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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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New West Capital 2026 Q2 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q2 2026 Letter Analysis

New West Capital Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, New West Capital. This analysis is provided for institutional research purposes only and is not investment advice.

SOURCE UNAVAILABLE

Fund Returns

Positioning StanceConstructive

Market CapMega Cap

Digest Analysis

Quick Take

"The Magnificent Seven's trillion-dollar AI buildout reveals stark divergence in value creation. Nvidia and Apple thrive as supplier and capital-light player respectively."

Executive Summary

New West Capital analyzes whether the Magnificent Seven's trillion-dollar AI infrastructure spending spree is creating or destroying shareholder value by measuring each company's return on invested capital against its cost of capital. The analysis reveals three distinct groups. Nvidia and Apple represent the winners: Nvidia as the AI buildout's primary supplier has seen returns multiply to 84% while Apple has chosen a capital-light approach, with both avoiding the economics squeeze. Microsoft, Meta, and Alphabet form the middle tier as archetypal builders whose returns have compressed from the low forties to mid-twenties, yet still earn 2.5 to 3 times their cost of capital, shifting from extraordinary to merely excellent. Amazon and Tesla represent the strugglers, with Amazon barely above its hurdle rate and Tesla now destroying value with returns below its cost of capital. The analysis also examines share count management, finding that the five companies clearing their hurdle with room to spare have all shrunk share counts, while the two strugglers have allowed significant dilution. The conclusion: capex spending itself is not the risk, but rather spending that fails to earn above the cost of capital.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

45%

CautiousHigh

Moderate (45%)

Market Conviction

This is a research piece analyzing the Magnificent Seven's capital allocation, not a fund letter with disclosed positions. The analysis demonstrates strong conviction in the analytical framework (return on invested capital versus cost of capital) and clear differentiation among the seven companies, with specific data points and named positions. However, there is no disclosure of New West Capital's actual portfolio holdings, position sizes, or whether they own any of these companies. The conviction expressed is in the analytical methodology and the conclusions drawn, not in specific investment positions. The explanation is thorough and data-driven, but the absence of any stated portfolio positions or sizing caps the score below 0.54 per the hard rule.

10%

BearishBullish

Bearish (10%)

Growth Outlook

The letter takes a measured, analytical view of the AI infrastructure buildout without expressing strong directional optimism or pessimism about markets broadly. The analysis acknowledges both the massive scale of investment and the mixed results, noting that most companies still clear their hurdle rates but with compression. The tone is observational rather than predictive, focusing on what has happened rather than forecasting market direction. The phrase 'genuinely open' regarding Amazon's verdict and questions about whether returns will persist capture the neutral, wait-and-see stance.

0%

DefensiveAggressive

Defensive (0%)

Risk Appetite

The document is a research piece analyzing other companies' capital allocation decisions, not a fund letter describing New West Capital's own portfolio positioning. There is no discussion of the firm's current exposure levels, hedging activity, cash position, or risk appetite. The analysis is purely observational and educational, examining the Magnificent Seven's economics without revealing how New West is positioned relative to these findings. Given the absence of any positioning disclosure, a neutral score of 0.00 is appropriate.

0%

De-riskingDeploying

De-risking (0%)

Capital Deployment

This document analyzes the capital deployment decisions of the Magnificent Seven companies; it does not disclose New West Capital's own capital deployment activity. There is no information about the firm's cash levels, whether they are adding or reducing positions, or any changes in net exposure. The analysis is purely observational, examining other companies' behavior rather than describing the firm's own portfolio actions. Without any data on New West's deployment activity, a neutral score of 0.00 is appropriate.

5%

CautiousExpansionary

Cautious (5%)

Forward Guidance

The letter provides minimal forward guidance on intended actions. The concluding section states that 'the dispersion isn't a warning, it's the opportunity' and suggests that 'returns tell you which franchises are buying growth and which is only buying capacity,' implying a framework for selection rather than specific deployment plans. There is no discussion of adding positions, raising cash, or changing exposure. The tone is educational and framework-oriented rather than action-oriented. The slight positive tilt reflects the framing of dispersion as opportunity, but without concrete deployment signals, the score remains near neutral.

20%

BearishBullish

Bearish (20%)

Language Signal

The language is predominantly analytical and neutral, focused on measurement and classification rather than directional advocacy. Positive language appears in descriptions of companies that 'clear their hurdle with room to spare,' 'thriving,' and creating 'opportunity' from dispersion. Negative language includes 'deteriorating' in the title, 'cautionary tale,' 'consuming value,' and 'destroying' capital. The balance tilts mildly positive because the conclusion emphasizes opportunity for long-term owners and notes that most of the group remains 'among the most productive deployers of capital anywhere.' However, the dominant tone is factual assessment rather than bullish or bearish advocacy.

35%

Low RiskElevated

Moderate Risk (35%)

Perceived Risk

The letter acknowledges moderate risk through its central question of whether the Magnificent Seven are 'quietly spending their way out of the very economics that made them worth owning.' The analysis identifies specific concerns: return compression for the builders, Amazon's thinning spread back toward its hurdle, and Tesla's value destruction. The phrase 'genuinely open' regarding Amazon's verdict and questions about whether Nvidia's economics can 'persist past the initial AI wave' signal uncertainty. However, the risks are presented analytically rather than alarmingly, and the conclusion emphasizes that most companies still earn well above their cost of capital. The risk discussion is substantive but measured, fitting the 0.35-0.59 range for moderate risk acknowledgment.

65%

ScarceAbundant

Abundant (65%)

Opportunity Density

The letter concludes that 'the dispersion inside [the Magnificent Seven] is wider than the label admits, and it is still widening,' explicitly framing this as opportunity rather than constraint. The statement 'for a long-term owner, that dispersion isn't a warning, it's the opportunity' directly signals a selective but meaningful opportunity set. The analysis identifies clear winners (Nvidia, Apple), a middle tier with compressed but still excellent returns (Microsoft, Meta, Alphabet), and strugglers (Amazon, Tesla), suggesting multiple investable ideas with distinct risk-reward profiles. This represents selective opportunities in defined areas rather than a broad, rich opportunity set, placing it in the 0.55-0.79 range.

75%

Short-TermLong-Term

Decade+ (75%)

Time Horizon

The letter explicitly addresses 'long-term owners' multiple times and frames the analysis around durable economics rather than near-term catalysts. The discussion of whether Nvidia's returns can 'persist past the initial AI wave' and the focus on multi-year capital base growth (four-year analysis period) indicate a multi-year investment horizon. The conclusion states 'for a long-term owner, that dispersion isn't a warning, it's the opportunity,' reinforcing the extended time frame. However, there is no discussion of permanent capital, decade-plus holding periods, or explicit statements about indefinite ownership. The horizon appears to be multi-year (2-5 years) with no near-term catalyst dependency, fitting the 0.65-0.84 range.