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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"The U.S. fiscal deficit lowers the probability of a traditional recession, paving the way for the nominal market to crash upwards. While extreme AI concentration has led to a narrow market, the bull market is set to broaden."
A robust government fiscal deficit and powerful secular tailwinds from AI adoption underpin a highly resilient nominal U.S. market outlook, even as extreme concentration and shifting interest rate expectations under newly sworn-in Federal Reserve Chairman Kevin Warsh introduce meaningful near-term volatility. During the second quarter of 2026, Multiples Capital recorded a net return of -1.0%, underperforming the S&P 500 Index due to its cautious stance on energy and commodities. While the portfolio's geographic and multi-asset diversification yielded standout winners, particularly in South Korea and Velo3D, tactical energy and defense positions underperformed as Middle Eastern tensions de-escalated rapidly. Additionally, gold and silver miners faced temporary headwinds from a sharp contraction in global dollar liquidity and a flattening yield curve. Despite these short-term drag factors, the fund remains structurally constructive on precious metals and has executed strategic additions to shipping, regional banks, consumer companies, and Japanese and Indian equities. The manager strongly believes that the multi-asset framework will regain its prominent spotlight as market participants look beyond narrow AI-driven software names and recognize the compounding value in broader sectors.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The portfolio is moderately diversified across multiple asset classes (precious metals, cash, shipping, equities) and contains several themes. The manager expresses high fundamental conviction in long-term precious metals but maintains a diversified posture.
Growth Outlook
The manager believes the market will eventually 'crash upwards' in nominal terms because the fiscal deficit insulates the economy from a true recession, despite near-term rate volatility.
Risk Appetite
A cautious stance was maintained during the quarter. Although strategic additions were made, the portfolio preserves a substantial cash buffer (16%) and meaningful commodity hedges.
Capital Deployment
Multiples Capital executed selective additions to regional banks, consumer companies, shipping, and international equities, though cash remains at a meaningful 16% of the consolidated portfolio.
Forward Guidance
The manager explicitly outlines plans for capital allocation, targeting regional banks, international markets, and shipping as they anticipate the bull market to broaden.
Language Signal
The language is largely balanced, with constructive phrasing on fiscal deficits and AI, counterbalanced by cautious commentary on rate hikes and past energy overestimates.
Perceived Risk
The manager lists several active macroeconomic risks, including Fed policy uncertainty, global liquidity drains, Middle Eastern geopolitics, and high stock valuations.
Opportunity Density
Opportunities are noted outside of mainstream AI names, specifically within regional banks, legacy consumer names, shipping, and Asian markets.
Time Horizon
The manager explicitly details a 'medium to long term' constructive outlook on precious metals and focuses on multi-year valuation realities rather than near-term momentum.
