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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Akre Focus underperformed dramatically in Q2 as markets chased AI semiconductor speculation, but the manager sees the Fund at decade-low valuations with exceptional fundamentals. Portfolio companies are successfully monetizing AI at the application layer with 16% projected growth and 42% ROIC at 17x free cash flow."
The Akre Focus ETF returned 0.66% in Q2 2026 versus 15.20% for the S&P 500, bringing trailing 12-month performance to -24.01% versus 22.32% for the index. The manager views the Fund as the most fundamentally strong and attractively valued in 10 years, trading at just over 17x free cash flow per share (lowest since 2016) with projected 16% annual FCFPS growth and 42% ROIC. The underperformance stems from valuation multiple compression as markets favor AI-related semiconductors and hardware over software. The manager expresses deep concern about speculative excess in AI investments, noting semiconductor companies now represent 20% of the S&P 500, leveraged ETF assets reached $218 billion, and margin debt hit $1.4 trillion. Portfolio companies including Salesforce, ServiceNow, and Constellation Software are successfully adopting and monetizing AI while fortifying competitive advantages. The manager remains fully invested with cash at 1.7%, committed to their time-tested process, and expects vindication as the narrative shifts toward AI value creation at the application layer where their holdings operate.
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