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 |
|---|---|---|---|---|---|---|
Spyglass Growth Strategy returned 24.63% in Q2 2026, outperforming the Bloomberg Midcap Growth Index's 14.05% as software stocks rebounded from the first quarter selloff and geopolitical tensions eased with the US-Iran ceasefire. The portfolio's earnings growth remains above 40%, which the manager believes is at one of its strongest points in the firm's history, yet share prices have not reflected this growth, suggesting attractive valuations. Top contributors included Credo Technology, Affirm, Snowflake, AAON, and Cadence, driven by strong quarterly results and improving sentiment around AI differentiation. The manager added three new positions: QXO in building products distribution following its TopBuild acquisition, MKS in semiconductor equipment components positioned for AI-driven WFE growth, and Forgent Power Solutions in electrical equipment benefiting from datacenter buildout. Despite strong operating results with 85% of companies meeting or exceeding estimates over 16 quarters, the portfolio experienced multiple compression from AI uncertainty, passive flows, and trading volatility. The manager maintains high conviction that temporary price dislocations will resolve as fundamentals drive long-term returns, remaining patient investors anchored to company operating results rather than short-term market inefficiencies.
Spyglass invests in market-leading growth companies where strong earnings growth is not yet reflected in stock prices, creating attractive valuations. The portfolio's earnings growth is at one of its strongest points in the firm's history at above 40%, yet the portfolio is experiencing significant multiple compression despite 85% of companies meeting or exceeding consensus estimates over the past 16 quarters. The manager believes short-term factors like AI uncertainty, passive flows, and trading volatility are creating temporary price dislocations that will be resolved as the market's long-term weighing machine confirms business success.
The manager remains optimistic about opportunities ahead, focused on identifying market-leading companies led by talented entrepreneurs, trading at attractive prices, and capitalizing on megatrends that will drive future innovation and growth. Despite the eventful first half of 2026 and current multiple compression, the manager believes the operating results within portfolio companies are outpacing their respective stock prices, creating value that is not currently recognized. The manager anchors expected present values to company fundamentals and believes the long-term weighing machine of the market will eventually resolve temporary distortions, remaining patient investors in the meantime.
As of Jul 21, 2026
The U.S. Mid Cap Growth Strategy is managed by three experienced portfolio managers who bring complementary expertise spanning 25+ years of industry experience. Sonu Chawla, CFA serves as Partner and Portfolio Manager with 25 years of industry experience and 7 years at TSCM, specializing in fundamental research with emphasis on management quality and long-term compounding, covering Software, Technology Services, and Internet Communications sectors. Grant R. Babyak holds positions of Chief Executive Officer, Partner, and Portfolio Manager, bringing 37 years of industry experience and 25 years with TimesSquare, providing institutional memory and strategic oversight. Edward F. Salib serves as Partner and Portfolio Manager/Analyst focusing on consumer discretionary and staples sectors. The team is supported by 8 experienced research analysts in a collaborative research environment emphasizing thorough fundamental analysis. TimesSquare Capital Management LLC was founded in 2000 and operates as a significantly employee-owned organization and independent affiliate of Affiliated Managers Group since 2004. The firm employs 43 individuals including 19 equity partners and 21 investment professionals who average 23 years industry experience and 13 years at TSCM. The employee ownership structure aligns interests with client success and promotes retention of key professionals through equity participation.
TimesSquare employs a unique bottom-up, fundamental research-intensive approach to identify mid cap growth stocks which they believe have the greatest potential to achieve price appreciation over a long-term horizon. The investment philosophy centers on four key criteria: quality management teams, sustainable competitive advantages, strong and consistent growth, and recurring revenue streams. The firm emphasizes an in-depth assessment of management quality, superior business models, and valuation discrepancies. Portfolio exposures generally favor quality and profitability characteristics while maintaining lower volatility and beta than the benchmark index. The strategy targets companies that demonstrate meaningful proportion of management net worth tied to company performance, reflecting the firm's emphasis on alignment of interests with shareholders. The investment team focuses on identifying businesses with sustainable competitive moats and the ability to generate consistent cash flows over extended periods. The approach has historically provided strong relative returns in normal fundamentally-driven markets and defensive characteristics during negative and bear markets, though it may lag during speculative market rallies. The strategy maintains approximately 75 quality growth stocks within the Russell Mid Cap Growth benchmark universe. The firm's goal is to build diversified portfolios of growth stocks that generate competitive risk-adjusted returns through disciplined security selection and patient, long-term investment approach.
Lead Portfolio Manager
Moderate Conviction Bullish
Market Conviction
The portfolio maintains 25 concentrated positions with specific position sizing and named holdings throughout the letter. The manager provides detailed thesis summaries for new positions (QXO, MKS, Forgent) with specific financial targets and timeframes (e.g., MKS revenue growing from $3.9B to $6B by FY2027, Forgent free cash flow inflecting from negative $39M to $300M+ by FY2027). The letter includes explicit position management decisions with percentage point additions and trims. The manager states 'we continue to maintain a high level of conviction in our perspective on AI' and describes multiple holdings as 'core positions.' However, the letter also notes enhanced due diligence on CoStar and exits due to widened outcomes (Roblox, Kinsale, nCino), showing some uncertainty. The conviction is high but not extreme, with clear theses and active management rather than indefinite hold language.
Growth Outlook
Market outlook remains high conviction: Small cap growth strategy underperformed amid market rotation from Software to defensive sectors following Iran conflict. Energy and semiconductor holdings delivered strong gains w...
Risk Appetite
Risk appetite posture is very low conviction: Small cap growth strategy underperformed amid market rotation from Software to defensive sectors following Iran conflict. Energy and semiconductor holdings delivered strong gains w...
Capital Deployment
The manager added three new positions (QXO, MKS, Forgent) during the quarter, but this required selling three existing positions (Kinsale, nCino, Roblox) to maintain the fixed 25-position portfolio structure. This represents capital rotation rather than net deployment. The manager also trimmed winners (Credo -2.73%, Ascendis -2.10%, Cadence -1.41%) and added to underperformers (CoStar +3.21%, Chime +2.42%, Medpace +1.69%), which is rebalancing activity. There is no mention of cash levels changing or net exposure increasing. The 24.63% quarterly return came from appreciation rather than new capital deployment. The activity is consistent with active portfolio management and rotation, scoring modestly positive but well below the threshold for net deployment.
Forward Guidance
Forward guidance signal: Small cap growth strategy underperformed amid market rotation from Software to defensive sectors following Iran conflict. Energy and semiconductor holdings delivered strong gains w...
Language Signal
The letter contains balanced directional language. Bullish terms include 'optimistic,' 'attractive valuation,' 'strongest points in our firm's history,' 'excited to own,' 'attractive entry points,' 'outpacing,' and 'opportunity at hand to drive alpha.' Bearish or cautious language includes 'significant multiple compression,' 'indifferent,' 'uncertainty,' 'pessimism,' 'unprecedented volatility,' 'temporary distortions,' 'sustained underperformance,' and 'widened cone of outcomes.' The letter also uses neutral descriptive language around market mechanics and company results. The net balance is roughly even, with constructive framing around long-term fundamentals offset by acknowledgment of near-term headwinds and market inefficiencies.
Perceived Risk
Perceived risk level is evaluated as moderate conviction. Small cap growth strategy underperformed amid market rotation from Software to defensive sectors following Iran conflict. Energy and semiconductor holdings delivered strong gains w...
Opportunity Density
The manager added three new positions during the quarter and describes being 'excited to own' each at 'attractive valuations.' The letter states the manager is 'focused on identifying market-leading companies led by talented entrepreneurs, trading at attractive prices, and capitalizing on the megatrends' and remains 'optimistic about the opportunities ahead.' Specific opportunities are identified in AI-driven datacenter buildout, semiconductor equipment upcycle, building products distribution, and electrical equipment demand. The manager believes 'there is value in our portfolio companies that is not currently recognized in their stock prices' and sees the current environment as creating 'the opportunity at hand to drive alpha for investors over the long term.' However, the letter also notes exits due to less compelling risk/reward (nCino) and widened cone of outcomes (Kinsale, Roblox), suggesting some selectivity is required. The opportunity set is characterized as good but requiring discernment rather than abundant across the board.
Time Horizon
The manager explicitly references Warren Buffett and Ben Graham's long-term philosophy, stating 'in the short run, the market is a voting machine but in the long run it is a weighing machine' and emphasizing they 'remain patient investors.' The letter discusses multi-year thesis horizons for new positions: QXO expected to 'organically double acquired-business earnings within 3-5 years,' MKS with earnings power targets for 2027-28, and Forgent with free cash flow inflection by fiscal year 2027. The manager states they 'consistently anchor our expected present values to company fundamentals' and believe 'the long-term weighing machine of the market eventually resolves what we perceive to be temporary distortions.' However, the letter also includes quarterly performance tracking, active trimming of winners, and monitoring of quarterly results, indicating a medium-term rather than permanent capital horizon. The time horizon is multi-year with specific 3-5 year milestones rather than indefinite or decade-plus holding periods.
Top Conviction Themes
Key Catalysts
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