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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, Mairs & Power – Power Fund. This analysis is provided for institutional research purposes only and is not investment advice.
"The Mairs & Power Fund focuses on navigating volatile market cycles by investing in high-quality, durable businesses with strong balance sheets and competitive moats. Despite trailing the S&P 500 YTD due to disciplined valuation guidelines, the fund maintains conviction in long-term compounders and downstream AI beneficiaries while capitalizing on temporary valuation dislocations to establish resilient new holdings."
Mairs & Power Fund maintains a bottom-up philosophy focused on purchasing high-quality, durable businesses at attractive valuations. During the first half of 2026, the fund achieved a 9.20% return, trailing the S&P 500 Total Return Index's 10.21% but aligning closely with its large-blend peer group. Performance was driven by positive sector allocation, particularly an overweight stance in Industrials, though stock selection in Information Technology served as a drag. While speculative AI hardware and memory stocks drove broader market gains, the fund remained disciplined, avoiding boom-and-bust cycle names in favor of resilient downstream beneficiaries like Entegris, nVent Electric, and Palo Alto Networks. Elevated interest rates and persistent inflation driven by Middle Eastern geopolitics pose macro risks. In response, the managers capitalized on market volatility to establish new positions in underappreciated software and service providers with proprietary data and high barriers to displacement, notably Bentley Systems, Arthur J. Gallagher, and CME Group, positioned to benefit as the AI investment cycle matures.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
A conviction score of 0.70 represents moderate to high conviction. The portfolio holds highly concentrated top positions like Microsoft (7.88%) and NVIDIA (9.35%) and explicitly maintains structural confidence in them during periods of underperformance, while still holding a diversified tail.
Growth Outlook
The market outlook score of 0.65 represents a constructive but cautious stance. The fund recognizes broadening earnings growth and rising productivity but remains mindful of sticky inflation, high interest rates, and geopolitical tensions.
Risk Appetite
The risk appetite score of 0.55 indicates a highly balanced posture. The fund actively manages risk by avoiding speculative momentum names and focusing on robust balance sheets and downside protection.
Capital Deployment
A score of 0.65 indicates moderate capital deployment. The fund actively initiated three new positions (Bentley Systems, CME Group, and Arthur J. Gallagher) during the quarter to capitalize on valuation dislocations, but remains highly selective.
Forward Guidance
A score of 0.60 shows a mild deployment bias. The managers are closely monitoring beaten-up software and financial names for potential entry points, while intentionally steering clear of hot, highly cyclical hardware names.
Language Signal
The language signal scores 0.65, reflecting constructive, long-term optimism. The letters are focused on high-quality compounders and durable downstream beneficiaries, balanced by risk-oriented vocabulary regarding Middle East conflicts and AI capital spending hurdles.
Perceived Risk
A score of 0.60 shows elevated but manageable risk awareness. The manager clearly outlines key threats, specifically highlighting geopolitical risks to oil supply chains and a potential cooling of capital expenditure cycles.
Opportunity Density
An opportunity density of 0.70 is assigned because the managers observe a fertile playing field in underappreciated, high-quality software and service names that are suffering from broad AI displacement fears.
Time Horizon
A time horizon score of 0.85 reflects a classic multi-year investment focus. The managers state their intention to hold companies that can benefit for 'years, not quarters' and repeatedly champion patience and bottom-up discipline.
