| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.9% | 7.6% | -3.7% |
LongRun Equity returned 7.6% in Q2 2026 versus 15.8% for the benchmark, bringing YTD performance to -3.7% versus +14.3% for global equities. The underperformance reflects narrow market breadth concentrated in AI-related stocks, while quality businesses outside this cohort experienced multiple compression despite continued earnings delivery. The fund believes assumptions that AI will erode competitive moats are overly broad, and many quality businesses can actually widen their moats through AI implementation. Top contributors included ASML and GE Aerospace, benefiting from semiconductor capacity buildout and defense momentum. Detractors included Intuit and Tencent, impacted by revenue misses and China macro concerns respectively. The fund added two new positions: Amphenol, a mission-critical interconnect supplier benefiting from AI data center buildout, and Nvidia, which has de-rated despite becoming fundamentally stronger. The portfolio maintains strong financial metrics with 31% operating margins, 63% ROIC, and 10% cross-cycle sales growth. Management expects a market rotation to benefit quality stocks and projects low double-digit forward returns based on attractive valuations and robust business fundamentals.
LongRun Equity invests as long-term business owners in a concentrated portfolio of high-quality companies with sustainable competitive advantages, superior economics, and the ability to compound earnings over time, managed by teams that allocate capital as if it were their own.
The fund expects a rotation from narrow market leadership to broader participation, which would be bullish for markets overall. The current portfolio of quality businesses with compressed multiples but intact moats and continued earnings delivery is positioned to benefit. The fund expects annualized forward returns in the low double digits for LongRun Equity based on a 2.9% free-cash-flow yield and strong underlying business fundamentals including 10% cross-cycle sales growth, 31% operating margins, and 63% ROIC.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Aug 20 2026 | 2026 Q2 | 0700.HK, APH, ASML, GE, INTU, NVDA | aerospace, AI, Capital Allocation, Compounding, Data centers, defense, Quality, semiconductors | - | LongRun Equity underperformed in Q2 as narrow market breadth favored AI stocks while quality businesses saw multiple compression despite earnings delivery. The fund added Amphenol and Nvidia, viewing AI disruption fears as creating opportunities in fundamentally strong businesses with intact moats. Portfolio metrics remain robust with 31% margins and 63% ROIC. Management expects market rotation to drive low double-digit forward returns from current attractive valuations. |
| Apr 16 2026 | 2026 Q1 | - | energy, Europe, Geopolitical, inflation, oil, valuation, value | - | Q1 2026 Middle East tensions triggered European equity corrections but restored attractive valuations at 13.9x P/E versus 20.5x US. Energy sector outperformed while value beat growth significantly. Recent Iran ceasefire reduces oil price pressures. European fundamentals remain solid with recovering manufacturing, controlled inflation, and 10% earnings growth expectations intact for potential rebound. |
| Jan 5 2026 | 2025 Q4 | ANTY.MI | Family Business, Leadership, planning, Stewardship, Succession, Values, Wealth management | - | Rothschild & Co's quarterly letter advocates for early succession planning with clear communication, gradual preparation of next generation, and strong values-based foundations. The firm's own CEO transition exemplifies these principles, emphasizing continuity in client relationships while allowing for evolution and growth in wealth management services. |
| Nov 30 2025 | 2025 Q3 | AAPL, ACN, AMZN, ASML, AVGO, CDNS, DHR, GOOGL, IDXX, INTC, META, MSFT, NVDA, SNPS, TMO, TSLA | AI, Cloud, Compounding, long-term, Quality, semiconductors, technology | - | LongRun Equity's quality-focused approach underperformed in Q3 as markets favored riskier growth names. The fund added Amazon and Synopsys while exiting Accenture, strengthening its semiconductor design and cloud computing exposure. Despite style headwinds, the manager maintains conviction in high-quality compounders with sustainable competitive advantages, expecting low double-digit forward returns from an attractively valued portfolio. |
| Jun 30 2025 | 2025 Q2 | AAP, AZO, COST, CRM, GE, IDXX, INTU, MC.PA, MSFT, ORLY, RMS.PA, TMO, UNH | AI, Auto Aftermarket, Compounding, healthcare, long-term, Quality, software |
ORLY CRM |
LongRun Equity underperformed in Q2 due to healthcare weakness and AI disruption concerns, despite strong gains from GE Aerospace, Intuit, and Microsoft. New positions in O'Reilly Automotive and Salesforce reflect continued focus on quality compounders with sustainable advantages. UnitedHealth exit demonstrates disciplined approach to visibility requirements. Portfolio fundamentals remain strong with attractive forward return expectations. |
| Mar 31 2025 | 2025 Q1 | 0700.HK, ACN, ADBE, ASML, CDNS, COST, GE, GOOGL, INTU, IT, LIN, MA, MSCI, MSFT, OR.PA, PG, RELX.L | Compounding, Consumer Staples, Defensive, long-term, Quality, technology |
CDS GE MSCI |
LongRun Equity's Q1 underperformance was driven by technology sell-offs amid risk-off sentiment, partially offset by defensive consumer staples resilience. New investments in semiconductor software leader Cadence and aerospace giant GE Aerospace capitalize on quality businesses with strong competitive moats. Management expects attractive low double-digit forward returns from current valuations. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI infrastructure demand is driving significant growth in data center interconnect content. The fund views AI as creating both opportunities and risks, with some quality businesses experiencing multiple compression due to assumptions that AI will erode their moats. The fund added Nvidia as a new position, viewing it as fundamentally stronger despite de-rating, with superior performance per watt and high switching costs via CUDA. |
Data Centers Semiconductors Cloud CUDA Infrastructure |
Data CentersData center buildout is a major growth driver, particularly for interconnect products. AI training clusters require ever-higher speeds and more sophisticated copper and optical interconnects. Power consumption per rack has multiplied, making power distribution critical. Hyperscale customers are placing long-dated commitments and co-funding capacity expansion to secure supply. |
AI Interconnects Power Hyperscale Infrastructure | |
SemiconductorsASML was a top contributor, positioned as one of the best businesses within AI infrastructure with mission-critical and unique products. Samsung and SK Hynix capacity buildout will drive new tool sales and grow the installed base requiring servicing. Nvidia was added as a new position with superior architectural design and high switching costs. |
ASML Nvidia Memory Equipment CUDA | |
DefenseGE Aerospace's Defense business showed positive momentum with a book-to-bill ratio exceeding 2x. The division benefits from rising defense budgets and increasing electronic content per platform. Defense is identified as one of Amphenol's growth end markets alongside commercial aerospace. |
Defense Spending Aerospace Electronics Backlog | |
QualityThe fund maintains focus on high-quality businesses with strong competitive moats, superior economics, and compounding ability. Many quality businesses are experiencing attractive valuations as multiples have compressed due to market assumptions about AI disruption, despite continued earnings delivery. The portfolio maintains 31% operating margins, 63% ROIC, and 10% cross-cycle sales growth. |
Moats Margins ROIC Compounding Valuation | |
Capital allocationThe fund emphasizes management teams that allocate capital as if it were their own, with skin in the game and incentives centered on long-term value creation. Amphenol exemplifies this with its decentralized structure where 130 business unit managers have full P&L responsibility and are compensated on their own unit results. The fund views capital allocation as the most important job of management. |
Management Incentives Buybacks M&A Returns | |
| 2026 Q1 |
OilRising oil prices due to Middle East tensions triggered market corrections but also created opportunities. Energy sector outperformed significantly with +38.4% returns. Recent ceasefire in Iran has led to oil price declines, reducing the energy risk premium. |
Oil Energy Middle East Geopolitical Inflation |
InflationEnergy price increases reignited inflation expectations, particularly in the US. This has influenced monetary policy expectations and market positioning. The temporary nature of energy-driven inflation is emphasized. |
Inflation Energy Monetary Policy Fed Rates | |
ValueValue style significantly outperformed growth style in Q1 2026, posting +2.1% versus -5.9% for growth. This outperformance was driven largely by energy sector gains and rising interest rates that penalized duration-sensitive growth stocks. |
Value Growth Style Outperformance Energy | |
EuropeEuropean equity valuations have become more attractive following the correction, trading at 13.9x P/E versus 20.5x for US markets. The region benefits from controlled inflation, potential monetary easing, and manufacturing recovery, particularly in Germany. |
Europe Valuation Manufacturing Germany Recovery | |
| 2025 Q4 |
SuccessionSuccession planning is critical for families and businesses, requiring early planning, clear communication, and strong values. The letter emphasizes that successful transitions involve preparing the next generation through gradual involvement, fostering stewardship mindset, and maintaining continuity while allowing evolution. Japanese businesses with over 100 years of operation demonstrate how values-based succession creates resilience. |
Family Business Leadership Planning Values Stewardship |
| 2025 Q3 |
AIAI has sparked a global race to develop specialized, high-performance chips. Cloud providers like Google, Amazon, Meta and Microsoft, along with many startups, are now designing their own AI chips. Each new design requires advanced tools for modeling and verification, driving demand for chip design software. AI is a long-term trend spanning data centers to edge devices. |
Artificial Intelligence Chip Design Cloud Providers Semiconductors Data Centers |
SemiconductorsThe semiconductor industry exposure through picks and shovels approach had been a drag on performance until recently. Focus is shifting towards the backbone of the industry, particularly amid onshoring trends fueled by US government and Nvidia investments into Intel. Chip design sits at the beginning of the value chain where the fund is well positioned. |
Chip Design Onshoring EDA Foundries Semi Equipment | |
CloudAmazon Web Services is viewed as a highly profitable cloud computing division with growth potential. The market had viewed AWS growth as disappointing, but the manager sees a difference between falling behind and taking time for sustainable execution. Partnerships and monetization of generative AI capabilities are expected to support margin improvements. |
AWS Cloud Computing Generative AI Infrastructure SaaS | |
QualityThe fund's preference for highly profitable quality companies was not rewarded by the market, which focused on riskier, growth-oriented and often unprofitable companies. The strategy maintains focus on companies with superior economics, sustainable competitive advantages, and the ability to compound earnings over time. |
Profitability Competitive Advantage Compounding Margins Returns | |
| 2025 Q2 |
AISoftware companies like Intuit and Microsoft increased by around 30% with the market pushing their rating higher thanks to their near impenetrable market positions which are likely to be further solidified through the use and successful monetization of artificial intelligence. Salesforce is positioned to augment its strong position further via the use of operational AI agents, such as its Agentforce initiative. |
Artificial Intelligence Software Monetization Agents Positioning |
Auto AftermarketO'Reilly Automotive operates in the consolidating U.S. aftermarket auto parts retail market. The company benefits from increasing vehicle age (currently 13 years) and mileage, with parts typically starting to fail after 60,000 miles. The business demonstrates antifragile characteristics, thriving during economic stress when new car purchases decline and people maintain existing vehicles longer. |
Vehicle Age Parts Retail Consolidation Antifragile Economic Stress | |
QualityThe fund focuses on high-quality companies with superior economics, strong market positions, pricing power, high margins and asset-light business models. Portfolio companies demonstrate strong competitive advantages with 76% having high competitive advantage strength and 100% having high switching costs. The strategy emphasizes wonderful companies at fair prices rather than fair companies at wonderful prices. |
Superior Economics Pricing Power Competitive Advantage Switching Costs Business Models | |
| 2025 Q1 |
QualityThe fund focuses on high-quality companies with superior economics, strong market positions, pricing power, high margins and asset-light business models. These characteristics result in high returns on capital and the ability to compound earnings over the long term. |
Quality Compounding Margins Returns Economics |
SemiconductorsThe fund invested in Cadence Design Systems, a leading provider of electronic design automation software for semiconductor chip design. EDA solutions are mission critical to the semiconductor industry as chip complexity increases, yet account for only a small share of customer spend. |
EDA Chip Design Software Mission Critical Complexity | |
AerospaceThe fund built a position in General Electric Aerospace, which dominates the narrowbody engine segment and controls around half of the widebody engine market. The aircraft engine market is characterized by near insurmountable barriers to entry, punitive switching costs and a large profitable aftermarket. |
Aircraft Engines Barriers Aftermarket Switching Costs Pricing Power |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 1, 2025 | Fund Letters | Rothschild & Co LongRun Equity Fund | ORLY | O'Reilly Automotive | Consumer Discretionary | Specialty Retail | Bull | NASDAQ | aftermarket, Antifragile, automotive, consolidation, defensive, Distribution, DIY, high-ROIC, market share, Parts, Professional, retail | Login |
| Jul 1, 2025 | Fund Letters | Rothschild & Co LongRun Equity Fund | CRM | Salesforce | Information Technology | Application Software | Bull | NYSE | Agentforce, AI, cloud, CRM, enterprise, margin expansion, recurring revenue, SaaS, Software, Workflow Integration | Login |
| Apr 1, 2025 | Fund Letters | Rothschild & Co LongRun Equity Fund | CDS | Cadence Design Systems | Information Technology | Application Software | Bull | NASDAQ | EDA software, market leader, Pricing power, semiconductors, Software, subscription model, technology | Login |
| Apr 1, 2025 | Fund Letters | Rothschild & Co LongRun Equity Fund | GE | General Electric Aerospace | Industrials | Aerospace & Defense | Bull | NYSE | Aerospace, aftermarket services, Aircraft engines, barriers to entry, Industrial, Joint venture, Pricing power | Login |
| Apr 1, 2025 | Fund Letters | Rothschild & Co LongRun Equity Fund | MSCI | MSCI Inc | Financials | Financial Exchanges & Data | Bull | NYSE | analytics, Benchmark Business, ESG Data, financial data, Index Provider, network effects, subscription model | Login |
| TICKER | COMMENTARY |
|---|---|
| ASML | We have long argued that ASML is one of the best-positioned businesses within the AI cohort as its products are mission-critical and unique. Samsung and SK Hynix's capacity build-out will not only result in new tool sales but also grow the installed base that requires servicing. |
| GE | GE Aerospace reported an outstanding set of results across all business lines. Commercial Engines & Services grew impressively on the back of strong engine deliveries. Momentum in the Defense business was also positive, with the division now boasting a book-to-bill ratio in excess of 2x. |
| INTU | Intuit reported slightly lower-than-expected revenues in the TurboTax business and was severely punished. Management was able to reduce its full-time workforce by a whopping 17%, demonstrating just how conducive the platform is to AI implementation. |
| 0700.HK | Tencent's performance was weighed down by macroeconomic concerns surrounding the Chinese economy, combined with the company's increased spending on AI. We are strong believers in businesses that provide platforms for AI implementation, and all of Tencent's business lines, both individually and collectively, lend themselves perfectly to monetisation. |
| APH | Amphenol offers a rare constellation: a mission-critical product portfolio, a genuinely entrepreneurial owner-operator culture, a proven acquisition machine and structural growth super-charged by the AI buildout – all wrapped in economics that keep improving. At around 32 times forward earnings, the shares are not optically cheap, but truly great businesses rarely are. Just as a connector is a small price to pay for a system that works, we consider today's valuation a fair price to pay for a business of this quality. We expect Amphenol to deliver double-digit compounding for years to come. The company reports in three segments: i) Harsh Environment Solutions, ii) Communications Solutions and iii) Interconnect & Sensor Systems, but the more instructive lens is its end markets: IT and data communications, defence, commercial aerospace, industrial, automotive, mobile devices and communications networks. The IT datacom market accounted for 36% of sales in 2025 and grew organically by around 120%. In the fourth quarter, orders reached a record USD 8.4 billion – a book-to-bill ratio of 1.3x – as hyperscale customers placed long-dated commitments and in some cases even co-funded Amphenol's capacity expansion to secure supply. The adjusted operating margin reached a record 26% in 2025, up from around 20% a decade ago. Adjusted earnings per share grew 77% in 2025 and have compounded in the high teens over the past decade. Free cash flow of USD 4.4 billion represented roughly 100% of adjusted net income. Returns on invested capital sit comfortably above 30%. |
| NVDA | Nvidia's profile has changed over time. End markets are now more stable due to the massive installed base built up over the years. Moreover, thanks to CUDA, Nvidia's software ecosystem for accelerated computing, switching costs are high, as moving to an alternative would cause enormous disruption given the depth of the developer tools and application libraries. It remains the go-to platform, ensuring that Nvidia will enjoy a healthy replacement cycle. Furthermore, its architectural design delivers superior performance for the power consumed. The stock has de-rated despite becoming fundamentally even stronger, and we are taking the opportunity to build a position. |
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