Small-cap stocks led a powerful Q2 rally, posting their best first half since 1991 and signaling healthier market breadth after years of narrow leadership. Oil volatility from the Strait of Hormuz crisis is fading, but AI infrastructure spending is driving sticky core inflation. The manager maintained discipline through the spring selloff, adding to quality names and trimming winners, positioning for full market cycles rather than chasing concentrated index momentum.

Wasatch Global Select underperformed in Q2 2026 as AI enthusiasm drove markets. Software stocks sold off on disruption fears, hurting Procore despite strong competitive moats. ASPEED Technology led gains on surging AI server chip demand. Aerospace names rallied on strong fundamentals. The managers are selectively investing in AI beneficiaries while concentrating capital into ignored steady growth companies trading at attractive valuations, positioned to outperform when fundamentals regain focus.

LENS fell 15.37% in Q2 2026 as Iran war volatility triggered commodity consolidation, but the manager sees this as a healthy reset within the Return to Tangibles secular bull market. Energy security concerns from the Strait of Hormuz closure will drive strategic oil demand, while unsustainable fiscal deficits and central bank gold buying support precious metals. The commodity super-cycle has only just begun.

EQUAM returned 2.6% in H1 2026 while European indices rose 10-12%, as capital flows ignored small-cap value stocks despite 120% portfolio upside potential. Three companies received takeover bids at 16-73% premiums, validating deep public market discounts. The fund sees exceptional opportunity in structurally undervalued UK equities and oil services entering a multi-year exploration spending cycle. Manager maintains near-zero cash with high conviction in mean reversion.

Buckley Capital returned 36% in Q2 2026 through disciplined capital recycling, exiting Dave at peak valuations and Root after industry headwinds deepened, while maintaining conviction in Liquidia ahead of a catalyst and initiating positions in mispriced Celsius and Light & Wonder. The small-cap portfolio is concentrated in businesses with improving fundamentals and identifiable catalysts where the market underestimates normalized earnings power, positioned for continued compounding.

Mayar Capital endures its worst five-year stretch, underperforming due to avoiding the AI bubble that dominates markets. The manager draws parallels to the late 1990s, identifying extreme valuations, passive flow distortions, and speculative excess. Despite the pain, he maintains conviction that the disciplined value strategy will be vindicated, with the current portfolio representing the highest-quality, most attractively valued opportunity set in the fund's 15-year history.

Wasatch Micro Cap Fund returned 27.41% in Q2 2026, slightly trailing the benchmark's 28.98% as AI-driven concentration dominated micro-cap performance. Stock selection in infrastructure-related materials and industrials added value, led by semiconductor plays Ambiq Micro and Veeco Instruments. Consumer holdings disappointed, with Vital Farms and TriSalus exited. The Russell reconstitution removing elevated-cap AI stocks may support relative performance as earnings growth regains focus.

Nightview Capital is buying the software panic of 2026, adding to Salesforce and ServiceNow while initiating Atlassian as the market misprices AI's impact on high-quality software franchises with data moats and switching costs. The manager built gaming and hospitality into a major theme through Las Vegas Sands, MGM, and Wynn, seeking physical assets undisrupted by software, while rotating financials toward scale with BlackRock and Schwab.

The London Company SMID Cap returned 11.8% net in Q2 but lagged the Russell 2500's 20.3% gain as momentum trumped quality. Semiconductors and AI infrastructure drove the rally, benefiting holdings like Entegris and Qualys. The manager made no trades, maintaining conviction in durable businesses despite near-term underperformance. Outlook is constructive but cautious given fragile AI capex dynamics, elevated valuations, and sticky inflation limiting Fed flexibility.

The London Company Income Equity portfolio returned 12.1% net in Q2, trailing the Russell 1000 Value by 180 basis points as AI-driven semiconductor leadership dominated. The manager trimmed technology winners to manage concentration and initiated waste services provider RSG. While broadly constructive on earnings and AI productivity gains, the manager flags fragile hyperscaler cash flows, elevated valuations, and difficult Fed policy as headwinds warranting discipline and quality focus ahead.

Cambiar SMID returned 14.39% in 2Q 2026, trailing the index as AI-driven semiconductors dominated. The manager is trimming expensive technology positions despite strong fundamentals, reallocating to quality value names with robust cash flows and reasonable valuations. Industrials rebounded sharply while Financials lagged modestly. With 4% cash and disciplined positioning, the fund is positioned for potential small cap leadership after years of underperformance while avoiding speculative excess in concentrated mega-cap technology.

Baron Health Care Fund outperformed in Q2 2026 driven by Eli Lilly's GLP-1 leadership and Revolution Medicines' breakthrough pancreatic cancer data. The manager re-entered managed care stocks UnitedHealth and Elevance to capture margin recovery as the insurance cycle turns favorable. Biotechnology funding surged 130% year-over-year while M&A activity accelerated. Medical device valuations compressed on ACA subsidy expiration concerns, creating selective opportunities despite near-term utilization headwinds.

Vulcan owns exceptional businesses at 50 cents on the dollar with values compounding steadily despite near-term underperformance. Healthcare insurers UnitedHealth and Elevance are recovering from post-Covid pressure. New position Equifax offers dominant workforce data with no AI threat. The manager reallocated capital into more discounted names and personally added capital, viewing current valuations as a compelling long-term opportunity for patient investors.

Vulcan's Focus Plus portfolio owns world-class businesses at 50% discounts despite Q2 outperformance. Amazon and Alphabet drove returns with accelerating cloud growth and AI adoption. UnitedHealth was sold after 35% recovery to fund deeper discounts. Everest Group compounds book value double-digits while buying stock below tangible book in a soft insurance market. Companies generate strong free cash flow and repurchase discounted shares. Manager added personal capital.

Mairs & Power Small Cap Fund returned 25.29% YTD, outperforming benchmarks as small caps posted first earnings growth in three years. The Fund is positioned as downstream beneficiary of AI infrastructure spending through semiconductor equipment, automation, and data center suppliers. Despite risks from AI spending sustainability and sticky inflation, managers see compelling valuations, improved earnings trends, and market broadening supporting small-cap outperformance.

Merion Road returned 16.6% in Q2, up 20% YTD, driven by long-term industrial holdings. The manager is adding to Honeywell Aerospace post-spinoff at a peer discount with low expectations set by conservative guidance. He explicitly avoids AI infrastructure in favor of boring industrials with dominant positions and strong cash flows. An activism campaign at United Bancorporation of Alabama addresses capital allocation concerns.

Baillie Gifford's US Equity Growth strategy lagged the S&P 500's 15 percent Q2 gain as markets chased semiconductor bottlenecks, but the team maintained conviction in exceptional growth companies trading at decade-low valuations despite 24 percent revenue growth. They added SpaceX, Broadcom, IDEXX and Mastercard while avoiding memory stocks, believing founder-led cultures and durable competitive advantages will drive superior long-term returns as AI disruption separates winners from losers.

Baron Real Estate Fund is positioned for a multi-year real estate recovery. Public real estate trades at significant discounts to private market values despite favorable supply-demand dynamics and decade-low construction activity. Three portfolio companies received takeover bids in Q2 at substantial premiums, validating the valuation disconnect. The Fund's diversified approach across REITs and non-REIT real estate companies, combined with compelling valuations and improving fundamentals, supports a path to double-digit annual returns.

Vulcan Small Cap returned 13.3% net in Q2 2026 despite price to value ratios remaining flat. The strategy added Badger Meter and TPG at significant discounts driven by market overreactions. MillerKnoll, Fortune Brands, and Littelfuse contributed materially. The portfolio owns exceptional small cap businesses at roughly 50 cents on the dollar with values compounding steadily, creating compelling long-term opportunities for patient capital.

Angel Oak High Yield Opportunities ETF outperformed in Q2 2026, benefiting from AI-driven economic resilience and strong corporate earnings. The fund maintains a constructive but cautious stance, favoring homeowner credit and investment-grade securitized debt over lower-quality corporate bonds. Management is trimming out-of-index exposure and emphasizing higher-quality issuers with strong fundamentals as credit spreads approach post-GFC tights and consumer strain emerges.

The fund delivered strong absolute returns but underperformed as its selective semiconductor positioning lagged an erratic rally concentrated in lower-quality names. Asian technology holdings drove performance while software detracted. The manager reduced hyperscaler and speculative semiconductor exposure, pivoting toward quality leaders like Nvidia and enterprise software positioned for AI industrialization. Medium-term AI outlook remains constructive but near-term positioning emphasizes selectivity given valuation excess.

Angel Oak Multi-Strategy Income Fund outperformed its benchmark by 95 bps in Q2 2026, returning 1.62% through core overweight allocations to non-agency RMBS, agency MBS, and ABS. The Fund opportunistically added CLO and corporate credit exposure during market dislocations, with CLOs delivering the strongest sector returns. Management expects increased credit dispersion ahead and maintains limited exposure to vulnerable segments while favoring high-quality securitized credit.

Plural Partners returned 17.9% net in Q2 as small caps recovered. The concentrated portfolio of seven to eight positions trades at 7.7x free cash flow in three years while growing double digits, just 43% of intrinsic value. New holding Strattec is a turnaround generating $30mm annual free cash flow on $345mm market cap. Top contributor Watches of Switzerland has a long runway deploying capital at 20% returns consolidating Rolex retail.

Markets rewarded diversification in H1 2026, with emerging markets, small caps, and value significantly outperforming AI-driven growth despite strong fundamentals. Euphoric speculation dominates options markets and IPO valuations, with SpaceX listing at 90x revenue exemplifying excess. The manager positions toward sensibly priced small caps and international equities while emphasizing disciplined sizing over forecasting. Behavioral discipline, not foresight, provides the edge in manic markets.

Marram holds 47% cash amid elevated valuations and macro uncertainty, maintaining core positions in energy infrastructure MLPs, regional banks, payment technology, and biopharma. Energy infrastructure and banks have performed well, while payment names declined 23% YTD on valuation compression. Manager exited PayPal and ICON plc, added Berkshire Hathaway, and continues patient opportunism approach with substantial dry powder awaiting attractive entry points on expanded Wishlist.

RLH SPAC Fund returned 6.1% in Q2 2026 by combining trust-supported yields with transaction-driven optionality. The strategy delivered as SPAC discounts converged and select transactions like CCXI and BRUN captured investor interest. With 55 new SPAC IPOs and 28 transaction announcements, the opportunity set remains compelling: base-case yields exceeding 5%, trust-protected downside, and meaningful upside when quality transactions emerge.

Hosking Partners delivered 15.3% year-to-date through capital cycle discipline, taking profits in memory semiconductors after historic AI-driven gains while maintaining energy positions despite geopolitical volatility. The strategy is positioned away from momentum-driven AI sectors experiencing record equity issuance and toward disciplined capital allocators in Japan, energy, and New York office real estate, capitalizing on the return to traditional supply-demand dynamics after a decade of capital-light business dominance.

The fund delivered 29.64% in Q2 2026, outperforming through concentrated AI semiconductor exposure and selective China technology positioning. SK Hynix, Samsung, MediaTek and Chinese hardware names drove returns while model makers lagged. The manager trimmed winners to maintain diversification but continues adding selectively. Outlook is constructive on AI and China tech but cautious on valuations and narrow market leadership. Indonesia regulatory concerns created headwinds.

Aoris underperformed in Q2 as markets favored AI infrastructure and cyclicals over quality compounders. The manager sold Accenture after a costly 58% decline, acknowledging excessive patience with deteriorating fundamentals. New positions in Moody's and Bentley Systems reflect conviction that the market overestimates AI disruption risk to mission-critical software and data businesses. The concentrated portfolio of 15 high-quality businesses remains positioned for AI to strengthen incumbent advantages.

Next Century Growth Investors' small cap strategy surged 45.4% in Q2 2026, crushing benchmarks by 2,000 basis points through concentrated AI infrastructure, semiconductor, and industrial exposure. Technology holdings returned 90-120% as AI capex conviction returned. The manager trimmed winners after sharp gains, redeploying into health care and software. Small caps delivered their strongest first half since 1991, and accelerating earnings with attractive valuations create a compelling multi-year setup.

SouthernSun underperformed in Q2 as AI speculation drove small-cap indices, but the manager deliberately avoided chasing concentration risk. The portfolio delivered solid absolute returns of 10.58% net with strong performance from Extreme Networks and Dorman Products. The team maintains conviction in renewable energy and aftermarket auto parts despite near-term headwinds, conducting deep field research to identify mispriced multi-year compounders while avoiding speculative growth.

Brown Advisory's Mid-Cap Growth Strategy outperformed by 300 basis points in Q2 2026, driven by AI infrastructure suppliers including Marvell Technology which returned 166% before being sold on valuation. The manager executed high portfolio turnover, adding eighteen new positions across data center hardware, software, and consumer services while maintaining discipline around price targets. Market leadership continued broadening beyond mega-cap tech as anticipated in recent letters.

Next Century Growth delivered exceptional Q2 returns led by AI infrastructure, semiconductors, and data centers, with small caps posting their best first half since 1991. The manager trimmed technology winners after sharp valuation expansion and redeployed into health care, industrials, and software. High conviction remains on small cap opportunities where accelerating earnings and reasonable valuations create a multi-year setup despite recent outperformance.

Invesco Small Cap Value Fund surged 22.75% in Q2 2026, crushing its benchmark by 548 basis points on the strength of AI infrastructure and semiconductor holdings. Penguin Solutions, Coherent, and MKS delivered outsized gains as AI spending accelerated. Energy holdings detracted as oil prices fell. Managers see compelling long-term value in small caps given historical valuation discounts to large caps and attractive gaps between current prices and intrinsic value estimates.

Blue Tower gained 18.91% net in Q2 2026 on Enova strength, bringing YTD to 20.84%. The manager holds Petrobras and SM Energy as the Iran War disrupts Hormuz oil flows. Initial market buffers including China's strategic reserve drawdowns are exhausting. With fighting resumed and China returning to markets, oil prices should rise significantly. Energy E&P trades cheap with improved capital discipline while AI data centers drive incremental energy demand.

Renaissance's international small cap strategy outperformed in Q2 2026, led by semiconductor holdings benefiting from NAND supply chain dynamics and traditional auto components gaining from slower EV adoption. The manager added energy services exposure while trimming commodity-dependent producers. International equities trade at a 32% discount to U.S. peers despite superior expected earnings growth through 2027, creating compelling value for diversification-seeking investors.

The fund outperformed in Q2 2026 as Hungary and Mexico rate positioning drove gains while Turkey, Brazil, and India detracted. Emerging markets navigated a complex quarter marked by the Iran conflict and less accommodative Fed policy, with central banks delivering increasingly divergent responses. The managers favor fundamentally stronger markets with credible central banks and attractive real yields, viewing recent dislocations as creating improved entry points for selective opportunities.

VELA International underperformed by 700 basis points in Q2 2026 as AI mania drove semiconductors higher while the fund's value-oriented technology holdings suffered. The manager sold half of Infineon after it doubled to 64x P/E and refuses to chase AI stocks at current valuations. Three new positions were initiated in undervalued Philippine banking, European ticketing, and airline catering. Healthcare delivered strong results across all holdings as post-pandemic headwinds fade.

Brown Advisory's concentrated Global Leaders Strategy underperformed in Q2 2026 due to semiconductor underweights during the AI infrastructure surge but has repositioned by initiating Nvidia and eliminating software exposure outside Microsoft. The manager sees exceptional opportunity with ready-to-buy lists at multi-year highs and 12-13% average portfolio IRRs. Quality investing remains core with strict valuation discipline targeting double-digit five-year returns from durable compounders.