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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"L1 Capital underperformed in Q1 2026 as markets oversimplified AI disruption risks and geopolitical uncertainty. High-quality software and payments companies are being mispriced despite strong fundamentals and adaptation capabilities."
L1 Capital International returned -13.1% in Q1 2026 versus -6.1% for the benchmark, driven by no energy exposure during elevated oil prices and weakness in high-quality software businesses. Markets remain driven more by geopolitics than fundamentals, with the Iran conflict creating uncertainty while companies are simplistically categorized as AI winners or losers. The fund sees nuanced outcomes rather than binary conclusions, with many high-quality software businesses now trading at attractive valuations despite their ability to adapt and benefit from AI. Core holdings like Microsoft, Intuit and Salesforce face pressure from AI disruption concerns, while payments networks Mastercard and Visa declined on emerging technology threats. The fund trimmed positions in outperformers like Alphabet and HCA Healthcare while initiating two new positions and increasing exposure to existing holdings trading below fair value. With almost every portfolio company at or below the lower end of valuation ranges, the fund sees compelling opportunities for long-term investors as short-term risks are being overpriced.
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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: L1 Capital underperformed in Q1 2026 as markets oversimplified AI disruption risks and geopolitical uncertainty. High-quality software and payments companies are being mispriced de...
Growth Outlook
Market outlook remains low conviction: L1 Capital underperformed in Q1 2026 as markets oversimplified AI disruption risks and geopolitical uncertainty. High-quality software and payments companies are being mispriced de...
Risk Appetite
Risk appetite posture is very low conviction: L1 Capital underperformed in Q1 2026 as markets oversimplified AI disruption risks and geopolitical uncertainty. High-quality software and payments companies are being mispriced de...
Capital Deployment
Manager actively deployed capital into high-conviction opportunities. L1 Capital underperformed in Q1 2026 as markets oversimplified AI disruption risks and geopolitical uncertainty. High-quality software and payments companies are being mispriced de...
Forward Guidance
Forward guidance signal: L1 Capital underperformed in Q1 2026 as markets oversimplified AI disruption risks and geopolitical uncertainty. High-quality software and payments companies are being mispriced de...
Language Signal
Tone analysis indicates low conviction language: L1 Capital underperformed in Q1 2026 as markets oversimplified AI disruption risks and geopolitical uncertainty. High-quality software and payments companies are being mispriced de...
Perceived Risk
Perceived risk level is evaluated as moderate conviction. L1 Capital underperformed in Q1 2026 as markets oversimplified AI disruption risks and geopolitical uncertainty. High-quality software and payments companies are being mispriced de...
Opportunity Density
Opportunity density index indicates moderate conviction actionable entry points. L1 Capital underperformed in Q1 2026 as markets oversimplified AI disruption risks and geopolitical uncertainty. High-quality software and payments companies are being mispriced de...
Time Horizon
Investment time horizon reflects a moderate conviction orientation. L1 Capital underperformed in Q1 2026 as markets oversimplified AI disruption risks and geopolitical uncertainty. High-quality software and payments companies are being mispriced de...
