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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Moerus Capital Management LLC 2026 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Moerus Capital Management LLC)

Primary Source Intelligence • Q2 2026 Letter Analysis

Moerus Capital Management LLC Quarterly Analysis

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

SOURCE UNAVAILABLE

Fund Returns

QTD+0.14%

YTD+5.37%

Annualized+11.25%

Digest Analysis

Quick Take

"Lagging AI-driven benchmarks but outperforming over longer periods. Energy holdings led gains from Iran conflict while precious metals declined."

Executive Summary

The Moerus Worldwide Fund returned 5.37% in H1 2026, lagging benchmarks amid an AI-driven frenzy that saw capital flood into technology stocks while fleeing traditional sectors. The Fund significantly outperformed in Q1 before giving back gains in Q2 as semiconductor stocks soared. Energy holdings were the largest contributors, benefiting from the Iran conflict and oil price surge, with positions in Valaris, Aker ASA, Tidewater, and International Petroleum performing well. Precious metals holdings declined in Q2 on inflation concerns and rate expectations. Manager actively avoids AI-related stocks due to excessive valuations and downside price risk, drawing parallels to the dot-com bubble. The bifurcated market created opportunities in unloved areas, with new positions initiated in UK homebuilding, agricultural equipment, and Indian life insurance and chemicals. Manager eliminated Valaris following Transocean takeover and redeployed proceeds. Despite near-term underperformance, the Fund has significantly outperformed both benchmarks over 3, 5, and 10-year periods. Manager remains committed to patient, contrarian approach focused on discounted prices and long-term value creation.

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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

78%

CautiousHigh

High Conviction (78%)

Manager demonstrates high conviction through concentrated portfolio with named, sized positions and specific investment theses. Letter discusses individual holdings in detail with clear catalysts and valuation frameworks. Explicitly states willingness to hold through volatility and adds to positions on weakness. Ten-year track record of sticking to disciplined approach despite significant headwinds shows strong conviction in process. However, diversified portfolio across multiple sectors and geographies, plus elimination of five positions in H1, prevents score from reaching extreme conviction range. Strong conviction evident in detailed company-specific analysis and long-term holding periods, but portfolio breadth caps score below 0.80.

Growth Outlook

43%

BearishBullish

Neutral (43%)

Manager expresses cautious view on markets, noting AI-related stocks are priced for perfection despite an imperfect world and drawing explicit parallels to dot-com bubble. Acknowledges elevated valuations in Technology sector (32% of MSCI ACWI) and warns of potential downside if lofty expectations are not met. However, sees selective opportunities in depressed areas and views current bifurcated environment as fertile for long-term value creation. Mixed outlook with concerns about popular areas but optimism about unloved sectors yields slightly negative score.

Risk Appetite

35%

DefensiveAggressive

Defensive (35%)

Portfolio is positioned away from expensive AI-related areas and concentrated in depressed sectors including Energy, Materials, and Financials. Manager actively added four new positions in H1 and re-entered Grupo Financiero Galicia, demonstrating willingness to deploy capital. However, also eliminated five positions due to valuation considerations, suggesting selective rather than aggressive deployment. Added to existing positions like Natura, Travis Perkins, and Douglas Elliman on weakness. Overall positioning is constructive but measured, tilted toward value opportunities rather than maximum risk-on.

Capital Deployment

15%

De-riskingDeploying

De-risking (15%)

Manager initiated four new positions and re-entered one holding in H1, demonstrating active deployment. Also added to existing positions including Natura, Travis Perkins, Douglas Elliman, and Samsonite on price weakness. However, simultaneously eliminated five positions (Valaris, Capstone Copper, New Found Gold, Nutrien, Türkiye Sigorta) and redeployed proceeds. No explicit cash level changes disclosed. Activity suggests capital rotation and selective deployment rather than net increase in exposure. Modest positive score reflects new position additions and selective buying on weakness, but absence of cash data and simultaneous selling activity prevents higher score.

Forward Guidance

25%

CautiousExpansionary

Cautious (25%)

Manager indicates selective deployment bias, having initiated four new positions and re-entered one holding in H1. Explicitly states taking advantage of recently reduced prices to add to positions in Travis Perkins, Douglas Elliman, and Samsonite. However, also eliminated five positions and redeployed proceeds, suggesting rotation rather than net new capital deployment. Language indicates watching for opportunities and adding selectively rather than aggressive deployment mandate. Slightly positive but measured action bias.

Language Signal

15%

BearishBullish

Bearish (15%)

Language is balanced with both opportunity and risk framing. Positive language includes attractive, compelling, fertile hunting grounds, exciting, exceptional, remarkable track record, and well-positioned. Negative language includes frustrating, excessive valuations, downside price risk, bubble, overvalued, challenging, depressed, and concerns. Manager uses confident tone about long-term approach but acknowledges near-term headwinds. Dot-com bubble comparison and AI avoidance represent significant bearish framing for popular areas, while enthusiasm for unloved sectors provides bullish offset. Net slightly positive directional language.

Perceived Risk

68%

Low RiskElevated

Elevated Risk (68%)

Manager identifies multiple specific macro risks including AI bubble dynamics with parallels to dot-com crash, circular hyperscaler financing creating systemic risk, Iran conflict and geopolitical tensions, inflationary resurgence, and Chinese AI competition. Discusses potential for significant downside in Technology sector if expectations not met, noting even successful dot-com businesses took 9-21 years to recover for investors who bought at peak. Acknowledges elevated valuations across markets and bifurcated environment. However, frames risks as creating opportunities rather than reasons for defensive positioning. Meaningful risk discussion with specific scenarios but not alarmed tone yields moderate-high perceived risk score.

Opportunity Density

72%

ScarceAbundant

Abundant (72%)

Manager expresses enthusiasm about opportunity set in unloved areas, describing current bifurcated market as fertile hunting ground and exciting period. Initiated four new positions across different geographies and sectors, finding compelling opportunities in UK homebuilding, ag equipment, and Indian financials. Notes reduction in competing value investors creates favorable environment. Describes waves of capital fleeing unfashionable areas as yielding numerous new opportunities. However, acknowledges challenges in finding value in popular areas and eliminated five positions due to valuation considerations. Strong opportunity density in specific depressed sectors but selectivity required yields moderately high score.

Time Horizon

82%

Short-TermLong-Term

Decade+ (82%)

Manager explicitly emphasizes long-term time horizon of five years or more throughout letter. States Fund is not managed with any short-term performance objectives or benchmark considerations in mind. Discusses ten-year track record and commitment to patient approach despite years of headwinds. Notes investments often require several years to bear fruit and ability to tolerate near-term volatility is key advantage. Describes going on offense during pandemic and planting seeds for subsequent outperformance. However, not permanent capital structure and discusses quarterly results and near-term catalysts for some holdings. Strong multi-year orientation with explicit patience but not decade-plus horizon yields high but not maximum score.