Oil Prices Conventional Production | |
ValueValue stocks surged with Russell 1000 Value Index gaining 9.4% as market breadth improved and high-quality companies that underperformed year-to-date rebounded. Portfolio seeks steep discounts to intrinsic value estimates. |
Market Breadth Quality Intrinsic Value Discount | |
| 2024 Q2 |
ValueThe fund employs a concentrated value strategy seeking high-quality companies trading at steep discounts to intrinsic value. Portfolio companies have higher operating margins and returns on invested capital than the index while trading at 13.5x forward P/E versus 16.3x for Russell 1000 Value. The manager believes these higher-quality companies should trade at a premium to the market over time. |
Intrinsic Value Quality Discount Margins Returns |
BeautyInitiated new position in Ulta Beauty, the leading specialty cosmetics retailer with $11 billion in sales and 10% US market share. The company benefits from industry tailwinds and share gains from department stores and pharmacies. Despite near-term pressure from Sephora competition, Ulta should deliver 5-7% revenue growth and earnings growth above 10% annually. |
Cosmetics Specialty Retail Market Share Growth | |
HomebuildersHomebuilding-related holdings delivered strong returns over several quarters before giving back some outperformance in Q2. The manager welcomed weakness in Builders FirstSource, repurchasing shares sold at $187 for $141 in June. Believes shares are worth $130-$200 range. |
Construction Building Materials Cyclical Valuation | |
| 2024 Q1 |
HomebuildersHomebuilders have become less financially leveraged and cyclical, mitigating past concerns about rising interest rates. The manager believes investors are recognizing this shift and starting to value homebuilders based on price-to-earnings ratios rather than historical price-to-book metrics. Recent relative strength of homebuilders has lots of runway left. |
Construction Building Materials Real Estate Interest Rates Valuation |
OilThe manager remains very optimistic about oil prices, with demand projected to exceed supply throughout summer months. Global oil inventories are near historic lows, raising the risk of further drawdowns that could push prices even higher. This potential price increase would benefit energy investments. |
Energy Commodities Supply Demand Inventories Pricing | |
GoldBarrick Gold was initiated as a new position, representing the world's largest gold miner with diversified global operations. The company benefits from strong management, organic reserve replacement, and a development pipeline to grow production while lowering costs. Gold prices pushing through all-time highs support the investment thesis. |
Precious Metals Mining Production Reserves Commodities | |
ValueThe portfolio utilizes a value investment strategy seeking high quality companies with durable competitive advantages trading at steep discounts to intrinsic value. This discipline creates a wide margin of safety and provides opportunity to generate above market returns while protecting capital. |
Intrinsic Value Margin of Safety Quality Competitive Advantages Discount | |
| 2023 Q4 |
HomebuildersHomebuilding-related stocks were top performers in Q4 with Toll Brothers up 39% and Builders FirstSource rising 32% as interest rates dropped from 5.0% to 3.8%. The manager made tactical position sizing adjustments in BLDR, trimming at $143 in summer and adding back at $117 in October before shares rebounded to $170. |
Homebuilders Interest Rates Housing Construction Building Materials |
SemiconductorsInitiated new position in On Semiconductor, a specialty semiconductor manufacturer with leading positions in power management and image sensing chips. The company benefits from strong tailwinds in electric vehicles, EV chargers, and solar applications with expected 25-30% CAGR growth through the decade. |
Semiconductors Electric Vehicles Power Management Silicon Carbide Image Sensors | |
Energy TransitionOn Semiconductor's primary product is power-optimizing semiconductors built on Silicon Carbide used in electric vehicles, EV chargers, solar inverters, and battery storage. The company has long-term contracts worth $11 billion with major auto companies including Tesla, VW, Hyundai, and BMW. |
Energy Transition Electric Vehicles Solar Battery Storage Silicon Carbide | |
OilSold Pioneer Resources following ExxonMobil buyout and rolled proceeds into EOG Resources to maintain energy exposure. EOG is the largest shale producer in the US with 970,000 barrels daily production and industry-leading drilling costs, generating 24% return on invested capital despite $77 average oil price. |
Oil Shale Energy Exploration & Production Free Cash Flow | |
FertilizersExited Nutrien position after farmers deferred potash fertilizer applications for a second consecutive year, defying conventional wisdom that farmers couldn't skip more than one year without meaningful crop yield impacts. This new information challenged the manager's understanding of potash market fundamentals. |
Fertilizers Potash Agriculture Crop Yields Commodity Cycles | |
TravelExpedia was the best performer in Q4 with 47% return after posting strong quarterly results and raising guidance. The company benefits from business restructuring that consolidated online travel websites onto a single technology platform, resulting in cost savings and higher operating margins. |
Travel Online Travel Technology Platform Cost Savings Operating Margins | |
| 2023 Q3 |
OilOil prices rose 32% in Q3 as global demand runs 1-2 million barrels per day ahead of supply, reaching record highs of 103 million barrels per day in July. Years of underinvestment outside US shale and prolonged OPEC production cuts have created supply constraints. The manager believes oil prices could continue rising given multi-year timeframes needed for new supplies and environmental policies constraining investment. |
Oil Prices Supply Deficit OPEC Shale Energy Investment |
RefinersRefining margins increased substantially in Q3 to $30 per barrel, well above pre-pandemic normal levels of $10-$16. Structural changes including diesel fuel shortages, refining capacity closures post-pandemic and Ukraine war, and US natural gas price discounts have supported margins. However, the manager expects market forces will ultimately drive margins back toward historic rates as oil prices rise and input costs increase. |
Refining Margins Diesel Capacity Natural Gas Ukraine | |
DividendsThe portfolio emphasizes companies with strong dividend yields and cash return policies. Verizon offers an 8% dividend yield while the manager waits for valuation re-rating. Pioneer Natural Resources has a policy returning 75% of free cash flow to shareholders through base dividends, variable dividends, and share repurchases, supporting over 8% annual dividend yield. |
Dividend Yield Cash Returns Shareholder Returns Free Cash Flow Payout Policy | |
| 2023 Q2 |
HomebuildersHomebuilders are benefiting from record low inventory of existing homes as high rates discourage homeowners with 3% rates from moving. They can buy down mortgage rates to 4-5% instead of offering traditional incentives, making new homes more attractive than existing properties with 7% mortgages. The sector continues to trade at reasonable valuations despite recent gains. |
Homebuilders Mortgage Building Materials Retail Construction |
TravelThe travel industry is benefiting from a rebound in business and leisure travel, with spending expected to eclipse 2019 levels in 2023 and grow 5-9% through the decade. Online travel agencies like Expedia are positioned to benefit from this recovery and technological improvements that enhance customer experience and margins. |
Travel Online Travel Hotels Air Travel Entertainment | |
FertilizersFertilizer pricing has declined as farmers held back on purchases, but this is viewed as temporary since farmers can only delay applications for so long. Supply remains constrained due to the Russia-Ukraine war, and as agriculture prices rise and farmers are incentivized to increase yields, fertilizer demand should rebound. |
Fertilizers Agriculture Potash Nitrogen Crop Protection | |
ValueThe portfolio focuses on high-quality companies trading at steep discounts to intrinsic value, creating a wide margin of safety. The concentrated value approach targets companies with durable competitive advantages, high returns, growing cash flows, and solid balance sheets while management emphasizes maximizing shareholder returns. |
Value Quality Buybacks Dividends Earnings | |
| 2023 Q1 |
ValueManager emphasizes constructing a portfolio favoring high-quality companies with attractive valuations and dividend yields. The Concentrated Value portfolio trades at 12.0x forward P/E versus 15.4x for Russell 1000 Value Index, with superior margins and returns on capital. |
Valuation Discount Margin of Safety Quality Dividends |
HomebuildersHome builders were the biggest winners despite rising interest rates, as stocks like Builders FirstSource and Toll Brothers were priced for dire outcomes at mid-single digit P/E ratios while generating substantial free cash flows from post-pandemic backlogs. |
Housing Construction Backlogs Free Cash Flow Buybacks | |
Capital MarketsCBOE Global Markets benefits from secular adoption of options trading, particularly one-day-to-expiry options which significantly boost revenues. The company has monopoly-like characteristics with exclusive rights to S&P 500 and VIX option products. |
Options Trading Monopoly Exchanges Volumes |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Aug 12, 2026 | Fund Letters | Pelican Bay Capital Management | DVN | Devon Energy | Other | Oil & Gas Exploration & Production | Bull | - | Coterra Acquisition, data center demand, Delaware Basin, energy, Equity, Exploration & Production, Free Cash Flow, LNG Export, natural gas, Oil & Gas, Share Buyback, undervalued, Value | Login |
| Apr 20, 2026 | Fund Letters | Pelican Bay Capital Management | ZM | Zoom Video Communications | Software - Application | Application Software | Bull | NASDAQ | AI integration, Anthropic Stake, competitive moat, Enterprise software, Free Cash Flow, SaaS, strong balance sheet, undervalued, User Interface, Video Communications | Login |
| Jan 22, 2026 | Fund Letters | Tyler Hardt | ACM | AECOM | Industrials | Engineering & Construction | Bull | New York Stock Exchange | backlog, infrastructure, Margins, transformation, valuation | Login |
| Jan 22, 2026 | Fund Letters | Tyler Hardt | FDS | FactSet Research Systems Inc. | Financials | Financial Data & Exchanges | Bull | New York Stock Exchange | compounder, Data, Margins, Subscriptions, valuation | Login |
| Jan 22, 2026 | Fund Letters | Tyler Hardt | ZTS | Zoetis Inc. | Health Care | Animal Health | Bull | New York Stock Exchange | Animal Health, compounding, Margins, pharmaceuticals, pipeline | Login |
| Jan 22, 2026 | Fund Letters | Tyler Hardt | ONON | ON Semiconductor Corporation | Information Technology | Semiconductors | Bear | NASDAQ | Cyclicality, Demand, EV, Risk, semiconductors | Login |
| Jan 22, 2026 | Fund Letters | Tyler Hardt | GOOGL | Alphabet Inc. | Communication Services | Interactive Media & Services | Bear | NASDAQ | AI, cloud, Discipline, Search, valuation | Login |
| Oct 20, 2025 | Fund Letters | Tyler Hardt | MU | Micron Technology Inc. | Information Technology | Semiconductors & Memory | Bull | NASDAQ | AI, Capacity, HBM, leverage, Memory, Pricing power, semiconductors | Login |
| Oct 20, 2025 | Fund Letters | Tyler Hardt | ODFL | Old Dominion Freight Line Inc. | Industrials | Trucking & Logistics | Bull | NASDAQ | FCF, Logistics, Ltl, Pricing power, recovery, Reinvestment, ROIC, Trucking | Login |
| Oct 20, 2025 | Fund Letters | Tyler Hardt | ELV | Elevance Health Inc. | Health Care | Managed Health Care | Bull | NYSE | buybacks, Eps recovery, health insurance, Medicare, Pbm, ROIC, valuation | Login |
| Oct 20, 2025 | Fund Letters | Tyler Hardt | MU | Micron Technology Inc. | Information Technology | Semiconductors & Memory | Bull | NASDAQ | AI, Capacity, HBM, leverage, Memory, Pricing power, semiconductors | Login |
| Oct 20, 2025 | Fund Letters | Tyler Hardt | GOOG | Alphabet Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, Chips, cloud, diversification, FCF, platform, productivity | Login |
| Oct 20, 2025 | Fund Letters | Tyler Hardt | ODFL | Old Dominion Freight Line Inc. | Industrials | Trucking & Logistics | Bull | NASDAQ | FCF, Logistics, Ltl, Pricing power, recovery, Reinvestment, ROIC, Trucking | Login |
| Oct 20, 2025 | Fund Letters | Tyler Hardt | ELV | Elevance Health Inc. | Health Care | Managed Health Care | Bull | NYSE | buybacks, Eps recovery, health insurance, Medicare, Pbm, ROIC, valuation | Login |
| Jul 11, 2025 | Fund Letters | Tyler Hardt | SLB | Schlumberger Limited | Energy | Oil & Gas Equipment & Services | Bull | New York Stock Exchange | Cyclicals, energy, Offshore, Oilservices, valuation | Login |
| Jul 11, 2025 | Fund Letters | Tyler Hardt | BF/B | Brown-Forman Corporation (Class B) | Consumer Staples | Distillers & Vintners | Bull | New York Stock Exchange | compounder, Consumerstaples, premiumization, Spirits, valuation | Login |
| Jul 11, 2025 | Fund Letters | Tyler Hardt | VZ | Verizon Communications Inc. | Communication Services | Integrated Telecommunication Services | Bear | New York Stock Exchange | Earningspressure, leverage, Pricing, Telecom, Value trap | Login |
| Jul 11, 2025 | Fund Letters | Pelican Bay Capital Management | BF-B | Brown-Forman Corporation | Consumer Staples | Distillers & Vintners | Bull | NYSE | American Whiskey, brand portfolio, consumer staples, Cyclical Recovery, Distiller, dividend yield, margin expansion, Premium Tequila, Spirits, Value | Login |
| Apr 23, 2025 | Fund Letters | Pelican Bay Capital Management | RPRX | Royalty Pharma | Health Care | Pharmaceuticals | Bull | NASDAQ | Biotech, Blockbuster Drugs, Clinical trials, drug development, market share, Pharmaceutical, recurring revenue, Royalty, Value | Login |
| Jan 21, 2025 | Fund Letters | Pelican Bay Capital Management | MU | Micron Technology | Information Technology | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | AI, Artificial Intelligence, Cyclical Recovery, DRAM, HBM, Memory, Nand, oligopoly, semiconductors, technology | Login |
| Jan 21, 2025 | Fund Letters | Pelican Bay Capital Management | KNSL | Kinsale Capital | Financials | Property & Casualty Insurance | Bull | NYSE | combined ratio, competitive moat, E&s, Excess and Surplus, growth, Insurance, market share gains, ROE, technology platform, underwriting | Login |
| Oct 23, 2024 | Fund Letters | Pelican Bay Capital Management | MO | Altria Group Inc | Consumer Staples | Tobacco | Bear | NYSE | Cigarettes, consumer staples, Market Share Loss, Oral Nicotine, Product Diversification, Regulatory Competition, tobacco, Vaping, Volume Decline | Login |
| Oct 23, 2024 | Fund Letters | Pelican Bay Capital Management | CVS | CVS Health Corporation | Health Care | Health Care Services | Bear | NYSE | Acquisitions, capital allocation, Earnings Power, Healthcare services, management execution, Medical Expenses, Medicare Insurance, Pharmacy Benefits, Premium Caps | Login |
| Oct 23, 2024 | Fund Letters | Pelican Bay Capital Management | SLB | Schlumberger Limited | Energy | Oil & Gas Equipment & Services | Bull | NYSE | competitive moat, Conventional Oil, Deepwater Drilling, E&P Spending, Energy cycle, Oil Services, ROIC, Shale Plateau, technology innovation, valuation discount | Login |
| Jul 23, 2024 | Fund Letters | Pelican Bay Capital Management | ULTA | Ulta Beauty | Consumer Discretionary | Specialty Retail | Bull | NASDAQ | Beauty, Competitive Advantage, Cosmetics, Free Cash Flow, loyalty program, market share gains, share repurchases, Specialty retail, Value | Login |
| Apr 15, 2024 | Fund Letters | Pelican Bay Capital Management | Gold | Barrick Gold Corporation | Materials | Gold | Bull | NYSE | Commodity Exposure, Copper Production, Geographic Diversification, gold mining, materials, Mining Operations, Precious Metals, resource development | Login |
| Jan 15, 2024 | Fund Letters | Pelican Bay Capital Management | 6ON GR | On Semiconductor Corporation | Information Technology | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | Adas, automotive, Brownfield Development, Electric Vehicles, growth, Image-sensors, Power management, semiconductors, Share Buybacks, SiC, Silicon Carbide | Login |
| Jan 15, 2024 | Fund Letters | Pelican Bay Capital Management | EOG | EOG Resources Inc | Energy | Oil, Gas & Consumable Fuels | Bull | NYSE | dividend yield, Drilling Costs, energy, Free Cash Flow, net cash, oil production, ROIC, Shale Oil, shareholder returns, Tier 1 Acreage, Value | Login |
| Oct 24, 2023 | Fund Letters | Pelican Bay Capital Management | CPRI | Capri Holdings | Consumer Discretionary | Textiles, Apparel & Luxury Goods | Bull | NYSE | buyout, fashion, Luxury goods, Merger Arbitrage, undervalued, Value Realization | Login |
| Oct 24, 2023 | Fund Letters | Pelican Bay Capital Management | GNRC | Generac Holdings Inc | Industrials | Electrical Equipment | Bull | NYSE | Dealer Network, Margin recovery, market leader, Power Grid, secular growth, Standby Generators | Login |
| Oct 24, 2023 | Fund Letters | Pelican Bay Capital Management | BVZN SW | Verizon Communications Inc | Communication Services | Wireless Telecommunication Services | Bull | NYSE | 5G infrastructure, dividend yield, Free Cash Flow, oligopoly, telecommunications, undervalued | Login |
| Oct 24, 2023 | Fund Letters | Pelican Bay Capital Management | FANG | Diamondback Energy Inc | Energy | Oil, Gas & Consumable Fuels | Bull | NASDAQ | Energy Fundamentals, oil producer, OPEC, Permian Basin, Shale, supply deficit | Login |
| Oct 24, 2023 | Fund Letters | Pelican Bay Capital Management | DIPSX | Phillips 66 | Energy | Oil, Gas & Consumable Fuels | Neutral | NYSE | Capacity closures, Diesel Shortage, natural gas, Oil Refiner, profit-taking, Refining Margins | Login |
| Oct 24, 2023 | Fund Letters | Pelican Bay Capital Management | PXD | Pioneer Natural Resources Company | Energy | Oil, Gas & Consumable Fuels | Bull | NYSE | Free Cash Flow, Horizontal Wells, Low-cost producer, Permian Basin, Shale Oil, shareholder returns | Login |
| TICKER | COMMENTARY |
|---|---|
| CSCO | Unsurprisingly, our strongest contribution to returns came from Cisco Systems (CSCO), which jumped 63.5% in sympathy with other AI hardware companies. This surge has pushed Cisco to the top end of our estimated intrinsic value range. We have trimmed our position, and the stock now represents our smallest holding in the portfolio. We will exit the position entirely if shares continue to advance past our intrinsic value range or if we identify a superior investment opportunity. |
| ELV | Elevance Health (ELV) continued to recover from a weak Medicare Insurance market as management successfully repriced plans to account for higher medical costs. The company is also exiting unprofitable Medicaid programs, shifting pharmaceutical spending to its in-house PBM, and continuing to take market share from UnitedHealthcare in the Commercial Insurance space. |
| RPRX | Royalty Pharma (RPRX), another healthcare holding, marched higher as investors gained confidence in management's ability to acquire new royalties on attractive terms. Following this steady share price increase, RPRX has become our largest portfolio holding. |
| TOL | Toll Brothers (TOL) rounded out our top contributors despite general weakness in the homebuilding sector. Toll is benefiting from exposure to affluent clients who have gained significantly from years of strong stock market performance. Because these buyers largely pay cash for their homes, they are also insulated from the headwinds of elevated mortgage rates, making Toll a rare bright spot in the industry today. |
| ZTS | On the negative side, we suffered only one real setback. One of our newer holdings, Zoetis (ZTS), fell sharply after its first-quarter earnings report. The company's legacy dermatology treatments and parasite franchises continue to lose share to lower-priced competition, as pet owners struggling with macroeconomic headwinds try to reduce veterinary spending. We believed these headwinds were already well understood, and the magnitude of the sell-off following their Q1 earnings release took us by surprise. However, we continue to believe that animal health spending will increase and that Zoetis is well positioned with a strong product pipeline to support high single-digit sales growth for years to come. Consequently, we added to our position after the sell-off. |
| DVN | Devon is our newest portfolio addition. The company possesses top-tier oil and gas assets in the Delaware Basin, which are now paired with strong natural gas production in Pennsylvania and Oklahoma. Having recently closed its large acquisition of Coterra Energy, the combined entity is now the largest exploration and production company in the United States. Devon boasts a clean balance sheet and is positioned to generate substantial free cash flow in the coming years. Based on our analysis at the time of purchase, we believe the stock was pricing in conservative commodity prices of approximately $62 for oil and $2.80 for gas, which we view as far too low. Furthermore, the stock trades at roughly ten times free cash flow, and management recently announced an $8 billion share repurchase program representing an impressive fourteen percent of the current market cap. We believe Devon is intrinsically worth $70 to $110 per share, compared to a price of $50 dollars when we initiated our position. |
| SLB | Falling energy prices, following the Trump Administration's pursuit of a ceasefire agreement with Iran, also detracted from the portfolio as our energy-exposed companies declined marginally. Both Devon (DVN) and Schlumberger (SLB) landed on our list of the bottom five detractors for the quarter. |
| FANG | While we recognize that the portfolio already has exposure to energy through our investments in Diamondback (FANG) and EOG, this addition brings our combined energy weighting to just under fifteen percent. |
| EOG | While we recognize that the portfolio already has exposure to energy through our investments in Diamondback (FANG) and EOG, this addition brings our combined energy weighting to just under fifteen percent. |
| GNRC | We also exited our positions in Generac (GNRC) and CBOE Global Markets (CBOE), as both companies rose well above the top end of our estimates of intrinsic value. We sold on success, staying true to our valuation-based sell discipline. |
| CBOE | We also exited our positions in Generac (GNRC) and CBOE Global Markets (CBOE), as both companies rose well above the top end of our estimates of intrinsic value. We sold on success, staying true to our valuation-based sell discipline. |
| BLDR | Regarding the remainder of our trading activity during the quarter, we added to Builders FirstSource (BLDR), Ulta Beauty (ULTA), Fidelity National Information Services (FIS), and AECOM (ACM) on price weakness. |
| ULTA | Regarding the remainder of our trading activity during the quarter, we added to Builders FirstSource (BLDR), Ulta Beauty (ULTA), Fidelity National Information Services (FIS), and AECOM (ACM) on price weakness. |
| FIS | Regarding the remainder of our trading activity during the quarter, we added to Builders FirstSource (BLDR), Ulta Beauty (ULTA), Fidelity National Information Services (FIS), and AECOM (ACM) on price weakness. |
| ACM | Regarding the remainder of our trading activity during the quarter, we added to Builders FirstSource (BLDR), Ulta Beauty (ULTA), Fidelity National Information Services (FIS), and AECOM (ACM) on price weakness. |
| ODFL | We trimmed Old Dominion Freight Line (ODFL) as it quickly moved into the upper half of its estimated intrinsic value range, and its large size in the portfolio became inappropriate relative to the remaining opportunity for outsized gains. |
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