The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
Sandhill Investment Management's Q2 2026 letter describes a market characterized by strong headline performance but unusual underlying dynamics. The S&P 500 rebounded roughly 15% from lows, supported by the fastest expected earnings growth in five years, though valuations remain extended at 20.5 times forward earnings. Beneath the surface, 22 S&P 500 stocks have doubled this year, surpassing the 1999 record, driven primarily by semiconductor companies benefiting from AI data center spending. The sector now represents nearly 20% of the index, up from 2% a decade ago. However, more than half of Information Technology stocks are in bear markets. The manager is finding value in overlooked areas, recently initiating positions in Badger Meter, a water technology company benefiting from aging infrastructure replacement, and Forgent Power Solutions, an electrical equipment manufacturer positioned for AI-driven power demand. On the consumer side, while the top 10% of earners drive nearly half of all spending, broader strain is evident with savings rates near 60-year lows and sentiment at pandemic-era depths. The firm is modestly extending duration in corporate bonds at yields above 5% while remaining selective in equities.
While broad market valuations remain elevated and consumer data shows growing strain beneath the surface, significant dispersion is creating attractive entry points in quality businesses that have been overlooked as investors fixate on AI-driven data center buildouts.
The manager expects to continue taking advantage of short-term volatility to invest in durable businesses with attractive long-term prospects, while remaining mindful of the broader economic backdrop. The firm is tracking unusual movements in both markets and the economy that are shaping views for the second half of the year and beyond, including growing consumer strain despite strong headline spending data.
As of Jul 30, 2026
Lead Portfolio Manager
Moderate Conviction Bullish
Market Conviction
The manager names and sizes two specific new positions (Badger Meter and Forgent Power Solutions) with detailed investment theses for each, including competitive positioning, growth drivers, and entry point rationale. However, the letter does not disclose total position count, concentration levels, or explicit position sizing beyond 'initiated a position.' The language is confident but includes standard hedging ('we believe,' 'we are finding'). The discussion of multiple scenarios (strong markets vs. consumer strain) without a definitive base case, combined with the lack of portfolio concentration data, places this in the moderate conviction range rather than high conviction.
Growth Outlook
Market outlook remains low conviction: Middle East conflict has created 9% market pullback, but historical analysis shows geopolitical shocks typically recover within twelve months. Sandhill is using volatility to upgra...
Risk Appetite
Risk appetite posture is moderate conviction: Middle East conflict has created 9% market pullback, but historical analysis shows geopolitical shocks typically recover within twelve months. Sandhill is using volatility to upgra...
Capital Deployment
The manager initiated two new equity positions (Badger Meter and Forgent Power Solutions) and is modestly extending duration in fixed income, moving from shorter-dated bonds to longer maturities at yields above 5%. The letter explicitly states 'we are putting capital to work' and 'taking advantage of short-term volatility.' However, no specific cash level changes are disclosed, and deployment is characterized as 'selective' rather than aggressive. The combination of two new positions plus duration extension suggests moderate deployment activity, scoring in the moderate deployment range.
Forward Guidance
Forward guidance signal: Middle East conflict has created 9% market pullback, but historical analysis shows geopolitical shocks typically recover within twelve months. Sandhill is using volatility to upgra...
Language Signal
The letter contains a balanced mix of directional language. Bullish terms include 'attractive entry points,' 'compelling value,' 'durable growth runway,' 'strong financial condition,' and 'quality businesses being valued more cheaply.' Bearish language includes 'extended valuations,' 'growing strain,' 'unusual movements,' 'bear market,' and 'taking a toll on household budgets.' The net balance leans slightly positive given the emphasis on finding opportunities, but the significant risk discussion keeps this in the mildly positive range.
Perceived Risk
Perceived risk level is evaluated as moderate conviction. Middle East conflict has created 9% market pullback, but historical analysis shows geopolitical shocks typically recover within twelve months. Sandhill is using volatility to upgra...
Opportunity Density
The manager explicitly states that 'quality businesses are being valued more cheaply than they have been in a long time' and that 'wide dispersion beneath the surface is creating attractive entry points.' Two new positions were initiated, and the letter emphasizes finding value 'in these areas' (overlooked parts of the market). The characterization is one of selective but real opportunities, not scarcity. The phrase 'individual businesses are presenting compelling value' suggests a decent pipeline of ideas, though the emphasis on selectivity prevents this from scoring in the rich opportunity range.
Time Horizon
The manager describes Badger Meter as having a 'multidecade replacement cycle' and 'durable growth runway,' and Forgent as having 'strong long-term growth prospects.' The letter emphasizes 'attractive long-term prospects' and notes they 'tracked Badger Meter on our watchlist for years before business fundamentals and valuation aligned.' This language suggests a multi-year investment horizon (2-5 years) with patience for thesis realization. However, there is no explicit statement of permanent capital, decade-plus holding periods, or complete indifference to near-term catalysts. The time horizon is clearly multi-year but not explicitly permanent, placing it in the upper-moderate range.
Top Conviction Themes
Key Catalysts
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