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 |
|---|---|---|---|---|---|---|
As of Oct 14, 2026
For the third quarter of 2026, the Smead Value Fund (SMVLX) produced a return of 1.53%, underperforming both the S&P 500 Index (2.30%) and the Russell 1000 Value Index (2.61%). Performance was driven positively by Cenovus Energy, APA Corp, and Merck & Co., as geopolitical tensions highlighted the value of long-life energy assets and Merck advanced late-stage lung cancer therapies to address Keytruda's upcoming 2028 patent expiration. Conversely, mall REITs Macerich and Simon Property Group, along with homebuilder D.R. Horton, were the quarter's primary detractors due to interest rate headwinds, though management reiterates that current rates reflect historical norms and emphasize the strong replacement-cost protections and foot-traffic demand supporting mall properties. In their commentary titled 'Breaking the Fever,' portfolio managers Bill Smead and Cole Smead compare current market conditions—characterized by massive AI-driven capital expenditures, high fiscal deficits, and extreme market concentration—to prior euphoric peaks where market 'Generals' marched while the underlying breadth deteriorated. Reaffirming their concentrated, valuation-disciplined strategy, the managers refuse to chase high-multiple growth equities, positioning instead in companies with robust current free cash flows and tangible asset backing that are poised to outperform when speculative fever cools.
The fund operates on the principle that interest rates have returned to long-run historical norms, requiring investors to discount long-term net profits at higher rates and prioritize immediate owner earnings over distant promises of growth ('a bird in the hand is worth two in the bush'). The managers argue that the current market environment is characterized by an unsustainable, euphoric capital investment boom around AI infrastructure and data centers, driving index concentration to dangerous peak levels (~40%) with deteriorating market breadth. Consequently, the fund is positioned defensively in high-free-cash-flow, low-valuation companies—particularly in energy, pharmaceuticals, and irreplaceable real estate assets—while completely bypassing speculative, long-duration growth sectors.
Management anticipates that the euphoric AI-led market cycle will inevitably break as market breadth remains unhealthy (with 70% of S&P 500 stocks declining in September despite index gains) and government deficits persist. When the speculative fever breaks, the fund expects mortgage rates to normalize lower, benefiting interest-rate-sensitive holdings such as homebuilders, while broader value investing will strongly outperform growth—a trend historically correlated with oil outperforming gold. The fund explicitly prioritizes capital preservation (invoking Warren Buffett's rule number one: 'never lose money') over participating in the tail end of the current market mania.
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