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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, Sandhill Investment Management. This analysis is provided for institutional research purposes only and is not investment advice.
"Sandhill sees a bifurcated market where AI-driven semiconductor concentration masks broad weakness, with over half of tech stocks in bear markets despite strong index performance. The firm is deploying capital selectively into overlooked quality businesses including water infrastructure and power equipment plays, while extending duration in corporate bonds above 5%."
Sandhill Investment Management's Q2 2026 letter describes a market characterized by strong headline performance but unusual underlying dynamics. The S&P 500 rebounded roughly 15% from lows, supported by the fastest expected earnings growth in five years, though valuations remain extended at 20.5 times forward earnings. Beneath the surface, 22 S&P 500 stocks have doubled this year, surpassing the 1999 record, driven primarily by semiconductor companies benefiting from AI data center spending. The sector now represents nearly 20% of the index, up from 2% a decade ago. However, more than half of Information Technology stocks are in bear markets. The manager is finding value in overlooked areas, recently initiating positions in Badger Meter, a water technology company benefiting from aging infrastructure replacement, and Forgent Power Solutions, an electrical equipment manufacturer positioned for AI-driven power demand. On the consumer side, while the top 10% of earners drive nearly half of all spending, broader strain is evident with savings rates near 60-year lows and sentiment at pandemic-era depths. The firm is modestly extending duration in corporate bonds at yields above 5% while remaining selective in equities.
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