Investor Summary
Fund Strategy
FUND PERFORMANCE AS OF 31st March 2026
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 2.63% | 2.63% |
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 2.63% | 2.63% |
The Wasatch Frontier Emerging Small Countries strategy underperformed in Q1 2026 as geopolitical tensions in the Middle East drove oil prices higher, benefiting energy and materials sectors where the strategy maintains zero weights. The continued U.S. dollar decline supported commodity exporters in countries like Oman, Colombia, and Peru, where the strategy was underweight. Top contributors included Camtek, benefiting from AI-driven data center construction boosting semiconductor inspection demand, and Electrical Industries Co., positioned for grid infrastructure upgrades. Detractors included Sea Ltd., facing competitive pressures in Brazilian e-commerce and gaming from AI disruption, and NU Holdings, pressured by fintech competition concerns. The manager reduced Sea Ltd. exposure but maintained conviction in NU's long-term prospects. Looking ahead, they expect the cycle to favor quality businesses over cyclical multiple expansion plays, aligning with their disciplined growth approach. The strategy avoids reactive positioning around geopolitical events, focusing instead on fundamental business durability and competitive progress of portfolio companies.
Focus on high-quality growth companies in frontier emerging markets with durable competitive advantages, avoiding capital-intensive and cyclical sectors while benefiting from structural trends like AI-driven infrastructure upgrades and grid modernization.
The manager expects the next phase of the economic cycle to favor businesses with durable competitive advantages and solid growth prospects rather than those positioned to benefit primarily from multiple expansion. They believe this environment plays to the strengths of their disciplined, growth-oriented investment approach. The strategy is expected to lag during early stages of recoveries that favor lower-quality, cyclical areas.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 25 2026 | 2026 Q1 | CAMT, MELI, NU, SE | AI, E-Commerce, emerging markets, Fintech, frontier markets, Grid Infrastructure, semiconductors, small caps |
CAMT SE |
Frontier emerging markets strategy underperformed as Middle East tensions boosted commodities, benefiting sectors where the fund has zero exposure. AI trends drove outperformance in semiconductor inspection tools and grid infrastructure while pressuring e-commerce and fintech through increased competition. Manager maintains disciplined approach, expecting quality growth companies to outperform cyclical plays in the next cycle phase. |
| Feb 10 2026 | 2025 Q4 | BCG.L, DSY.JO, FN, FRT.HM, MELI, SE | Dollar, E-Commerce, emerging markets, frontier markets, Latin America, Quality, underperformance, Vietnam |
SE BCG LN MELI DSY SJ FRT VN FN |
Wasatch's frontier emerging markets strategy underperformed in 2025 as beaten-down, lower-quality stocks surged on dollar weakness while higher-quality portfolio holdings lagged. Manager maintains conviction in companies positioned for domestic transformations, viewing 2025 as potential inflection point for sustained frontier market tailwinds as global capital returns to the asset class. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI is driving accelerated data center construction by hyperscalers, boosting demand for semiconductor inspection tools and electrical equipment. However, AI is also creating competitive pressures in gaming and digital financial platforms by lowering barriers to entry. |
Data Centers Semiconductors Gaming FinTech |
SemiconductorsRising chip complexity and accelerated data center construction are driving higher demand for inspection and metrology tools. Next-generation architectures require more rigorous process-control steps across the semiconductor value chain. |
Semi Equipment Data Centers Metrology | |
Grid UpgradeSurging electricity use by AI data centers requires large-scale upgrades to aging grid infrastructure globally. This trend is lifting demand for electrical equipment, with grid-upgrade cycles lengthening and end markets becoming more durable. |
Electrical Equipment Infrastructure Data Centers | |
E-commerceE-commerce platforms face rising competitive intensity in Brazil with pressure on margins as companies increase spending to defend market share. Competition from both global and Chinese platforms has intensified in Latin America. |
Brazil Latin America Competition | |
FinTechDigital financial platforms face concerns about increased competitive pressures from AI advances. However, long-term growth prospects for leading fintech banks in Latin America remain favorable despite recent sentiment-driven weakness. |
Digital Banking Latin America Competition | |
| 2025 Q4 |
AIAI emergence has created market hysteria and broad software sell-offs despite limited real-world adoption. Manager believes incumbent software firms with domain expertise and proprietary data are better positioned than AI-native startups to capture long-term benefits from AI integration. |
Artificial Intelligence Software Automation Technology |
SoftwareSoftware sector treated as monolith awaiting AI disruption, creating valuation disconnect. Manager maintains significant overweight despite recent underperformance, believing dominant vertical platforms can successfully reinvent themselves for agentic world and fend off AI-native competitors. |
Enterprise Software SaaS Technology Vertical Software | |
HotelsChoice Hotels represents new core position trading at distressed multiple due to cyclical headwinds. Company shifting portfolio toward higher-margin segments like extended stay and international markets, with potential for significant cash unlock and share buybacks. |
Hospitality Franchising Extended Stay Real Estate | |
ValueMarket experiencing broadening out to small cap value industries, though manager unable to capitalize due to software overweight. Traditional value industrial exposure outweighing software gains, creating performance headwinds despite cheaper software valuations. |
Small Cap Value Investing Industrial Rotation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 25, 2026 | Fund Letters | Wasatch Frontier Emerging Small Countries Strategy | CAMT | Camtek Ltd. | Semiconductor Equipment & Materials | Semiconductor Equipment | Bull | NASDAQ | AI infrastructure, data centers, hyperscalers, Inspection Tools, Israel, Metrology, semiconductor equipment, technology | Login |
| Apr 25, 2026 | Fund Letters | Wasatch Frontier Emerging Small Countries Strategy | - | Electrical Industries Co. | Paper & Paper Products | Electrical Components & Equipment | Bull | New York Stock Exchange | AI data centers, electrical equipment, Grid Infrastructure, Industrials, Monopoly Position, Saudi Arabia, Transformers | Login |
| Apr 25, 2026 | Fund Letters | Wasatch Frontier Emerging Small Countries Strategy | - | Banca Transilvania SA | Banks - Regional | Banks | Bull | New York Stock Exchange | Banking Consolidation, dividend, Eastern Europe, financials, market leader, Returns on Capital, Romanian Bank | Login |
| Apr 25, 2026 | Fund Letters | Wasatch Frontier Emerging Small Countries Strategy | SE | Sea Ltd. | Internet Retail | Interactive Media & Services | Bear | New York Stock Exchange | AI disruption, Brazil, Competitive pressure, Digital gaming, e-commerce, Fintech, Singapore, Southeast Asia | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | SE | Sea Limited | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | New York Stock Exchange | Competition, e-commerce, Fintech, Gaming, Margins, Southeast Asia | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | BCG LN | Baltic Classifieds Group PLC | Communication Services | Interactive Media & Services | Bull | New York Stock Exchange | AI, asset-light, Classifieds, Margins, network effects, Portals | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | MELI | MercadoLibre, Inc. | Consumer Discretionary | Broadline Retail | Bull | NASDAQ | Competition, e-commerce, Fintech, Latin America, Margins, Payments | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | DSY SJ | Discovery Limited | Financials | Life & Health Insurance | Bull | New York Stock Exchange | banking, Incentives, Insurance, operating leverage, South Africa, Wellness | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | FRT VN | FPT Digital Retail JSC | Consumer Staples | Drug Retail | Bull | New York Stock Exchange | consolidation, earnings growth, Pharmacies, retail expansion, scale, Vietnam | Login |
| Feb 10, 2026 | Fund Letters | Scott Thomas | FN | Fabrinet | Information Technology | Communications Equipment | Bull | New York Stock Exchange | AI, data centers, manufacturing, Networking, Optical, telecommunications | Login |
| TICKER | COMMENTARY |
|---|---|
| CAMT | The top contributor to strategy performance for the quarter was Israel-based Camtek Ltd. (CAMT). The company is a leading supplier of inspection and metrology tools used in semiconductor manufacturing. Accelerated construction of data centers by hyperscalers is driving higher volumes of advanced chip assembly and the associated need for increased inspection capacity. Rising chip complexity has also boosted demand for Camtek's systems as next-generation, system-level architectures require more-rigorous process-control steps across the semiconductor value chain. |
| SE | The greatest detractor from strategy performance for the quarter was Sea Ltd., ADR (SE). Based in Singapore, the company operates across e-commerce, digital entertainment and financial services in Southeast Asia, Taiwan and parts of Latin America. Investors reacted negatively to rising competitive intensity in Brazil and the resulting pressure on margins as Sea Ltd. increases spending in its e-commerce business to defend market share. In addition, investors were concerned about the digital gaming segment, especially the impact on competition as AI lowers barriers to entry in game development. Although recent advances in AI may lead to more games being launched, the potential success rate of these new titles is unclear. Given the gaming segment's importance to Sea Ltd., however, we reduced the strategy's position in the company to reflect the increased risk. |
| NU | NU Holdings Ltd. (NU) was also a detractor from performance. NU is a Brazilian company that operates Latin America's largest fintech bank. Shares moved moderately lower in the quarter amid concerns that advances in AI could increase competitive pressures on digital financial platforms. We view the recent weakness as largely driven by sentiment and believe NU's long-term growth prospects remain favorable. |
| MELI | Another weak stock in the strategy was MercadoLibre, Inc. (MELI). The company operates e-commerce platforms and payment solutions in Latin America. MercadoLibre continues to work through an investment cycle as it faces ongoing competitive pressure in Brazil, its largest and fastest-growing market. The company has been increasing spending significantly in Brazil to expand its logistics network and strengthen its fintech capabilities, a strategy that has weighed on margins in the near term. At the same time, competition from both global and Chinese platforms has intensified, adding to investor concerns about profitability. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||