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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
Buyside Digest is not affiliated with, and does not endorse, Fawkes Capital Management. This analysis is provided for institutional research purposes only and is not investment advice.
"Fawkes gained 0.7% in January despite AI volatility, maintaining conviction in infrastructure demand as Big Tech increases capex. Positioned for Trump's $150-175 billion border security spending through equipment companies and tariff beneficiaries like Century Aluminium."
Fawkes Capital Fund posted a 0.7% gain in January despite AI stock volatility from DeepSeek emergence. The manager maintains conviction in AI infrastructure demand, noting Google's 50% capex increase and Big Tech's moves to protect proprietary training data from distillation methods. The fund benefited from strong performance in Optical Cable Corporation and aerospace investments. Key positioning includes border security equipment companies like Lightpath Technologies and OSI Systems, positioned for the Trump administration's $150-175 billion border funding allocation. The fund holds tariff beneficiaries including Century Aluminium, which expects doubled profitability from 25% aluminum tariffs. In AI infrastructure, Western Digital represents the largest AI investment, capitalizing on structural storage demand growth from video training data and AI inference outputs. The manager closed GEO Group positions due to slower deportation pace and exited 'Drill Baby Drill' themes after research showed limited energy company prospecting appetite. Australian energy transition investments like Southern Cross Electrical Engineering benefit from the $19 billion Rewiring the Nation Fund and accelerating data center build-out.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evident through concentrated positions in named holdings like Western Digital as 'largest AI investment' and specific position sizing language. Manager provides detailed thesis support for each holding with clear catalysts and valuation metrics, though diversified across multiple themes.
Growth Outlook
Manager expresses constructive outlook on specific themes like AI infrastructure and government spending catalysts, but acknowledges near-term volatility from DeepSeek disruption and trade war risks. Balanced between opportunity identification and risk awareness.
Risk Appetite
Portfolio shows selective risk-taking with profit-taking on GEO Group and theme exits on 'Drill Baby Drill' while maintaining AI infrastructure exposure. Manager demonstrates disciplined approach to position sizing and risk management.
Capital Deployment
Net slight de-risking through profit-taking on GEO Group and closing 'Drill Baby Drill' positions, though maintaining core AI infrastructure and adding border security exposure. Selective rotation rather than aggressive deployment or cash raising.
Forward Guidance
Manager indicates continued deployment into favored themes with specific catalysts identified, particularly border security equipment and AI infrastructure. Selective adding bias evident with clear conviction on structural trends despite near-term volatility.
Language Signal
Language balances opportunity-focused terms like 'significant upside potential' and 'structural acceleration' with risk acknowledgment around DeepSeek disruption and trade tensions. More constructive than cautious overall.
Perceived Risk
Manager acknowledges specific risks including DeepSeek disruption, data center energy bottlenecks, and trade war escalation. Risk discussion is substantive but balanced with opportunity identification, showing moderate risk awareness without alarm.
Opportunity Density
Manager identifies multiple attractive opportunities across AI infrastructure, border security, tariff beneficiaries, and energy transition themes. Selective approach evident but with clear conviction on structural trends and specific company opportunities.
Time Horizon
Investment thesis focuses on multi-year structural trends like AI infrastructure build-out, government spending cycles, and energy transition timelines. Manager discusses 10-year border funding allocation and long-term AI development, indicating patient capital approach.
