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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, Tweedy, Browne International Value II. This analysis is provided for institutional research purposes only and is not investment advice.
"Tweedy Browne International Value Fund II returned 6.69% in Q2 2026 but trails benchmarks year-to-date at 8.84%. The manager expresses serious concern about AI-driven valuation excesses, with key metrics at bubble-like levels and hyperscalers trapped in a capex prisoner's dilemma."
Tweedy, Browne International Value Fund II returned 6.69% in Q2 2026, bringing year-to-date returns to 8.84%, though trailing the MSCI EAFE benchmark. The quarter saw a resumption of AI-inspired advances in US technology stocks following easing of US/Iran tensions. Samsung Electronics delivered record semiconductor profits while smaller caps broadened the rally. The manager expresses deep concern about rapidly rising valuations, with the Cape Shiller P/E at 41X and Buffett Indicator at 219% near all-time highs. Hyperscalers pour billions into AI capex with uncertain returns, creating a prisoner's dilemma dynamic. The Fed narrative flipped from rate cuts to potential hikes due to persistent inflation. New positions include Capgemini and bioMérieux, purchased at discounts to intrinsic value. The portfolio maintains growing exposure to smaller and mid-cap companies offering more attractive valuations than US tech giants. The fund is positioned defensively with underweights in overvalued segments, expecting to hold up better if markets correct while still participating if the rally continues. The manager draws parallels to the late 1990s tech bubble.
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