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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, Wasatch Long Short Alpha Fund. This analysis is provided for institutional research purposes only and is not investment advice.
"Wasatch Long/Short Alpha returned 8.29% in Q2 2026, significantly trailing the Russell 2500's 20.26% as speculative AI beneficiaries dominated. The quality-focused long/short strategy faced headwinds from lower-quality outperformance."
The Wasatch Long/Short Alpha Fund returned 8.29% in Q2 2026, trailing the Russell 2500 Index's 20.26% gain as market leadership remained concentrated in AI-related companies, particularly unprofitable businesses and those with uncertain growth durability. This created a structural headwind for the fund's quality-focused long/short strategy. The fund's long positions generated positive returns but lagged the benchmark, while short positions in low-quality stocks that rallied produced losses. Top long contributors included JFrog, which benefited from AI-driven demand for software supply chain tools, and Everus Construction Group, which provides electrical infrastructure services for data centers. The manager views current AI demands as driving 10-20 years of grid upgrade requirements. Detractors included Ensign Group, pressured by a short-seller report, and Procore Technologies, caught in software sector AI disruption concerns. The manager maintains conviction in portfolio quality metrics and earnings growth, has added to overlooked steady-growth companies at attractive valuations, and increased short exposure given heightened market speculation. The portfolio is positioned for a potential shift back to fundamentals-driven markets.
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