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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Edgewood's concentrated large-cap growth portfolio underperformed in Q2 2026 despite accelerating earnings growth to 31% YoY, as sector rotations overrode fundamentals and drove 16% multiple compression. The firm added Tesla, Linde, and Amazon to deepen Physical AI exposure—its core thesis that AI will proliferate into robotaxis, humanoids, and physical applications with addressable markets multiples larger than digital AI."
Edgewood's Large Cap Growth strategy returned 9.3% net in Q2 2026 but remains down 5.1% for the trailing year, underperforming benchmarks as sector rotations and momentum dynamics dominated fundamentals. The portfolio delivered 31% average year-over-year EPS growth across the last five quarters, accelerating 14 percentage points, yet experienced 16% P/E multiple compression. Management teams responded to cheap valuations with record buybacks, including Fair Isaac's largest-ever $605M program, Netflix's new $25B authorization, and Visa's record $7.9B repurchase. The firm updated its investment framework to increase single position limits from 8% to 10%, allow flexible growth bucket weights, and raise theme caps from 25% to 35%, enabling deeper concentration around high-conviction ideas. Three new holdings—Tesla, Linde, and Amazon—were added to deepen exposure to Physical AI, the firm's core multi-year theme centered on AI proliferation from digital to physical applications including robotaxis, humanoids, and warehouse automation. The portfolio now holds eight names providing Physical AI exposure across an addressable market the firm believes is multiples larger than digital AI. Edgewood maintains conviction that strong fundamentals and attractive valuations will drive long-term shareholder value despite near-term underperformance.
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