| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 32.2% | 30.1% | 21.8% |
The Pernas Portfolio returned 30.1% in Q2 2026, substantially outperforming major indexes, driven by large gains in holdings including VPG, BWEN, XMTR, CEPL, and RELY. The manager argues that the next several years will be the best environment in modern history for fundamental active managers to beat the S&P 500. The core thesis centers on the index's high concentration in richly valued mega-cap technology companies at the exact moment these companies are being forced into an existential AI arms race. Hyperscalers are committing roughly $750 billion in AI-related spending in 2026, diluting shareholders and issuing debt to fund buildouts. This creates a productivity subsidy for the rest of the economy, with opportunities in smaller companies that benefit from this spending without having to fund it. The manager expects large dispersion across companies based on their ability to convert AI infrastructure into better business economics. Revenue is accelerating behind the buildout, with agents emerging as a major demand catalyst. The portfolio is positioned to identify companies with the culture and operational flexibility to redesign workflows around AI and convert the technology into faster growth, lower costs, and higher margins.
The next several years represent an extraordinary opportunity for active managers to outperform the S&P 500 due to the index's high concentration in richly valued mega-cap technology companies forced into an existential AI arms race, creating vulnerability at the index level while generating productivity spillovers and dispersion opportunities across smaller companies.
The manager believes the next several years will be the best environment in modern S&P 500 history for fundamental active managers to beat the index, with this setup likely lasting only a few years before the index organically corrects for the current Mag 7 imbalance. The manager expects large dispersion across companies based on their ability to metabolize AI technology into actual economics, with the next stage of investment opportunity coming from identifying companies that can convert AI infrastructure into better business performance. The manager expects agents to shift the likely range of infrastructure spending towards the high end and expects hyperscalers to continue the buildout over the next one to two years.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 15 2026 | 2026 Q2 | AMZN, GOOG, META, NVDA, ORCL | active management, AI, Data centers, dispersion, Mega-cap, semiconductors, small caps, technology | - | Pernas Portfolio returned 30% in Q2, outperforming indexes substantially. Manager sees an extraordinary multi-year opportunity for active managers to beat the S&P 500 due to index concentration in richly valued mega-caps forced into an AI arms race. Hyperscalers committing $750 billion in AI spending creates productivity spillovers. Portfolio positioned in smaller companies that benefit from AI infrastructure without funding it, focusing on those converting AI into superior business economics. |
| Apr 20 2026 | 2026 Q1 | SPT | AI, Concentration, Portfolio Management, SaaS, software, technology, value | SPT | Q1 saw the SaaSpocolypse create structural opportunities in SaaS as AI fears drove 38% median selloffs in application software. Adaptive companies with moats like Sprout Social trade at compelling valuations despite incorporating agentic capabilities. The manager added aggressively into weakness, viewing smaller SaaS players as unfairly discounted relative to their structural advantages. |
| Jan 20 2026 | 2025 Q4 | ADBE, APLD, CARD.L, CELH, META, NKE, PSFE, SEMR, STX | AI, defense, Mean reversion, small caps, technology, value | - | Pernas Portfolio outperformed the S&P 500 by 36.4% in 2025 despite volatile conditions and initial missteps around Trump's Liberation Day. The manager advocates abandoning mean reversion strategies in favor of recognizing structural changes driven by AI, economic shifts, and geopolitical dynamics. Portfolio focuses on a barbell of AI winners and mislabeled AI losers. |
| Oct 29 2025 | 2025 Q3 | AMD, APLD, CGEH, CSCO, GOOGL, NVDA, ORCL, RELY, STX, WCG, XMTR | AI, Data centers, growth, semiconductors, small caps, technology |
NVDA NVDA |
Portfolio surged 31.7% in Q3 driven by AI-related names posting triple-digit gains. Manager argues current AI buildout differs from fiber bubble with demand-linked CAPEX, high utilization, and flexible assets. Expects AI investment cycle to continue 12-16 months despite growing bubble concerns, maintaining conviction in AI infrastructure theme. |
| Jul 18 2025 | 2025 Q2 | AMD, APLD, CGEH, CSCO, GOOGL, NVDA, ORCL, RELY, STX, XMTR | AI, Data centers, growth, infrastructure, semiconductors, small caps, technology | - | AI infrastructure drove 23% quarterly outperformance with triple-digit gains in APLD and CGEH. Unlike the debt-fueled fiber bubble, current AI spending is demand-driven with high data center utilization and contracted revenue. The manager expects this cycle to continue 12-16 months, betting on exponential compute demand growth while maintaining conviction despite traditional economic indicators proving ineffective. |
| Apr 19 2025 | 2025 Q1 | AAPL, LHX, NUE, PLTR | Cash, defense, Industrial Policy, Onshoring, tariffs, uncertainty, Valuations | - | Pernas maintains elevated cash amid market fragility and historic valuations following Trump's Liberation Day tariffs. Three structural themes drive opportunity: defense spending modernization as Pax Americana erodes, U.S. industrial policy favoring domestic manufacturers, and onshoring creating capital spending supercycles. Dynamic positioning pulls back during uncertainty while evaluating high-conviction defense sector opportunities. |
| Jan 24 2025 | 2024 Q4 | DOCS.L, DUOL, RRGB | Education, growth, Restaurants, small caps, technology, value | - | Pernas Research posted 45.6% returns in 2024 through concentrated small-cap investing, learning from mistakes like Red Robin's alternative data disadvantage while missing Duolingo's AI opportunity. Despite stretched S&P valuations, the manager sees continued multi-bagger potential from technological changes and economic resilience, maintaining selective bullish positioning with disciplined risk management. |
| Oct 8 2024 | 2024 Q3 | - | - | - | Performance report showing Pernas Portfolio's strong Q3 2024 results with 17.97% net returns versus S&P 500's 6.89%. Since 2017 inception, the portfolio has delivered 25.17% annualized returns with lower volatility. Document lacks investment commentary or strategic insights, focusing purely on historical performance metrics and risk statistics. |
| Jul 20 2024 | 2024 Q2 | RELY, XMTR | AI, consumer discretionary, Data centers, growth, Manufacturing, small caps, technology, value | XMTR | Portfolio underperformed in Q2 due to UK consumer weakness but small caps ARQ and TSSI gained over 100%. Manager focuses on AI application layer winners with proprietary data advantages, adding digital manufacturing disruptor Xometry. Expects Fed cuts to benefit small caps with variable rate debt while maintaining balanced consumer exposure between value and premium brands. |
| May 3 2024 | 2024 Q1 | ARQ, BURBY.L, DELL, DOCS.L, META, MSFT, NVDA, REX, RRGB, SMCI, VRT | AI, inflation, interest rates, small caps, technology, United Kingdom, value | - | Pernas Research underperformed in Q1 due to high cash and small-cap exposure but sees compelling opportunities in early-stage AI beneficiaries, severely undervalued UK stocks trading near 2009 lows, and small-cap companies with attractive risk/reward profiles despite interest rate sensitivity. Manager maintains anti-inflationary structural view while positioning for volatile CPI trajectory ahead. |
| Aug 1 2024 | 2023 Q4 | - | - | - | Pernas Portfolio delivered exceptional 2023 performance with 53.93% net returns, doubling the S&P 500's 26.29%. Since 2017 inception, the fund has generated 25.25% annualized net returns with strong risk-adjusted metrics including 0.86 beta and superior downside protection. The strategy targets attractively-priced companies with sustainable cash flows or clear recovery potential. |
| Oct 14 2023 | 2023 Q3 | ABL, CKX, CRSXF, HCC, PLCE, SENEA, SUP, UNTC | Coal, Concentration, Outperformance, small caps, value | - | Kingdom Capital delivered 18.19% net returns in Q3 2023, significantly outperforming major indices through concentrated small-cap value investing. Coal positions drove performance as metallurgical coal prices surged 30% in August. The fund targets undervalued companies with margin of safety, maintaining 15% cash while rotating holdings and expecting continued strength from supply-constrained coal investments. |
| Jul 14 2023 | 2023 Q2 | META, S4M GR, ZUMZ | - | - | |
| Apr 14 2023 | 2023 Q1 | E2N GR, META | - | - | |
| Feb 28 2023 | 2022 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIManager views the next several years as the best environment in modern history for active managers to beat the S&P 500 due to the index's concentration in richly valued mega-cap tech companies forced into an existential AI arms race. Hyperscalers are committing roughly $750 billion in AI-related spending in 2026, diluting shareholders and issuing debt to fund buildouts. The manager sees this as creating a productivity subsidy for the rest of the economy and expects large dispersion across companies based on their ability to convert AI infrastructure into better business economics. |
Hyperscalers Capex Infrastructure Agents Productivity |
Data CentersManager notes that hyperscalers are funding data centers, chips, models, power infrastructure, networking, and software layers that other companies will use. Revenue is accelerating behind the buildout, with revenue being earned on GPUs racked twelve to eighteen months ago. Rising rents on depreciated hardware like the H100 are cited as evidence against oversupply concerns. |
GPUs Infrastructure Revenue Capacity | |
CloudManager discusses how hyperscalers are building cloud infrastructure and data centers to support AI workloads. The spending is creating opportunities for companies supplying power equipment, cooling, networking, data-center infrastructure, components, and specialized services. The manager expects this infrastructure layer to enable productivity gains across the corporate economy. |
Infrastructure Capex Suppliers Productivity | |
SemiconductorsManager references GPU demand and capacity, noting that rising rents on depreciated H100 hardware contradict oversupply narratives. The discussion is embedded within the broader AI infrastructure buildout theme, with semiconductors positioned as a critical enabler of the compute demand driven by AI agents and model deployment. |
GPUs H100 Demand Capacity | |
Mega CapManager identifies the S&P 500's high concentration in richly valued mega-cap technology companies as creating vulnerability for the index. These companies are being forced into an existential AI arms race, committing all of their free cash flow and more to AI-related spending. The manager notes that Google raised $85 billion through equity offering and Oracle raised $5 billion with another $20 billion planned, while the Mag 7 have issued roughly $224 billion in bonds year-to-date. |
Concentration Valuations Capex Dilution | |
Small CapsManager explicitly states that investors can find excess returns in smaller companies that benefit from hyperscaler AI spending without having to fund all of it. The opportunity is described as broader than just direct infrastructure suppliers, extending to companies across industries that can convert AI infrastructure into better business economics. This is positioned as a core element of the Active Investor Opportunity Window thesis. |
Dispersion Beneficiaries Productivity Opportunity | |
| 2026 Q1 |
SaaSThe SaaSpocolypse represents a structural opportunity as AI fears have driven widespread selloffs in application-layer software companies. The manager sees adaptive SaaS companies incorporating agentic capabilities rather than being disrupted, with smaller players trading at compelling valuations despite having structural advantages. |
Software Applications Agents Disruption Valuation |
AIAI advancement through agentic coding tools is creating market fears about software commoditization and disrupting traditional SaaS economics. The manager views this as creating opportunities rather than existential threats for adaptive companies. |
Agents Coding Disruption Automation | |
| 2025 Q4 |
OilOil represents the cheapest major asset class globally, trading at near-record lows relative to gold despite balanced fundamentals. The Strait of Hormuz closure has triggered massive short covering, while non-OPEC supply growth is slowing dramatically with U.S. shale production plateauing. |
Crude Brent WTI Shale OPEC |
Natural GasU.S. natural gas showed strength in Q4 due to cold weather, but the market remains oversupplied. However, supply growth is concentrated in the Permian Basin's gas burp, which should plateau soon, setting up for tighter balances as LNG demand expands. |
Henry Hub LNG Permian Storage | |
SilverSilver surged 51% in Q4 and over 140% for the year, staging a dramatic catch-up rally relative to gold. This magnitude of outperformance has historically marked important turning points and generated sell signals for precious metals. |
Precious Metals Gold Ratio | |
CopperCopper gained 17% in Q4 and 41% for the year, but modeling suggests the market has moved back into surplus. Exchange inventories have risen to levels last seen in 2013 when prices subsequently fell 35%, indicating potential weakness ahead. |
Base Metals Inventories Supply | |
Platinum Group MetalsPGMs continued their powerful advance with platinum and palladium each rising 28% in Q4. Policy reversals in the U.S. and Europe are unwinding EV mandates and ICE phase-out timelines, fundamentally improving the demand outlook for auto-catalyst metals. |
Platinum Palladium Auto Catalysts EV Policy | |
UraniumUranium demand is surging while meeting a fragile supply base, creating structural tightness in the market. The nuclear renaissance is driving unprecedented demand growth against constrained production capacity. |
Nuclear Supply Deficit | |
CommoditiesThe commodity bull market has barely begun, with most commodities still 46% below historical peaks nominally and 73% below real peaks. Relative to equities, commodities trade near the lowest levels in over a century, suggesting the cycle is in early innings. |
Bull Market Valuation Cycles | |
| 2025 Q3 |
AIAI-related names drove significant portfolio returns with APLD and CGEH posting triple-digit gains. The manager compares current AI investment cycle to fiber buildout, arguing AI has more durable CAPEX with demand-linked spending and high data center utilization. Expects AI investment cycle to last 12-16 months with low probability of collapse. |
Data Centers GPUs Semiconductors Cloud Automation |
Data CentersAI data center utilization is near maximum with demand exceeding supply. Physical constraints include power, cooling, and semiconductor availability rather than demand issues. Data centers scale incrementally and are modular, making them more flexible than fiber infrastructure. |
AI Cloud Infrastructure Power Equipment Cooling | |
SemiconductorsSemiconductor availability remains a key constraint in AI buildout. The manager tracks companies with thematic exposure to semiconductors as part of broader AI investment theme, noting stock prices moving ahead of fundamentals in some cases. |
AI GPUs Memory Chip Designers | |
| 2025 Q2 |
AIAI-related names drove significant portfolio returns with APLD and CGEH posting triple-digit gains. The manager views the AI investment cycle as lasting at least 12-16 months, comparing it favorably to the fiber buildout era. Unlike fiber's debt-financed overbuild, AI spending is demand-linked with high data center utilization and contracted demand supporting continued capital deployment. |
Data Centers GPUs Semiconductors Cloud Automation |
SemiconductorsSemiconductor companies benefited from AI infrastructure demand with significant gains in the quarter. The manager notes that AI data center utilization remains near maximum with demand exceeding supply, constrained by physical factors like power, cooling, and semiconductor availability rather than demand. |
GPUs Memory Semi Equipment Foundries Chip Designers | |
Data CentersData center investments are viewed as more flexible and durable than historical fiber infrastructure. The manager emphasizes that data centers scale incrementally with racks filled gradually, and assets are modular with power, cooling, and compute that can be reconfigured or upgraded, unlike static fiber infrastructure. |
Cloud Infrastructure Power Equipment Cooling Servers Storage | |
| 2025 Q1 |
Defense SpendingGlobal defense balkanization is driving multi-decade modernization efforts as nations reassess defense postures amid eroding Pax Americana. Countries like Germany, Poland, Japan, and South Korea are increasing defense budgets to levels not seen in decades, with the definition of defense expanding to include robotics, AI, cybersecurity, and data infrastructure. The manager believes it's not far-fetched to imagine the world's next trillion-dollar companies emerging from the defense sector. |
Defense Modernization AI Cybersecurity Robotics |
Industrial PolicyThe rise of industrial policy in the U.S. through massive fiscal spending and Trump's willingness to reshape entire industries has fundamentally changed equity analysis. Buy America provisions in the CHIPS Act, Inflation Reduction Act, and Infrastructure Bill have tilted the playing field toward U.S.-based manufacturers. The current administration plans to further reduce corporate tax rates for domestic manufacturers from 21% to 15% and expand R&D tax credits. |
CHIPS Act Buy America Tax Credits Manufacturing Domestic | |
OnshoringDe-globalization shocks are now structural features of the investing landscape, with supply chains harder to rebuild than break. Countries want sovereign capacity, meaning rebuilding supply chains, onshoring factories, and stockpiling critical components. This trend underpins a supercycle in capital spending with large investment implications, though diversification today means higher cost, lower redundancy, and more uncertainty. |
Supply Chains Sovereign Capital Spending Manufacturing Reshoring | |
Trade PolicyTrump's reciprocal tariffs on April 2, 2025, dubbed Liberation Day, have created economic uncertainty and forced a rational repricing of corporate valuations. When global supply chain structures are disrupted by tariffs, sanctions, or forced reshoring, the assumptions behind corporate valuations must be revisited as shifting toward U.S.-centric production introduces friction, inefficiency, and cost. |
Tariffs Liberation Day Sanctions Valuations Disruption | |
| 2024 Q4 |
Small CapsManager is bullish on selective small-cap names that benefit from a strong economy. Small caps can pivot quickly to capitalize on emerging opportunities and even small industry shifts can lead to large demand windfalls for companies with smaller revenue bases. 2024 saw 108 multi-baggers, more than double the typical number. |
Small Caps Multi-baggers Pivoting Emerging Opportunities Revenue |
AIManager acknowledges AI as a significant technological force driving increased capex and market changes. Initially dismissed Duolingo as an AI loser but later recognized it as positioned to be an AI winner through integration of AI tools into its platform. |
AI Technology Capex Integration Platform | |
| 2024 Q2 |
AIManager believes we are in early stages of one of the most consequential technological moments for humankind. Big AI winners over next 12-36 months will be application layer companies with robust tech culture, proprietary data, and strong distribution. Companies like Remitly and Xometry positioned to benefit from underutilized proprietary data. |
Application Layer Proprietary Data Distribution Tech Culture Machine Learning |
Small CapsPortfolio demonstrates anti-index nature with outsized gains from small caps ARQ and TSSI (both up over 100%) despite largest outperformance of large caps relative to small caps in recent history. Small caps have seen snapback in Q3, surging 11.5% in five days due to overextension of large caps and clarity over Fed cuts. |
Large Cap Outperformance Fed Cuts Variable Rate Debt Snapback Anti-Index | |
Data CentersManager examining hardware AI companies including data center service providers like TSSI as beneficiaries of AI trends. TSSI was mentioned as one of the main contributors with gains well over 100%. |
Hardware AI Service Providers Infrastructure AI Beneficiaries | |
| 2024 Q1 |
AIManager views AI technology as still in the first inning and actively seeks companies positioned to benefit from this trend. Primary beneficiaries have been corporations like NVIDIA, Microsoft, and Meta, along with hardware manufacturers supporting data center build-out for AI workloads. Future leaders in novel applications and new industries are still to emerge. |
Data Centers Semiconductors Cloud Networking Hardware |
United KingdomUK remains a notable underperformer among developed economies, struggling with persistent Brexit-related issues and stubborn inflation. UK mid-caps valuations are trading at just a 23% premium above their 2009 lows, indicating severely oversold conditions. Manager sees compelling evidence that UK stocks have been unduly punished. |
Brexit Value Mid Cap Undervaluation Recovery | |
Small CapsSmall caps have lagged behind large caps with Russell 2000 up less than half the S&P YTD. Higher interest rates impact small caps more significantly as ~40% have variable rate debt versus ~7% for S&P 500. This creates opportunities to invest in indebted small caps that may be prematurely dismissed as too risky. |
Interest Rates Credit Value Underperformance Debt | |
| 2023 Q3 |
CoalQ3 returns strongly benefited from coal positions as seasonal weakness in metallurgical coal prices ended in August with indexes rising over 30% in a month. Demand for the key steelmaking component continues to increase while no significant supply response has occurred due to new mining equipment and labor shortages. |
Metallurgical Coal Steel Mining Commodities Supply |
ValueThe fund focuses on acquiring stocks priced well below intrinsic value with appropriate margin of safety. Examples include Children's Place trading at few times normal earnings power and companies with steady operating histories available at attractive valuations. |
Undervalued Intrinsic Value Margin of Safety Earnings Inefficiencies | |
Small CapsDespite small cap stocks continuing to underperform larger indices, several holdings excelled. The fund operates an actively managed small-cap strategy seeking patient investors interested in this approach. |
Russell 2000 Outperformance Active Management Concentration |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 20, 2026 | Fund Letters | Pernas Research | SPT | Sprout Social | Software - Application | Application Software | Bull | NASDAQ | API Access, contrarian, SaaS, small-cap, social media management, Software, technology, Value | Login |
| Oct 29, 2025 | Fund Letters | Deiya Pernas | NVDA | NVIDIA Corp. | Information Technology | Semiconductors & AI Hardware | Bull | NASDAQ | AI, CapEx, data centers, Demand, GPUs, semiconductors, Utilization | Login |
| Oct 29, 2025 | Fund Letters | Deiya Pernas | NVDA | NVIDIA Corp. | Information Technology | Semiconductors & AI Hardware | Bull | NASDAQ | AI, CapEx, data centers, Demand, GPUs, semiconductors, Utilization | Login |
| Jul 21, 2024 | Fund Letters | Pernas Research | XMTR | Xometry | Information Technology | Internet Services & Infrastructure | Bull | NASDAQ | 3D printing, AI-Powered Marketplace, CNC Machining, Digital Manufacturing, machine learning, Manufacturing Disruption, proprietary data, secular growth | Login |
| TICKER | COMMENTARY |
|---|---|
| GOOG | Google recently raised $85 billion through an equity offering to expand its AI infrastructure |
| ORCL | Oracle raised $5 billion of equity with a further $20 billion on the way |
| UBER | Uber reportedly burned through its entire 2026 AI budget in four months and was forced to cap employee spending on AI tools |
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