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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Hayden Capital underperformed in Q2 as markets favored momentum over quality. Manager Liu focuses on reinvestment cycles with calculable ROICs, expressing conviction in e-commerce plays Shopee and Mercado Libre while questioning AI capex sustainability at hyperscalers."
Hayden Capital returned 6.9% net in Q2 2026 versus 15.2% for the S&P 500, bringing YTD performance to -23.3%. The fund's core thesis centers on earnings growth through reinvestment cycles at attractive incremental ROICs. Manager Fred Liu argues AI disruption is happening slower than markets initially feared, with software incumbents remaining resilient. He expresses concern about hyperscaler capex sustainability, noting the big tech companies will spend close to $800 billion in 2026 with capex now exceeding internal cash flow for the first time. Liu questions whether incremental ROICs will remain attractive as speculative bid in chip markets potentially evaporates. The portfolio remains concentrated in what Liu views as highest-quality franchises, with particular conviction around e-commerce reinvestment cycles at Shopee and Mercado Libre showing early signs of 18-38% ROICs. The fund exited Pinduoduo after a successful 3.5 year hold generating 24% annualized returns as the original thesis played out. Portfolio allocation is 34% Asia, 43% North America, 17% Latin America. Liu believes current setup of companies growing 40%+ yet trading at market multiples plants seeds for future outperformance.
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