| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Q1 2026 delivered a sobering wake-up call to global markets as high optimism for AI and rate cuts collided with reality. The S&P 500 fell 4.3% while the Nasdaq dropped 6.0% as investors rotated from growth stocks (down 12.8%) to value stocks (up 2.4%). Geopolitical tensions spiked oil past $101 per barrel and pushed gold to record $4,679 per ounce. The AI boom faced severe infrastructure bottlenecks, with data centers costing up to $55 billion and electricity grid constraints delaying massive profits by years. Sticky inflation at 3.2% forced the Fed to maintain rates at 3.50-3.75%, keeping mortgage and auto loan rates elevated. Despite market anxiety, the underlying economy remained resilient at 2.7-2.9% growth. The manager emphasizes that diversification is essential again, having positioned conservative clients for this value rotation over the past year. Long-term market health depends on corporate earnings and economic resilience, both remaining solid despite daily headline stress.
Market rotation from growth to value stocks reflects the reality that AI profits will be delayed by infrastructure constraints, while traditional businesses offer stability and dividends in an environment of sticky inflation and geopolitical tensions.
The manager expects the transition to an AI economy to be a slow, physical rebuild rather than an overnight digital miracle. Long-term market health is driven by corporate earnings and economic resilience, both of which remain solid. The manager emphasizes the necessity of financial balance and diversification across the real economy to weather the rest of 2026.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 8 2026 | 2026 Q1 | - | AI, energy, Fed policy, geopolitics, inflation, Market Rotation, technology, value | - | Q1 2026 marked a major rotation from growth to value as AI infrastructure reality checks, sticky inflation, and geopolitical tensions ended the tech rally. Value stocks gained 2.4% while growth fell 12.8%. Oil spiked past $101, gold hit records, and the Fed held rates steady. Diversification across the real economy is essential again. |
| Jan 2 2026 | 2025 Q4 | AMZN | AI, blue chip, consumer discretionary, dividends, industrials, large cap, Quality, technology | - | Rigden Capital delivered solid Q4 2025 returns as markets rewarded quality over speculation. Key drivers included election uncertainty removal, Fed rate cuts to 3.50-3.75%, and resilient 6.8% e-commerce growth. The firm maintains balanced exposure to Tech/AI growth themes while emphasizing high-quality Blue Chip companies and dividend payers as valuations require strong earnings delivery. |
| Oct 1 2025 | 2025 Q3 | AMD, AVGO, DAL, DECK, GS, HOOD, IT, JPM, LULU, MSTR, NVDA, PLTR, SMCI, SNOW, STX, TTD, UNH, WDC | AI, earnings, Fed policy, Market Rally, semiconductors, technology, Trade Policy, Valuations | - | Q3 2025 delivered robust gains with the S&P 500 up 7.8%, driven by AI euphoria, Fed rate cuts, and trade tensions thaw. Technology and semiconductors led the charge, with all major indices hitting records. However, elevated valuations at 22x forward earnings and upcoming elections present risks, requiring a balanced barbell approach for Q4. |
| Jul 2 2025 | 2025 Q2 | - | consumer, earnings, inflation, rates, technology, Trade Policy | - | Markets surged in Q2 2025 with S&P 500 up 10.2% and NASDAQ gaining 16.7%, driven by cooling inflation and strong tech sector performance. Federal Reserve held rates steady while trade policy shifts created selective volatility. Despite consumer confidence declining and earnings growth slowing, disinflation trends and corporate momentum supported the broad rally across global markets. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIThe AI boom faced severe physical infrastructure limits in Q1 2026. Building AI-optimized data centers now costs up to $55 billion, and securing enough electricity to power these facilities has become the tech industry's biggest hurdle. This reality check created opportunities for traditional industrial, electrical, and construction companies hired to build the new power grid. |
Data Centers Infrastructure Power Construction Industrial |
EnergyGeopolitical tensions spiked energy prices with crude oil shooting past $101 per barrel. High oil prices act like a tax on the economy, making manufacturing, transportation, and everyday driving more expensive. The energy sector benefited from this price spike amid Middle Eastern conflicts. |
Oil Geopolitics Commodities Energy Trading | |
ValueValue stocks gained 2.4% in Q1 2026 as investors rotated from growth to mature businesses like banks, manufacturers, and consumer goods companies. These companies offered immediate stability and cash dividends, drawing investors back during the tech sell-off. |
Dividends Banks Consumer Stability | |
InflationSticky inflation at 3.2% in February forced the Federal Reserve to keep interest rates flat at 3.50% to 3.75%. The Fed's message is clear they will not make borrowing cheaper until the cost of living reliably drops, keeping mortgage and auto loan rates elevated. |
Rates Fed Monetary Policy Consumer Finance | |
| 2025 Q4 |
AIAI emergence has created market hysteria and broad software sell-offs despite limited real-world adoption. Manager believes incumbent software firms with domain expertise and proprietary data are positioned to thrive by integrating AI into mission-critical systems, while AI-native startups face significant barriers in regulated industries. |
Artificial Intelligence Software Automation Technology |
SoftwareSoftware sector treated as monolith awaiting AI disruption, but manager sees meaningful differentiation. Dominant vertical platforms with engineering talent and proprietary data can successfully reinvent themselves for agentic world and fend off AI-native competitors through integrated solutions and vendor consolidation. |
Enterprise Software SaaS Technology Vertical Software | |
Small CapsLong-anticipated broadening out of returns and leadership shift to small cap value industries has occurred, but fund unable to capitalize due to software overweight. Small cap value has outperformed while software lagged despite being cheaper than traditional value industrials. |
Small Cap Value Market Leadership | |
HotelsChoice Hotels represents asset-light, high-margin hotel franchisor trading at distressed multiple due to cyclical headwinds. Company shifting portfolio toward higher-revenue segments like Extended Stay and international markets, with potential for significant cash unlock and share buybacks at historically low valuations. |
Hospitality Franchising Real Estate | |
| 2025 Q3 |
AIAI euphoria continued to electrify markets, lifting tech stocks 15% on average with semiconductors up 25%. Hyperscalers' massive capex plans drove the theme, which permeated beyond hardware to firms like Palantir and Snowflake, contributing to 60% of the S&P's gains. |
Semiconductors Hyperscalers Capex Hardware Software |
RatesThe Federal Reserve's pivot provided crucial tailwinds with a 25-basis-point reduction on September 17-18, lowering the fed funds rate to 4.75-5.00%. Chair Jerome Powell cited a softening labor market as the rationale, with the easing cycle helping equities rebound 8% in Q3 alone. |
Fed Monetary Policy Easing Labor Market Tailwinds | |
Trade PolicyU.S.-China negotiations yielded interim deals on semiconductors and EVs, averting a full-blown escalation and sparking a honeymoon phase that lifted global PMIs. This thaw benefited cyclicals, with metals and mining up 12% in the S&P Materials sector. |
China Semiconductors EVs Cyclicals Materials | |
SemiconductorsSemiconductors surged 25% during the quarter, with Nvidia, AMD, and Broadcom leading the charge as AI chip demand showed no signs of abating. Nvidia alone added over $200 billion to its market cap in September, highlighting the sector's explosive growth. |
AI Chips Nvidia AMD Broadcom Market Cap | |
| 2025 Q2 |
InflationBoth Consumer Price Index and Producer Price Index showed meaningful cooling, with CPI declining 0.1% in June 2025 marking the first monthly drop since May 2020. Core CPI rose just 0.1% in June, the smallest increase since August 2021, supporting valuations across sectors. |
CPI PPI Disinflation Core Prices |
Trade PolicyNewly imposed tariffs on select imports, particularly in tech and renewable energy sectors, reshaped investor expectations. Markets interpreted these trade policy shifts as manageable and potentially stimulative to domestic production in the medium term, though they introduced pockets of volatility. |
Tariffs Imports Trade Domestic Policy | |
RatesFederal Reserve maintained benchmark interest rate unchanged at 5.25% to 5.50%, reflecting cautious stance amid persistent inflationary pressures. Chair Powell emphasized requiring greater confidence that inflation is moving sustainably toward 2 percent before considering rate cuts. |
Fed Interest Powell Monetary Policy |
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