RS Large Cap Val Strategy

Investor Summary

The RS Large Cap Value Strategy is managed by Chief Investment Officer Robert J. Harris, who heads the experienced RS Value team within Victory Capital's RS Investments franchise. Harris joined the firm in 2005 after serving as a financial services analyst and global sector portfolio manager at Dresdner RCM Global Investors, bringing significant experience including eight years of service in the United States Air Force as a veteran of Operation Desert Storm. The investment team includes dedicated analysts Joseph Mainelli, Andrew Walker CFA, and Ryan Wilsey, who collectively bring decades of investment experience from firms including Janus Capital Group, Parnassus Investments, Scout Capital, and Goldman Sachs. The team operates within Victory Capital's institutional platform, which provides comprehensive operational infrastructure and regulatory compliance framework while preserving the RS franchise's investment decision-making independence and process integrity.

Fund Strategy

The RS Large Cap Value Strategy seeks to produce superior long-term risk-adjusted returns by investing in durable large capitalization companies that are led by strong management teams and are attractively valued. The investment decision process starts with business analysis and understanding the company's unit-level economics. The team are Return on Invested Capital (ROIC) focused investors and seek to invest in companies that can create shareholder value, due to an improvement in the returns of the existing assets, or attractive reinvestment opportunities. The evaluation of a company's management team is critical to the investment decision, with the team regularly meeting with management to gauge how they think about their business. To the RS Value Team, value investing is buying a business at a discount to what they believe it is actually worth. The team are long-term investors who use their investment time horizon as a competitive advantage and are attracted to out-of-favor and/or misunderstood companies in the market.

ANNUALIZED SINCE INCEPTION	QUARTERLY	YTD
12.24%	5.03%	6.03%

Executive Summary

The RS Large Cap Value Strategy underperformed its Russell 1000 Value Index benchmark in Q2 2026, returning 5.03% net versus 13.87% for the index. The S&P 500 rallied 15% during the quarter despite ongoing uncertainties including the Iran conflict, elevated inflation, and Federal Reserve leadership changes. Market leadership shifted from the Magnificent Seven hyperscalers to AI infrastructure providers including semiconductors, memory, and power generators, driving strong performance in Industrials and Energy sectors. Small cap stocks outperformed large caps as investors moved down the cap spectrum. The strategy's underperformance was driven by unfavorable stock selection in Information Technology and Industrials, partially offset by positive selection in Communication Services, Consumer Staples, and Energy. The team maintains its ROIC-focused approach, seeking companies with sound balance sheets, improving fundamentals, and stock prices trading at deep discounts to intrinsic value. Key holdings include CVS Health, which is recovering from Medicare Advantage margin compression, and MarketAxess, where the team remains positive on structural change opportunities. Looking ahead, the team continues to prioritize businesses with improving ROIC and strong balance sheets while maintaining strict valuation discipline and a margin of safety approach.

Core Thesis

The RS Value Team seeks to invest in good companies with strong management teams that are attractively valued, focusing on businesses with improving returns on invested capital (ROIC) and the potential to create shareholder value through improvement in existing asset returns or attractive reinvestment opportunities.

Forward Outlook

Investor sentiment has become more constructive as signs of improving economic activity driven by reshoring, electrification, infrastructure spending, and deregulation are supported by a somewhat more stable geopolitical environment. Markets continue to benefit from sustained AI-related capital expenditure. However, the ceasefire in Iran remains fragile, and lingering questions surrounding inflation and interest rates warrant caution. The strategy continues to prioritize businesses with improving ROIC and strong balance sheets, maintaining a disciplined margin of safety approach as the market navigates a more constructive but still uncertain environment.

Date	Letter	Tickers	Keywords	Pitches	Quick Takes
Jul 15 2026	2026 Q2	AMAT, CHKP, CRM, CVS, FDX, MAT, MKTX, SSNC, USFD, VLO, XOM, ZBRA	AI, healthcare, inflation, large cap, ROIC, small caps, value	CVS MKTX	RS Large Cap Value underperformed in Q2 2026, returning 5.03% net versus 13.87% for the Russell 1000 Value Index. Market leadership shifted from hyperscalers to AI infrastructure providers. The team maintains its ROIC-focused value approach, seeking companies with improving returns and deep valuation discounts. Key holdings include CVS Health recovering from Medicare Advantage pressures and MarketAxess benefiting from structural change. Strict valuation discipline and margin of safety remain paramount.
Apr 22 2026	2026 Q1	FDX, MAT	AI, energy, Geopolitical, large cap, Logistics, ROIC, value	FDX MAT	RS Large Cap Value underperformed in Q1 2026 as geopolitical tensions shifted market leadership from growth to value. Energy holdings drove outperformance while technology selections detracted. The team maintains focus on quality businesses with improving ROIC, positioned defensively for continued volatility while ready to capitalize on market dislocations.
Feb 12 2026	2025 Q4	C, CHKP, ETN, GOOGL, KEY, MDLZ, PNC, REGN, SEE, TEVA, ZBRA	AI, Data centers, financials, Grid Upgrade, healthcare, large cap, ROIC, value	SEE ETN	RS Large Cap Value outperformed in Q4 with 5.77% net returns, benefiting from value's outperformance versus growth and strong healthcare/financial selections. The team sees attractive opportunities in value stocks being ignored amid AI-driven market concentration, focusing on quality companies with improving ROIC trading at discounts to intrinsic value.
Oct 20 2025	2025 Q3	ABBV, C, CI, CPAY, CRM, GOOGL, KDP, LKQ, TEVA, VLO	Fed, large cap, rates, Refiners, ROIC, small cap, tariffs, value	VLO LKQ VLO LKQ	RS Large Cap Value underperformed in Q3 with 4.47% net returns versus 5.33% for the Russell 1000 Value Index. The Fed's rate cut and administration's economic policies create mixed signals. Small-cap value shows promise with 12.6% quarterly returns. The team maintains focus on quality companies with improving ROIC trading at discounts to intrinsic value.
Jul 27 2025	2025 Q2	APH, C, CACI, CPAY, EG, ETN, FFH.TO, LKQ, ST, UNH, XOM	defense, large cap, Quality, ROIC, tariffs, technology, Trade Policy, value	CACI CPAY	RS Large Cap Value returned 3.55% net in Q2, slightly trailing its benchmark amid tariff-driven volatility. The ROIC-focused strategy targets quality companies at discounts to intrinsic value, with defense contractor CACI and payments processor Corpay as key holdings. The team anticipates higher inflation and rates ahead but sees opportunities in reduced regulation and M&A activity.
Mar 31 2025	2025 Q1	ABBV, CBOE, CI, CRM, EXC, GOOGL, RRX, TEVA, XOM, ZBRA	large cap, Pharmaceuticals, ROIC, tariffs, value, volatility	ABBV ZBRA	RS Large Cap Value outperformed during Q1's volatile market, returning 1.57% versus the benchmark's -2.14% decline. The team capitalizes on tariff-driven uncertainty and market dislocations to find quality companies with improving ROIC trading at discounts. AbbVie's strong performance and obesity drug deal exemplify their approach. Value strategies appear well-positioned as growth valuations normalize.
Jun 30 2024	2024 Q2	APH, CI, CPAY, CRM, GOOGL, GS, LKQ, PCAR, TEVA, TKO, VST	financials, healthcare, large cap, ROIC, value	TEVA CPAY	RS Large Cap Value outperformed by 300+ basis points in Q2 despite value's continued underperformance versus growth. Strong stock selection in Financials and Healthcare drove results. The team remains focused on quality companies with improving ROIC trading at deep discounts, believing value investing is positioned for outperformance after years of growth stock dominance.

Date

Letter

Tickers

Keywords

Pitches

Quick Takes

Jul 15 2026

2026 Q2

AMAT, CHKP, CRM, CVS, FDX, MAT, MKTX, SSNC, USFD, VLO, XOM, ZBRA

AI, healthcare, inflation, large cap, ROIC, small caps, value

CVS
MKTX

RS Large Cap Value underperformed in Q2 2026, returning 5.03% net versus 13.87% for the Russell 1000 Value Index. Market leadership shifted from hyperscalers to AI infrastructure providers. The team maintains its ROIC-focused value approach, seeking companies with improving returns and deep valuation discounts. Key holdings include CVS Health recovering from Medicare Advantage pressures and MarketAxess benefiting from structural change. Strict valuation discipline and margin of safety remain paramount.

Apr 22 2026

2026 Q1

FDX, MAT

AI, energy, Geopolitical, large cap, Logistics, ROIC, value

FDX
MAT

RS Large Cap Value underperformed in Q1 2026 as geopolitical tensions shifted market leadership from growth to value. Energy holdings drove outperformance while technology selections detracted. The team maintains focus on quality businesses with improving ROIC, positioned defensively for continued volatility while ready to capitalize on market dislocations.

Feb 12 2026

2025 Q4

C, CHKP, ETN, GOOGL, KEY, MDLZ, PNC, REGN, SEE, TEVA, ZBRA

AI, Data centers, financials, Grid Upgrade, healthcare, large cap, ROIC, value

SEE
ETN

RS Large Cap Value outperformed in Q4 with 5.77% net returns, benefiting from value's outperformance versus growth and strong healthcare/financial selections. The team sees attractive opportunities in value stocks being ignored amid AI-driven market concentration, focusing on quality companies with improving ROIC trading at discounts to intrinsic value.

Oct 20 2025

2025 Q3

ABBV, C, CI, CPAY, CRM, GOOGL, KDP, LKQ, TEVA, VLO

Fed, large cap, rates, Refiners, ROIC, small cap, tariffs, value

VLO
LKQ
VLO
LKQ

RS Large Cap Value underperformed in Q3 with 4.47% net returns versus 5.33% for the Russell 1000 Value Index. The Fed's rate cut and administration's economic policies create mixed signals. Small-cap value shows promise with 12.6% quarterly returns. The team maintains focus on quality companies with improving ROIC trading at discounts to intrinsic value.

Jul 27 2025

2025 Q2

APH, C, CACI, CPAY, EG, ETN, FFH.TO, LKQ, ST, UNH, XOM

defense, large cap, Quality, ROIC, tariffs, technology, Trade Policy, value

CACI
CPAY

RS Large Cap Value returned 3.55% net in Q2, slightly trailing its benchmark amid tariff-driven volatility. The ROIC-focused strategy targets quality companies at discounts to intrinsic value, with defense contractor CACI and payments processor Corpay as key holdings. The team anticipates higher inflation and rates ahead but sees opportunities in reduced regulation and M&A activity.

Mar 31 2025

2025 Q1

ABBV, CBOE, CI, CRM, EXC, GOOGL, RRX, TEVA, XOM, ZBRA

large cap, Pharmaceuticals, ROIC, tariffs, value, volatility

ABBV
ZBRA

RS Large Cap Value outperformed during Q1's volatile market, returning 1.57% versus the benchmark's -2.14% decline. The team capitalizes on tariff-driven uncertainty and market dislocations to find quality companies with improving ROIC trading at discounts. AbbVie's strong performance and obesity drug deal exemplify their approach. Value strategies appear well-positioned as growth valuations normalize.

Jun 30 2024

2024 Q2

APH, CI, CPAY, CRM, GOOGL, GS, LKQ, PCAR, TEVA, TKO, VST

financials, healthcare, large cap, ROIC, value

TEVA
CPAY

RS Large Cap Value outperformed by 300+ basis points in Q2 despite value's continued underperformance versus growth. Strong stock selection in Financials and Healthcare drove results. The team remains focused on quality companies with improving ROIC trading at deep discounts, believing value investing is positioned for outperformance after years of growth stock dominance.

QUARTER	THEMES	TAGS
2026 Q2	AI Leadership in the AI trade has shifted from the Magnificent Seven hyperscalers to the infrastructure supporting the AI boom, including semiconductors, memory, power generators, and ancillary players. This broadening trend drove strong performance in Industrials and Energy sectors. Markets continue to benefit from sustained AI-related capital expenditure, with ongoing investment in infrastructure and compute capacity providing meaningful demand across technology and industrial supply chains.	Semiconductors Infrastructure Data Centers Hyperscalers Capital Expenditure
	Value The RS Value Team focuses on ROIC-driven investing, seeking companies with improving returns on invested capital and attractive valuations. The team emphasizes buying businesses at a discount to intrinsic value, with a strict valuation discipline and margin of safety approach. They prioritize companies with sound balance sheets, solid fundamentals, and stock prices trading at deep discounts to intrinsic value as a formula for attractive risk-adjusted returns over longer time periods.	ROIC Valuation Intrinsic Value Margin of Safety Discount
	Healthcare CVS Health was initiated in early 2025 after shares fell due to prior management's aggressive Medicare Advantage expansion coinciding with post-COVID medical utilization rebound. The company benefited from strong first-quarter results, raised guidance, and S&P credit outlook revision. Medicare Advantage insurers received a meaningful tailwind from CMS finalizing a 2.5% rate increase for 2027, while recent utilization data point to moderating medical cost trends, supporting a credible path to earnings recovery over the next two to three years.	Medicare Advantage Managed Care Medical Utilization Margin Recovery Pharmaceuticals
	Small Caps Small cap stocks as measured by the Russell 2000 have outperformed the S&P 500 for the second quarter and throughout the first half of the year. This reflects investors' increasing willingness to move down the cap spectrum, perhaps reflecting both the potential of many smaller companies as well as their relative valuations. Small-cap value stocks were top performers among the value cohort, returning 17.2% for the quarter.	Russell 2000 Valuation Outperformance Cap Spectrum
	Energy Energy prices have receded as the conflict in the Middle East is likely to end soon, with the ceasefire in Iran helping ease tensions and contributing to a pullback in oil prices. This has relieved some inflationary pressure that had weighed on markets in recent quarters. However, the ceasefire remains fragile and the risk of renewed escalation has not fully dissipated. Energy was the worst-performing sector in the quarter, posting a return of -13.77%.	Oil Middle East Geopolitics Inflation
	Inflation Elevated inflation readings remain an ongoing concern, with lingering questions surrounding inflation and how it could impact interest rates and consequently equities over the medium term. New leadership at the Federal Reserve has suggested a preference to focus more on price stability versus employment, and Treasury yields have risen this year in response. The pullback in oil prices has relieved some of the inflationary pressure that had weighed on markets in recent quarters.	Federal Reserve Interest Rates Price Stability Treasury Yields
	Infrastructure Spending Investor sentiment has become more constructive as signs of improving economic activity are driven by the potential for reshoring, electrification, infrastructure spending, and deregulation. These themes lend structural support to the economic outlook and provide meaningful sources of demand across technology and industrial supply chains.	Reshoring Electrification Deregulation Economic Activity
2026 Q1	Value Value stocks significantly outperformed growth during Q1 2026 market turmoil, with Russell 3000 Value returning 2.2% versus -9.5% for growth. The team continues to focus on value-oriented segments believing they offer better risk-adjusted returns in uncertain environments.	Value Growth Outperformance Risk-adjusted Multiples
	Energy Energy emerged as the leading sector with 38.12% returns during Q1 amid Middle East conflict and oil price volatility. The team holds energy positions including Exxon Mobil and Valero Energy which were top contributors to performance.	Energy Oil Geopolitical Volatility Outperformance
	AI AI adoption expectations initially boosted market sentiment but later caused multiple compression among software stocks. The team notes AI might boost individual company earnings but potentially at the expense of overall employment and questions which sectors might be next to be disrupted.	AI Software Disruption Employment Valuation
	Logistics FedEx represents a key logistics holding where the company's strategic shift to focus on ROIC has driven outperformance. The upcoming freight business spin-off should allow both segments to optimize their paths toward higher returns.	Logistics ROIC Spin-off Optimization Returns
2025 Q4	Industrial Gases SOL Group operates dual-engine industrial gas franchise serving 50k customers across 32 countries plus homecare health business. Manager views gases as expensive to transport creating local oligopolies with high barriers to entry through infrastructure networks built over decades.	Industrial Gases Infrastructure Oligopoly Barriers Distribution
	Healthcare Vivisol homecare business serves 750k patients as largest home respiratory care provider in Italy, Belgium, Netherlands. Growth driven by aging demographics and healthcare systems moving chronic care from hospitals to homes with government reimbursement.	Homecare Demographics Respiratory Reimbursement Chronic Care
	AI Manager maintains cautious stance on AI impact, preferring businesses with high barriers to entry unlikely to see unit economics negatively affected by AI. Appetite for exceptionally resilient business models has grown since AI boom.	Artificial Intelligence Disruption Barriers Resilience Software
2025 Q3	Value The team continues to believe that actively managed, value-oriented approaches should be well positioned going forward. They focus on companies with improving ROIC trading at discounts to intrinsic value. Small-cap value stocks showed impressive performance with a 12.6% return in Q3, representing an area where they see intriguing potential and attractive risk-reward tradeoff.	ROIC Intrinsic Value Small Cap Risk-Adjusted Returns Discount
	Rates The Federal Reserve finally cut the federal funds rate by 25 basis points in September, responding to declining job creation and rising unemployment. The rate cut helped fuel technology and communication services sectors and rekindled interest in small-cap stocks. Current conditions suggest a more inflationary and higher interest rate environment than the past decade.	Fed Rate Cuts Unemployment Inflation Monetary Policy
	Trade Policy The new administration's focus on economic renaissance includes strategic tariffs targeting U.S. trade deficits, which triggered volatility in global markets. The Liberation Day tariff announcement roiled markets earlier, though there remains no absolute clarity on trade policy. Incremental tariffs on auto parts are expected to add to collision repair costs.	Tariffs Trade Deficits Economic Renaissance Volatility Auto Parts
	Refiners Valero Energy Corporation operates 15 petroleum refineries and focuses on optimizing return on invested capital. The company has structural advantages through U.S. natural gas allowing lower cost base relative to many global refiners. Recent industry consolidation and closure of high-cost U.S. refineries have resulted in additional economic value accruing to Valero.	Natural Gas Cost Advantage Industry Consolidation Free Cash Flow Refining
2025 Q2	Trade Policy The quarter was dominated by tariff-induced volatility, with markets initially selling off on Liberation Day tariff announcements before recovering on perceived softening of the administration's trade policy stance. The administration's protectionist policies have introduced significant uncertainty, overshadowing economic renaissance goals and impacting global currencies and markets.	Tariffs Protectionism Trade Policy Volatility
	Value The RS Value Team focuses on ROIC-driven investing, seeking companies trading at discounts to intrinsic value with improving returns on invested capital. Value-oriented equities participated in the second-quarter rally with far less volatility than growth stocks, though large-cap value lagged growth during the period.	ROIC Intrinsic Value Discount Value Investing Returns
	Defense CACI International, which derives 74% of revenues from the U.S. Department of Defense and 21% from federal civilian institutions including intelligence agencies, benefits from bipartisan support for defense and security initiatives. The company is positioned as an important part of mission-critical efforts with growing future opportunities.	Defense Spending Government Security Intelligence Contracts
2025 Q1	Value The team continues to focus on value-oriented strategies, believing they are well-positioned in the current environment of elevated volatility. They seek companies with improving ROIC trading at deep discounts to intrinsic value, emphasizing that value stocks outperformed growth during the quarter's market decline.	ROIC Intrinsic Value Discount Fundamentals Cash Flows
	Volatility The quarter was characterized by significant market volatility driven by uncertainty around tariffs, economic growth, and monetary policy. The team views volatility as an opportunity for patient, long-term investors to find compelling opportunities during times of market tumult.	Market Volatility Uncertainty Risk-off Patient Capital
	Trade Policy Tariff uncertainty was a major market driver, with questions about whether they are negotiating tools or will slow global trade and act as GDP headwinds. The team notes tariffs could impact inflation and corporate profits, creating both risks and opportunities.	Tariffs Trade Inflation GDP Corporate Profits
2024 Q2	Value The team focuses on investing in companies trading at deep discounts to intrinsic value with improving ROIC. They believe value-oriented approaches should be well positioned following years of low interest rates driving growth stock valuations higher.	ROIC Discount Intrinsic Undervalued Fundamentals
	Pharmaceuticals TEVA Pharmaceutical outperformed due to positive clinical data, successful product launches, and stabilizing generic pricing. The company showed promising sales from newer products and received approvals for biosimilar versions.	Generics Biosimilars Clinical Pricing Innovation

QUARTER

THEMES

AI

Leadership in the AI trade has shifted from the Magnificent Seven hyperscalers to the infrastructure supporting the AI boom, including semiconductors, memory, power generators, and ancillary players. This broadening trend drove strong performance in Industrials and Energy sectors. Markets continue to benefit from sustained AI-related capital expenditure, with ongoing investment in infrastructure and compute capacity providing meaningful demand across technology and industrial supply chains.

Semiconductors Infrastructure Data Centers Hyperscalers Capital Expenditure

Value

The RS Value Team focuses on ROIC-driven investing, seeking companies with improving returns on invested capital and attractive valuations. The team emphasizes buying businesses at a discount to intrinsic value, with a strict valuation discipline and margin of safety approach. They prioritize companies with sound balance sheets, solid fundamentals, and stock prices trading at deep discounts to intrinsic value as a formula for attractive risk-adjusted returns over longer time periods.

ROIC Valuation Intrinsic Value Margin of Safety Discount

Healthcare

CVS Health was initiated in early 2025 after shares fell due to prior management's aggressive Medicare Advantage expansion coinciding with post-COVID medical utilization rebound. The company benefited from strong first-quarter results, raised guidance, and S&P credit outlook revision. Medicare Advantage insurers received a meaningful tailwind from CMS finalizing a 2.5% rate increase for 2027, while recent utilization data point to moderating medical cost trends, supporting a credible path to earnings recovery over the next two to three years.

Medicare Advantage Managed Care Medical Utilization Margin Recovery Pharmaceuticals

Small Caps

Small cap stocks as measured by the Russell 2000 have outperformed the S&P 500 for the second quarter and throughout the first half of the year. This reflects investors' increasing willingness to move down the cap spectrum, perhaps reflecting both the potential of many smaller companies as well as their relative valuations. Small-cap value stocks were top performers among the value cohort, returning 17.2% for the quarter.

Russell 2000 Valuation Outperformance Cap Spectrum

Energy

Energy prices have receded as the conflict in the Middle East is likely to end soon, with the ceasefire in Iran helping ease tensions and contributing to a pullback in oil prices. This has relieved some inflationary pressure that had weighed on markets in recent quarters. However, the ceasefire remains fragile and the risk of renewed escalation has not fully dissipated. Energy was the worst-performing sector in the quarter, posting a return of -13.77%.

Oil Middle East Geopolitics Inflation

Inflation

Elevated inflation readings remain an ongoing concern, with lingering questions surrounding inflation and how it could impact interest rates and consequently equities over the medium term. New leadership at the Federal Reserve has suggested a preference to focus more on price stability versus employment, and Treasury yields have risen this year in response. The pullback in oil prices has relieved some of the inflationary pressure that had weighed on markets in recent quarters.

Federal Reserve Interest Rates Price Stability Treasury Yields

Infrastructure Spending

Investor sentiment has become more constructive as signs of improving economic activity are driven by the potential for reshoring, electrification, infrastructure spending, and deregulation. These themes lend structural support to the economic outlook and provide meaningful sources of demand across technology and industrial supply chains.

Reshoring Electrification Deregulation Economic Activity

2026 Q1

Value

Value stocks significantly outperformed growth during Q1 2026 market turmoil, with Russell 3000 Value returning 2.2% versus -9.5% for growth. The team continues to focus on value-oriented segments believing they offer better risk-adjusted returns in uncertain environments.

Value Growth Outperformance Risk-adjusted Multiples

Energy

Energy emerged as the leading sector with 38.12% returns during Q1 amid Middle East conflict and oil price volatility. The team holds energy positions including Exxon Mobil and Valero Energy which were top contributors to performance.

Energy Oil Geopolitical Volatility Outperformance

AI

AI adoption expectations initially boosted market sentiment but later caused multiple compression among software stocks. The team notes AI might boost individual company earnings but potentially at the expense of overall employment and questions which sectors might be next to be disrupted.

AI Software Disruption Employment Valuation

Logistics

FedEx represents a key logistics holding where the company's strategic shift to focus on ROIC has driven outperformance. The upcoming freight business spin-off should allow both segments to optimize their paths toward higher returns.

Logistics ROIC Spin-off Optimization Returns

2025 Q4

Industrial Gases

SOL Group operates dual-engine industrial gas franchise serving 50k customers across 32 countries plus homecare health business. Manager views gases as expensive to transport creating local oligopolies with high barriers to entry through infrastructure networks built over decades.

Industrial Gases Infrastructure Oligopoly Barriers Distribution

Healthcare

Vivisol homecare business serves 750k patients as largest home respiratory care provider in Italy, Belgium, Netherlands. Growth driven by aging demographics and healthcare systems moving chronic care from hospitals to homes with government reimbursement.

Homecare Demographics Respiratory Reimbursement Chronic Care

AI

Manager maintains cautious stance on AI impact, preferring businesses with high barriers to entry unlikely to see unit economics negatively affected by AI. Appetite for exceptionally resilient business models has grown since AI boom.

Artificial Intelligence Disruption Barriers Resilience Software

2025 Q3

Value

The team continues to believe that actively managed, value-oriented approaches should be well positioned going forward. They focus on companies with improving ROIC trading at discounts to intrinsic value. Small-cap value stocks showed impressive performance with a 12.6% return in Q3, representing an area where they see intriguing potential and attractive risk-reward tradeoff.

ROIC Intrinsic Value Small Cap Risk-Adjusted Returns Discount

Rates

The Federal Reserve finally cut the federal funds rate by 25 basis points in September, responding to declining job creation and rising unemployment. The rate cut helped fuel technology and communication services sectors and rekindled interest in small-cap stocks. Current conditions suggest a more inflationary and higher interest rate environment than the past decade.

Fed Rate Cuts Unemployment Inflation Monetary Policy

Trade Policy

The new administration's focus on economic renaissance includes strategic tariffs targeting U.S. trade deficits, which triggered volatility in global markets. The Liberation Day tariff announcement roiled markets earlier, though there remains no absolute clarity on trade policy. Incremental tariffs on auto parts are expected to add to collision repair costs.

Tariffs Trade Deficits Economic Renaissance Volatility Auto Parts

Refiners

Valero Energy Corporation operates 15 petroleum refineries and focuses on optimizing return on invested capital. The company has structural advantages through U.S. natural gas allowing lower cost base relative to many global refiners. Recent industry consolidation and closure of high-cost U.S. refineries have resulted in additional economic value accruing to Valero.

Natural Gas Cost Advantage Industry Consolidation Free Cash Flow Refining

2025 Q2

Trade Policy

The quarter was dominated by tariff-induced volatility, with markets initially selling off on Liberation Day tariff announcements before recovering on perceived softening of the administration's trade policy stance. The administration's protectionist policies have introduced significant uncertainty, overshadowing economic renaissance goals and impacting global currencies and markets.

Tariffs Protectionism Trade Policy Volatility

Value

The RS Value Team focuses on ROIC-driven investing, seeking companies trading at discounts to intrinsic value with improving returns on invested capital. Value-oriented equities participated in the second-quarter rally with far less volatility than growth stocks, though large-cap value lagged growth during the period.

ROIC Intrinsic Value Discount Value Investing Returns

Defense

CACI International, which derives 74% of revenues from the U.S. Department of Defense and 21% from federal civilian institutions including intelligence agencies, benefits from bipartisan support for defense and security initiatives. The company is positioned as an important part of mission-critical efforts with growing future opportunities.

Defense Spending Government Security Intelligence Contracts

2025 Q1

Value

The team continues to focus on value-oriented strategies, believing they are well-positioned in the current environment of elevated volatility. They seek companies with improving ROIC trading at deep discounts to intrinsic value, emphasizing that value stocks outperformed growth during the quarter's market decline.

ROIC Intrinsic Value Discount Fundamentals Cash Flows

Volatility

The quarter was characterized by significant market volatility driven by uncertainty around tariffs, economic growth, and monetary policy. The team views volatility as an opportunity for patient, long-term investors to find compelling opportunities during times of market tumult.

Market Volatility Uncertainty Risk-off Patient Capital

Trade Policy

Tariff uncertainty was a major market driver, with questions about whether they are negotiating tools or will slow global trade and act as GDP headwinds. The team notes tariffs could impact inflation and corporate profits, creating both risks and opportunities.

Tariffs Trade Inflation GDP Corporate Profits

2024 Q2

Value

The team focuses on investing in companies trading at deep discounts to intrinsic value with improving ROIC. They believe value-oriented approaches should be well positioned following years of low interest rates driving growth stock valuations higher.

ROIC Discount Intrinsic Undervalued Fundamentals

Pharmaceuticals

TEVA Pharmaceutical outperformed due to positive clinical data, successful product launches, and stabilizing generic pricing. The company showed promising sales from newer products and received approvals for biosimilar versions.

Generics Biosimilars Clinical Pricing Innovation

Date	Pitch Type	Author	Ticker	Company	Industry	Sub Industry	Bull / Bear	Exchange	Keywords	Action
Jul 15, 2026	Fund Letters	RS Large Cap Val Strategy	CVS	CVS Health	Healthcare Plans	Health Care Services	Bull	New York Stock Exchange	Health Care Services, health insurance, Margin recovery, Medicare Advantage, Pharmacy Benefits Management, ROIC Improvement, turnaround, Value	Login
Jul 15, 2026	Fund Letters	RS Large Cap Val Strategy	MKTX	MarketAxess Holdings Inc	Capital Markets	Financial Exchanges & Data	Bull	NASDAQ	Electronic Trading Platform, Financial Exchanges, Fintech, fixed income, Market Share Leader, new management, Structural Growth, Value	Login
Apr 22, 2026	Fund Letters	RS Large Cap Val Strategy	FDX	FedEx Corporation	Integrated Freight & Logistics	Air Freight & Logistics	Bull	New York Stock Exchange	cost savings, Logistics, margin expansion, ROIC, share repurchases, spin-off, Transportation	Login
Apr 22, 2026	Fund Letters	RS Large Cap Val Strategy	MAT	Mattel, Inc.	Leisure	Leisure Products	Bull	NASDAQ	Brand Licensing, Digital gaming, entertainment, Intellectual Property, ROIC, strategic investment, Toy Manufacturer	Login
Feb 12, 2026	Fund Letters	Robert J. Harris	SEE	Sealed Air Corporation	Materials	Packaging & Containers	Bull	New York Stock Exchange	cashflow, Margins, Packaging, ROIC, takeover, turnaround	Login
Feb 12, 2026	Fund Letters	Robert J. Harris	ETN	Eaton Corporation plc	Industrials	Electrical Components & Equipment	Bull	New York Stock Exchange	AI, datacenters, Electrification, Grid, Margins, ROIC	Login
Oct 20, 2025	Fund Letters	Robert J. Harris	VLO	Valero Energy Corporation	Energy	Oil & Gas Refining & Marketing	Bull	NYSE	cashflow, Cost advantage, Decarbonization, Diesel, energy, FCF, Margins, refining, shareholder returns, valuation	Login
Oct 20, 2025	Fund Letters	Robert J. Harris	LKQ	LKQ Corporation	Consumer Discretionary	Auto Parts & Equipment	Bear	NASDAQ	Auto parts, Cost control, Cyclicality, exit, inflation, Margins, Reallocation, Repair, tariffs, Volumes	Login
Oct 20, 2025	Fund Letters	Robert J. Harris	VLO	Valero Energy Corporation	Energy	Oil & Gas Refining & Marketing	Bull	NYSE	cashflow, Cost advantage, Decarbonization, Diesel, energy, FCF, Margins, refining, shareholder returns, valuation	Login
Oct 20, 2025	Fund Letters	Robert J. Harris	LKQ	LKQ Corporation	Consumer Discretionary	Auto Parts & Equipment	Bear	NASDAQ	Auto parts, Cost control, Cyclicality, exit, inflation, Margins, Reallocation, Repair, tariffs, Volumes	Login
Jun 30, 2025	Fund Letters	RS Large Cap Val Strategy	CACI	CACI International Inc.	Information Technology	IT Consulting & Other Services	Bull	NYSE	Bipartisan Support, Defense, Federal Government, Government Contractor, IT services, Mission-Critical, value creation	Login
Jun 30, 2025	Fund Letters	RS Large Cap Val Strategy	CPAY	Corpay Inc.	Information Technology	Data Processing & Outsourced Services	Bull	NYSE	Acquisitions, B2B payments, Cross-Border, Fleet Payments, founder-led, Management alignment, ROIC Improvement, value creation	Login
Mar 31, 2025	Fund Letters	RS Large Cap Val Strategy	ABBV	AbbVie Inc.	Health Care	Pharmaceuticals	Bull	NYSE	Biotech, defensive, high-margin, Immunology, licensing deal, Neuroscience, Obesity, Patent cliff, pharmaceuticals, pipeline	Login
Mar 31, 2025	Fund Letters	RS Large Cap Val Strategy	ZBRA	Zebra Technologies Corporation	Information Technology	Technology Hardware, Storage & Peripherals	Bull	NASDAQ	Asset tracking, Automation, consumer spending, Cyclical, Distribution, efficiency, Hardware, healthcare, manufacturing, retail, Software, tariffs	Login
Jun 30, 2024	Fund Letters	RS Large Cap Val Strategy	TEVA	Teva Pharmaceutical Industries Ltd.	Health Care	Pharmaceuticals	Bull	NYSE	Biosimilars, Clinical trials, Generic Drugs, Leverage reduction, pharmaceuticals, Specialty medicines, turnaround, Value	Login
Jun 30, 2024	Fund Letters	RS Large Cap Val Strategy	CPAY	Corpay Inc.	Information Technology	Data Processing & Outsourced Services	Bull	NYSE	Acquisitions, capital allocation, cash flow generation, Corporate-payments, Fleet Management, founder-led, Payments, ROIC	Login

Date

Pitch Type

Author

Ticker

Company

Industry

Sub Industry

Bull / Bear

Exchange

Keywords

Action

Jul 15, 2026

Fund Letters

RS Large Cap Val Strategy

CVS

CVS Health

Healthcare Plans

Health Care Services

Bull

New York Stock Exchange

Health Care Services, health insurance, Margin recovery, Medicare Advantage, Pharmacy Benefits Management, ROIC Improvement, turnaround, Value

Jul 15, 2026

Fund Letters

RS Large Cap Val Strategy

MKTX

MarketAxess Holdings Inc

Capital Markets

Financial Exchanges & Data

Bull

NASDAQ

Electronic Trading Platform, Financial Exchanges, Fintech, fixed income, Market Share Leader, new management, Structural Growth, Value

Apr 22, 2026

Fund Letters

RS Large Cap Val Strategy

FDX

FedEx Corporation

Integrated Freight & Logistics

Air Freight & Logistics

Bull

New York Stock Exchange

cost savings, Logistics, margin expansion, ROIC, share repurchases, spin-off, Transportation

Apr 22, 2026

Fund Letters

RS Large Cap Val Strategy

MAT

Mattel, Inc.

Leisure

Leisure Products

Bull

NASDAQ

Brand Licensing, Digital gaming, entertainment, Intellectual Property, ROIC, strategic investment, Toy Manufacturer

Feb 12, 2026

Fund Letters

Robert J. Harris

SEE

Sealed Air Corporation

Materials

Packaging & Containers

Bull

New York Stock Exchange

cashflow, Margins, Packaging, ROIC, takeover, turnaround

Feb 12, 2026

Fund Letters

Robert J. Harris

ETN

Eaton Corporation plc

Industrials

Electrical Components & Equipment

Bull

New York Stock Exchange

AI, datacenters, Electrification, Grid, Margins, ROIC

Oct 20, 2025

Fund Letters

Robert J. Harris

VLO

Valero Energy Corporation

Energy

Oil & Gas Refining & Marketing

Bull

NYSE

cashflow, Cost advantage, Decarbonization, Diesel, energy, FCF, Margins, refining, shareholder returns, valuation

Oct 20, 2025

Fund Letters

Robert J. Harris

LKQ

LKQ Corporation

Consumer Discretionary

Auto Parts & Equipment

Bear

NASDAQ

Auto parts, Cost control, Cyclicality, exit, inflation, Margins, Reallocation, Repair, tariffs, Volumes

Oct 20, 2025

Fund Letters

Robert J. Harris

VLO

Valero Energy Corporation

Energy

Oil & Gas Refining & Marketing

Bull

NYSE

cashflow, Cost advantage, Decarbonization, Diesel, energy, FCF, Margins, refining, shareholder returns, valuation

Oct 20, 2025

Fund Letters

Robert J. Harris

LKQ

LKQ Corporation

Consumer Discretionary

Auto Parts & Equipment

Bear

NASDAQ

Auto parts, Cost control, Cyclicality, exit, inflation, Margins, Reallocation, Repair, tariffs, Volumes

Jun 30, 2025

Fund Letters

RS Large Cap Val Strategy

CACI

CACI International Inc.

Information Technology

IT Consulting & Other Services

Bull

NYSE

Bipartisan Support, Defense, Federal Government, Government Contractor, IT services, Mission-Critical, value creation

Jun 30, 2025

Fund Letters

RS Large Cap Val Strategy

CPAY

Corpay Inc.

Information Technology

Data Processing & Outsourced Services

Bull

NYSE

Acquisitions, B2B payments, Cross-Border, Fleet Payments, founder-led, Management alignment, ROIC Improvement, value creation

Mar 31, 2025

Fund Letters

RS Large Cap Val Strategy

ABBV

AbbVie Inc.

Health Care

Pharmaceuticals

Bull

NYSE

Biotech, defensive, high-margin, Immunology, licensing deal, Neuroscience, Obesity, Patent cliff, pharmaceuticals, pipeline

Mar 31, 2025

Fund Letters

RS Large Cap Val Strategy

ZBRA

Zebra Technologies Corporation

Information Technology

Technology Hardware, Storage & Peripherals

Bull

NASDAQ

Asset tracking, Automation, consumer spending, Cyclical, Distribution, efficiency, Hardware, healthcare, manufacturing, retail, Software, tariffs

Jun 30, 2024

Fund Letters

RS Large Cap Val Strategy

TEVA

Teva Pharmaceutical Industries Ltd.

Health Care

Pharmaceuticals

Bull

NYSE

Biosimilars, Clinical trials, Generic Drugs, Leverage reduction, pharmaceuticals, Specialty medicines, turnaround, Value

Jun 30, 2024

Fund Letters

RS Large Cap Val Strategy

CPAY

Corpay Inc.

Information Technology

Data Processing & Outsourced Services

Bull

NYSE

Acquisitions, capital allocation, cash flow generation, Corporate-payments, Fleet Management, founder-led, Payments, ROIC

TICKER	COMMENTARY
CVS	CVS Health is a diversified healthcare services company with leading positions in pharmacy benefits management, retail pharmacy, and health insurance (via its Aetna franchise). We initiated our investment in early 2025 after shares had fallen, driven largely by prior management's 'growth at any cost' strategy in Medicare Advantage. That aggressive expansion coincided with a sharp rebound in post-COVID medical utilization, leading to significant margin compression. From 2022 to 2024, the Health Care Benefits (HCB) segment's medical benefit ratio (medical costs / premium revenue) increased from 84.0% in 2022 to 92.5% in 2024. This weighed heavily on HCB operating margins, which fell from 6.9% in 2022 to 0.2% in 2024. During the second quarter, CVS benefited from both company-specific execution and improving industry fundamentals. The company reported strong first-quarter results, raised full-year guidance, and saw S&P revise its credit outlook from negative to stable. Additionally, Medicare Advantage insurers received a meaningful tailwind when The Centers for Medicare & Medicaid Services (CMS) finalized a 2.5% rate increase for 2027, well above the initially proposed 0.1%, while recent utilization data point to moderating medical cost trends. The combination of higher reimbursement and easing cost pressures should support a meaningful recovery in payer margins, and we continue to see a credible path to an earnings increase over the next two to three years. That said, we have trimmed the position opportunistically to fund other attractive ideas within the portfolio.
MKTX	MarketAxess Holdings Inc is a leading electronic trading platform for fixed income securities. MKTX connects institutional investors and broker-dealers for trading across corporate and government bonds. Servicing over 2,100 institutional clients, with nearly 20% market share of US corporate investment grade bond trading, the company has established a strong market position. Shares were under pressure during the quarter over concerns of increased competition and margin pressure. Despite the recent underperformance and broader market concerns, we remain positive on the structural change opportunity taking place under the new CEO and continue to hold the position.
XOM	Exxon Mobil Corporation was the top contributor to performance during the quarter, contributing 1.07% to return.
VLO	Valero Energy Corporation was a top contributor to performance during the quarter, contributing 0.68% to return.
FDX	FedEx Corporation was a top contributor to performance during the quarter, contributing 0.47% to return.
USFD	US Foods Holding Corp. was a top contributor to performance during the quarter, contributing 0.46% to return.
AMAT	Applied Materials, Inc. was a top contributor to performance during the quarter, contributing 0.41% to return.
CRM	Salesforce, Inc. was the top detractor from performance during the quarter, contributing -0.62% to return.
SSNC	SS&C Technologies Holdings, Inc. was a detractor from performance during the quarter, contributing -0.51% to return.
CHKP	Check Point Software Technologies was a detractor from performance during the quarter, contributing -0.47% to return.
MAT	Mattel, Inc. was a detractor from performance during the quarter, contributing -0.45% to return.
ZBRA	Zebra Technologies Corporation was a detractor from performance during the quarter, contributing -0.31% to return.

TICKER

COMMENTARY

CVS

CVS Health is a diversified healthcare services company with leading positions in pharmacy benefits management, retail pharmacy, and health insurance (via its Aetna franchise). We initiated our investment in early 2025 after shares had fallen, driven largely by prior management's 'growth at any cost' strategy in Medicare Advantage. That aggressive expansion coincided with a sharp rebound in post-COVID medical utilization, leading to significant margin compression. From 2022 to 2024, the Health Care Benefits (HCB) segment's medical benefit ratio (medical costs / premium revenue) increased from 84.0% in 2022 to 92.5% in 2024. This weighed heavily on HCB operating margins, which fell from 6.9% in 2022 to 0.2% in 2024. During the second quarter, CVS benefited from both company-specific execution and improving industry fundamentals. The company reported strong first-quarter results, raised full-year guidance, and saw S&P revise its credit outlook from negative to stable. Additionally, Medicare Advantage insurers received a meaningful tailwind when The Centers for Medicare & Medicaid Services (CMS) finalized a 2.5% rate increase for 2027, well above the initially proposed 0.1%, while recent utilization data point to moderating medical cost trends. The combination of higher reimbursement and easing cost pressures should support a meaningful recovery in payer margins, and we continue to see a credible path to an earnings increase over the next two to three years. That said, we have trimmed the position opportunistically to fund other attractive ideas within the portfolio.

MKTX

MarketAxess Holdings Inc is a leading electronic trading platform for fixed income securities. MKTX connects institutional investors and broker-dealers for trading across corporate and government bonds. Servicing over 2,100 institutional clients, with nearly 20% market share of US corporate investment grade bond trading, the company has established a strong market position. Shares were under pressure during the quarter over concerns of increased competition and margin pressure. Despite the recent underperformance and broader market concerns, we remain positive on the structural change opportunity taking place under the new CEO and continue to hold the position.

XOM

Exxon Mobil Corporation was the top contributor to performance during the quarter, contributing 1.07% to return.

VLO

Valero Energy Corporation was a top contributor to performance during the quarter, contributing 0.68% to return.

FDX

FedEx Corporation was a top contributor to performance during the quarter, contributing 0.47% to return.

USFD

US Foods Holding Corp. was a top contributor to performance during the quarter, contributing 0.46% to return.

AMAT

Applied Materials, Inc. was a top contributor to performance during the quarter, contributing 0.41% to return.

CRM

Salesforce, Inc. was the top detractor from performance during the quarter, contributing -0.62% to return.

SSNC

SS&C Technologies Holdings, Inc. was a detractor from performance during the quarter, contributing -0.51% to return.

CHKP

Check Point Software Technologies was a detractor from performance during the quarter, contributing -0.47% to return.

MAT

Mattel, Inc. was a detractor from performance during the quarter, contributing -0.45% to return.

ZBRA

Zebra Technologies Corporation was a detractor from performance during the quarter, contributing -0.31% to return.

Ticker	Put/Call	Amount Bought	Shares Bought	% Change	Weight %
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No Recent Buys Data

Ticker	Put/Call	Amount Sold	Shares Sold	% Change	Weight %	Status
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Industry	Prev Quarter %	Current Quarter %	Change
No industry data available

Industry

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Current Quarter %

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No industry data available

Investment Summary

Investor Summary

Fund Strategy

FUND PERFORMANCE AS OF 30th June 2026

Investor Letters

Latest Executive Summary:

Executive Summary

Core Thesis

Forward Outlook

Investment Themes

AI

Value

Healthcare

Small Caps

Energy

Inflation

Infrastructure Spending

Value

Energy

AI

Logistics

Industrial Gases

Healthcare

AI

Value

Rates

Trade Policy

Refiners

Trade Policy

Value

Defense

Value

Volatility

Trade Policy

Value

Pharmaceuticals

Investor Pitches

Current Portfolio as of ( 30th June 2026 )

Key Risks identified by Manager:

Key catalysts include:

Portfolio Implications

Ticker Commentary

Robert J. Harris Top Holdings

Recent Buys (13F)

Recent Sells (13F)

13F Sector Summary

Portfolio Distribution

Latest 13D & 13G Filings

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RS Large Cap Val Strategy