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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, Aristotle Value Equity Fund. This analysis is provided for institutional research purposes only and is not investment advice.
"Aristotle Value underperformed in Q2 2026 due to deliberate underexposure to AI infrastructure semiconductors, which the manager views as transient scarcity earnings destined to normalize. They are upgrading the portfolio toward Durable Quality franchises with permanent competitive advantages at attractive valuations, selling Atmos and Danaher to buy Autodesk and Edwards Lifesciences."
The Aristotle Value Equity Fund returned 4.32% in Q2 2026, underperforming the Russell 1000 Value Index's 13.87% return due to underexposure to AI data center infrastructure spending, particularly semiconductors and memory. The manager characterizes current semiconductor earnings as real but transient scarcity profits that will normalize when supply catches up, and they are actively avoiding these names despite extraordinary performance. Instead, they are using the market dislocation to upgrade the portfolio toward Durable Quality businesses with natural monopolies, irreplaceable infrastructure, and sustainable pricing power. The manager sold Atmos Energy and Danaher to purchase Autodesk and Edwards Lifesciences, which they view as offering more compelling risk-reward opportunities. Key contributors included Qualcomm and Alphabet, while detractors included Corteva and Motorola Solutions due to near-term headwinds. The broader economy outside AI infrastructure is struggling, with construction facing its toughest environment since the Global Financial Crisis. The manager maintains conviction that prices and fundamentals will eventually reconnect, positioning the portfolio for long-term value creation beyond the current cycle.
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