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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, Pzena Focused Value strategy. This analysis is provided for institutional research purposes only and is not investment advice.
"Pzena Focused Value outperformed in Q2 2026 on health care strength, led by managed care insurers benefiting from favorable medical cost trends. The manager trimmed semiconductors on unsustainable 80%+ margins, avoiding the cyclical peak, and initiated software positions after AI-disruption fears created decade-low valuations."
The Pzena Focused Value strategy returned 14.3% gross in Q2 2026, slightly outperforming its Russell 1000 Value benchmark as health care and financials drove gains while energy detracted. The quarter was dominated by a semiconductor earnings boom that accounted for the vast majority of global equity returns, with memory chip margins reaching unprecedented levels above 80%. The manager explains why these margins are unsustainable using a normalized earnings framework, having bought semiconductors when cheap in 2022-2023 and trimmed on strength well before the cycle peaked. The portfolio is now finding value in areas left behind by AI-driven concentration, including managed care insurers Humana and CVS Health, which contributed strongly on favorable medical cost trends. New positions include Workday and SS&C Technologies, purchased after AI-disruption fears drove software valuations to decade lows despite mission-critical product positioning. The manager trimmed energy holdings as oil spiked near $120 on Middle East conflict, then gave back gains as tensions eased. With the equal-weighted MSCI EM Index underperforming cap-weighted by 18%—the widest gap in 34 years—the manager sees compelling opportunities in consumer businesses and health care franchises at valuations that do not require historically anomalous conditions to justify returns.
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