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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Diranko Capital posted an 11.2% net return in Q3 2025, but the manager cautions that the massive capital expenditures by Big Tech in AI are unlikely to achieve sustainable returns, prompting him to avoid the sector entirely."
Diranko Capital delivered a strong third quarter in 2025, achieving an after-fee return of 11.2% (14.8% gross) and bringing year-to-date net performance to 16.3% (21.5% gross). Since its inception on November 25, 2024, the fund has generated a net return of 22.3%, significantly outperforming its benchmarks, the MSCI World Small Cap (-2.8%) and the MSCI ACWI (3.6%). In this letter, manager David Diranko leverages his background as a data scientist to analyze the current AI investment landscape. He expresses deep skepticism regarding the massive capital expenditures of major platform companies (Microsoft, Alphabet, Meta, and Amazon), which are projected to spend $1 trillion on datacenters from 2024 through 2026. Diranko calculates that to achieve a standard 15% pre-tax ROIC, these companies would need to generate $660 billion in annual revenue, an amount far exceeding the total global enterprise software market. He argues that AI economics differ fundamentally from SaaS, as AI relies on ongoing, capital-intensive compute rather than low-cost replication. Ultimately, Diranko categorizes AI investments as 'Too-Hard,' preferring to invest in small, undervalued, and 'boring' businesses with a tangible margin of safety.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High-conviction positioning: Diranko Capital posted an 11.2% net return in Q3 2025, but the manager cautions that the massive capital expenditures by Big Tech in AI are unlikely to achieve sustainable returns,...
Growth Outlook
Market outlook remains high conviction: Diranko Capital posted an 11.2% net return in Q3 2025, but the manager cautions that the massive capital expenditures by Big Tech in AI are unlikely to achieve sustainable returns,...
Risk Appetite
Risk appetite posture is high conviction: Diranko Capital posted an 11.2% net return in Q3 2025, but the manager cautions that the massive capital expenditures by Big Tech in AI are unlikely to achieve sustainable returns,...
Capital Deployment
Manager actively deployed capital into high-conviction opportunities. Diranko Capital posted an 11.2% net return in Q3 2025, but the manager cautions that the massive capital expenditures by Big Tech in AI are unlikely to achieve sustainable returns,...
Forward Guidance
Forward guidance signal: Diranko Capital posted an 11.2% net return in Q3 2025, but the manager cautions that the massive capital expenditures by Big Tech in AI are unlikely to achieve sustainable returns,...
Language Signal
Tone analysis indicates high conviction language: Diranko Capital posted an 11.2% net return in Q3 2025, but the manager cautions that the massive capital expenditures by Big Tech in AI are unlikely to achieve sustainable returns,...
Perceived Risk
Perceived risk level is evaluated as moderate conviction. Diranko Capital posted an 11.2% net return in Q3 2025, but the manager cautions that the massive capital expenditures by Big Tech in AI are unlikely to achieve sustainable returns,...
Opportunity Density
Opportunity density index indicates high conviction actionable entry points. Diranko Capital posted an 11.2% net return in Q3 2025, but the manager cautions that the massive capital expenditures by Big Tech in AI are unlikely to achieve sustainable returns,...
Time Horizon
Investment time horizon reflects a high conviction orientation. Diranko Capital posted an 11.2% net return in Q3 2025, but the manager cautions that the massive capital expenditures by Big Tech in AI are unlikely to achieve sustainable returns,...
