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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Fairlight Alpha Fund 2026 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Fairlight Alpha Fund)

Primary Source Intelligence • Q2 2026 Letter Analysis

Fairlight Alpha Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Fairlight Alpha Fund. This analysis is provided for institutional research purposes only and is not investment advice.

SOURCE UNAVAILABLE

Fund Returns

QTD-12.6%

YTD-8.6%

Annualized+38.4%

Positioning StanceConstructive

Market CapSmallCap

Digest Analysis

Quick Take

"Driven by market regime shifts and Middle East volatility."

Executive Summary

Fairlight Alpha Fund returned -12.6% net in Q2 2026 and -8.6% year-to-date, underperforming the S&P 500's 10.2% first-half return, though the fund has delivered 835.1% cumulative returns and 35.6% annualized since inception in March 2019. The quarter saw cheap stocks become cheaper due to market regime shifts and Middle East geopolitical volatility, despite underlying business progress. Key positions include Dong A Eltek, a Korean OLED equipment manufacturer trading at extreme discounts with a monopoly in OLEDoS production for VR/AR headsets, and Valeura Energy, a low-cost Thai oil producer generating strong cash flow from elevated oil prices. CEMATRIX delivered record Q2 results with 76% revenue growth in its niche cellular concrete business. The manager is finding value in Europe and Asia while avoiding AI and technology stocks at unsustainable valuations, exemplified by SpaceX's 158x revenue multiple. The fund continues bottom-up research across global markets, focusing on mispriced businesses with durable competitive advantages in sectors overlooked by the broader market's focus on technology and AI.

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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

Market Conviction

72%

CautiousHigh

High Conviction (72%)

The letter demonstrates high conviction through detailed discussion of specific positions with concrete financial metrics. Dong A Eltek analysis includes precise valuations (KRW 100 billion market cap vs KRW 420 billion sum-of-parts), revenue figures (KRW 312 billion), and earnings (KRW 96 billion). Valeura Energy discussion includes realized oil prices ($106/bbl), quarterly revenue ($260 million), free cash flow ($105 million), and cash balances ($316 million vs $880 million market cap). CEMATRIX growth rates are specified (76% revenue growth, 100%+ operating income growth). The manager provides clear thesis explanations for each position and explicitly states what they are avoiding and why. The specificity of financial data, position sizing context, and willingness to hold through volatility indicate high conviction, though the diversified portfolio across multiple geographies and sectors prevents a score above 0.85.

Growth Outlook

43%

BearishBullish

Neutral (43%)

The manager describes a market driven by Magnificent 7, AI, and tech themes with strong S&P 500 growth, but notes volatility from Middle East geopolitical events. The manager observes that cheap stocks became even cheaper due to market regime shifts rather than fundamentals. There is acknowledgment of uncertainty in how geopolitical events will resolve. The outlook is cautious and selective rather than broadly bullish or bearish, with focus on finding value in overlooked areas while noting difficult valuations in popular sectors.

Risk Appetite

35%

DefensiveAggressive

Defensive (35%)

The fund is actively invested with named positions in Korean, Thai, and Canadian small-caps, demonstrating willingness to deploy capital in niche opportunities. However, the manager is selectively avoiding entire sectors (AI, technology, space) due to valuation concerns and is monitoring junior metal producers for entry points rather than deploying immediately. The positioning is tilted toward risk in specific value opportunities but with clear defensive boundaries around overvalued sectors.

Capital Deployment

15%

De-riskingDeploying

De-risking (15%)

The letter describes entering new Korean positions during the quarter, indicating some deployment activity. However, there is no explicit cash level data provided, and the manager describes a monitoring stance toward junior metal producers rather than active deployment. The fund is selectively adding positions but also actively avoiding entire sectors (AI, technology, space). The net activity appears to be modest selective deployment rather than aggressive capital deployment or meaningful de-risking, warranting a score slightly above neutral.

Forward Guidance

25%

CautiousExpansionary

Cautious (25%)

The manager states they continue to research and find new ideas across Europe, Asia, and the rest of the world, noting many pockets of exciting businesses. However, the language is more about monitoring and selective deployment rather than aggressive capital deployment. The manager is watching junior metal producers for entry points and maintaining focus on bottom-up stock selection, suggesting a patient, selective approach rather than urgent deployment.

Language Signal

20%

BearishBullish

Bearish (20%)

The letter contains balanced directional language. Bullish terms include 'excellent results,' 'attractive,' 'mispriced stocks,' 'good ideas,' 'exciting businesses,' and 'value' appearing multiple times. Bearish language includes 'difficult valuation levels,' 'not investable,' 'uncertain,' 'volatility,' and warnings about financial reality catching up with the stock market. The net balance leans slightly positive given the emphasis on finding opportunities, but the tone is measured and selective rather than overwhelmingly bullish.

Perceived Risk

52%

Low RiskElevated

Moderate Risk (52%)

The manager identifies specific risks including Middle East geopolitical uncertainty driving rapid sentiment changes across equities, oil, and energy markets. Market regime shifts are causing price depression in cheap stocks despite business progress. The manager explicitly warns about AI and technology valuations using SpaceX as an example of unsustainable multiples (158x revenues), stating 'financial reality must always catch up with the stock market eventually.' However, these risks are discussed in the context of creating opportunities rather than systemic threats requiring defensive positioning. The risk discussion is meaningful but not alarming, warranting a moderate score.

Opportunity Density

68%

ScarceAbundant

Abundant (68%)

The manager explicitly states 'there are a lot of good ideas to be found' and 'many pockets of exciting businesses across a variety of sectors' when searching across Europe, Asia, and the rest of the world. The letter discusses multiple new positions entered during the quarter and notes they continue to research and find new ideas. However, the manager also characterizes the environment as requiring selectivity, noting they are not finding value in AI, technology, and space stocks, and are monitoring junior metal producers for entry points rather than deploying immediately. The opportunity set is described as selective but abundant in specific niches.

Time Horizon

68%

Short-TermLong-Term

Multi-Year (68%)

The letter demonstrates a multi-year investment horizon with focus on durable competitive advantages and business fundamentals rather than near-term catalysts. The manager discusses holding through volatility driven by 'retail investor deleveraging and general market sentiment, rather than business fundamentals,' indicating willingness to look past short-term price movements. Analysis of Dong A Eltek focuses on structural competitive position (monopoly in OLEDoS) and long-term growth drivers (new facility for Perovskite solar). Valeura Energy discussion emphasizes building 'an extremely safe balance sheet' for continued growth. However, the letter does reference quarterly results and near-term project timing for CEMATRIX, preventing a score above 0.75. The overall emphasis is on multi-year business quality rather than imminent catalysts.