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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Tweedy Browne delivered strong Q2 absolute returns but lagged AI-driven benchmarks. The manager draws explicit parallels to the late 1990s bubble, citing 41X Cape Shiller P/E, hyperscaler capex prisoner's dilemma, and record margin debt."
Tweedy, Browne's Value Fund delivered strong absolute returns of 7.20% in Q2 2026 and 11.07% year-to-date, though underperforming benchmarks as AI-driven US technology stocks dominated. The manager expresses increasing concern about rapidly rising valuations, drawing explicit parallels to the late 1990s bubble. Key market indicators including the 41X Cape Shiller P/E and 219% Buffett Indicator trade near all-time highs. The manager highlights risks including hyperscaler capital expenditure dynamics creating a prisoner's dilemma, stubbornly persistent inflation, and casino-like market behavior with margin debt at record levels. Most AI companies fail to meet their valuation criteria and fall into the too hard file. The Funds maintain growing exposure to smaller and mid-cap companies at attractive valuations, with underweights in Financials and overvalued technology. Samsung Electronics was a standout performer with record semiconductor profits. The manager adjusted the Buybacks, Dividends + Value Fund strategy to emphasize share repurchases at discounted valuations. If market excesses correct, they expect their value-oriented positioning to hold up better and potentially gain ground on benchmarks.
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