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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"SGA's quality growth portfolio delivered strong fundamentals with 15% revenue and 20% EPS growth but underperformed as extreme momentum and AI infrastructure spending dominated Q2 returns. Portfolio now trades at steepest discount to market in 23-year history despite predictable compounding from durable franchises."
SGA's U.S. Large Cap Growth portfolio returned 6.6% net in Q2 2026 versus 16.7% for Russell 1000 Growth as extreme momentum leadership and AI infrastructure spending drove market returns. Portfolio companies delivered median revenue and EPS growth of 15% and 20% respectively with 85% beating consensus, yet valuation multiples compressed as only 27% of index stocks outperformed. Manager initiated positions in Equinix and Arista Networks for long-term data center and networking exposure while exiting Intuit and Aon to reallocate to higher conviction opportunities. Portfolio now trades near steepest discount to Russell 1000 Growth on forward P/E in firm's 23-year history with Enterprise Yield of 3% versus 1% during TMT bubble. Key risks include momentum reversal potential, memory cycle normalization as new capacity arrives 2027-2028, and extreme index concentration. Manager maintains high conviction viewing current dislocation as creating fertile ground for subsequent outperformance as quality businesses compound predictably while trading at massive discounts. Portfolio positioned to deliver 15% revenue and 19% earnings growth over next three years.
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