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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"LHC Capital's software-focused fund fell 23.8% as AI disruption fears triggered indiscriminate selling across the sector. Despite strong operational results from holdings like Wisetech and Pro Medicus, markets questioned software terminal values."
LHC Capital's Australia High Conviction Fund declined 23.8% in Q3 2026, primarily due to an indiscriminate sell-off in software companies amid concerns that agentic AI coding tools could compress terminal software values. The fund's core holdings including HUB24, Life360, Pro Medicus, REA Group and Wisetech all declined significantly despite strong operational performance. The manager argues the market failed to distinguish between companies facing genuine AI disruption versus those whose competitive positions will be reinforced by AI. Their thesis centers on mission-critical software being analogous to rent - a non-discretionary cost with high switching costs and deep operational integration. Geopolitical uncertainty involving Iran added to risk-off sentiment, while structural market changes amplified volatility through passive flow-driven trading. The manager views current mark-to-market declines as temporary given strong underlying business fundamentals, with companies reporting growing revenues, expanding margins and increasing free cash flow. They have selectively increased exposure to highest conviction positions, believing the Fund is well positioned for market normalization focused on business performance.
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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: LHC Capital's software-focused fund fell 23.8% as AI disruption fears triggered indiscriminate selling across the sector. Despite strong operational results from holdings like Wise...
Growth Outlook
Market outlook remains low conviction: LHC Capital's software-focused fund fell 23.8% as AI disruption fears triggered indiscriminate selling across the sector. Despite strong operational results from holdings like Wise...
Risk Appetite
Risk appetite posture is moderate conviction: LHC Capital's software-focused fund fell 23.8% as AI disruption fears triggered indiscriminate selling across the sector. Despite strong operational results from holdings like Wise...
Capital Deployment
Manager actively deployed capital into high-conviction opportunities. LHC Capital's software-focused fund fell 23.8% as AI disruption fears triggered indiscriminate selling across the sector. Despite strong operational results from holdings like Wise...
Forward Guidance
Forward guidance signal: LHC Capital's software-focused fund fell 23.8% as AI disruption fears triggered indiscriminate selling across the sector. Despite strong operational results from holdings like Wise...
Language Signal
Tone analysis indicates low conviction language: LHC Capital's software-focused fund fell 23.8% as AI disruption fears triggered indiscriminate selling across the sector. Despite strong operational results from holdings like Wise...
Perceived Risk
Perceived risk level is evaluated as moderate conviction. LHC Capital's software-focused fund fell 23.8% as AI disruption fears triggered indiscriminate selling across the sector. Despite strong operational results from holdings like Wise...
Opportunity Density
Opportunity density index indicates moderate conviction actionable entry points. LHC Capital's software-focused fund fell 23.8% as AI disruption fears triggered indiscriminate selling across the sector. Despite strong operational results from holdings like Wise...
Time Horizon
Investment time horizon reflects a moderate conviction orientation. LHC Capital's software-focused fund fell 23.8% as AI disruption fears triggered indiscriminate selling across the sector. Despite strong operational results from holdings like Wise...
