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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"The London Company Income Equity portfolio returned 12.1% net in Q2, trailing the Russell 1000 Value by 180 basis points as AI-driven semiconductor leadership dominated. The manager trimmed technology winners to manage concentration and initiated waste services provider RSG."
The London Company Income Equity portfolio returned 12.1% net in Q2 2026, trailing the Russell 1000 Value Index's 13.9% gain but finishing in line with 85-90% upside capture expectations. The quarter saw U.S. equities stage a strong reversal, with the S&P 500 posting its strongest quarter since 2020, fueled by AI infrastructure spending and better-than-expected earnings. Technology led as the only sector to outperform, driven by a historic semiconductor rebound, while Energy lagged as oil prices retreated. The portfolio's underexposure to a handful of AI-oriented semiconductor names accounted for more than 100% of relative underperformance, though the manager's own technology holdings rose roughly 25%. Top contributors included GLW, TXN, and CSCO, benefiting from AI infrastructure demand. The manager trimmed these positions to manage concentration and initiated RSG in waste services. Looking ahead, the manager remains broadly constructive but notes accumulating headwinds including fragile AI capex dynamics, elevated valuations, and difficult Fed policy environment. The portfolio's focus on quality, high active share, and dividend yield is positioned to provide important ballast and downside protection as more modest equity returns are expected ahead.
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