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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Hood River Capital - New Opportunities Fund 2026 Q3 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q3 2026 Letter Analysis

Hood River Capital - New Opportunities Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Hood River Capital - New Opportunities Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD-13.46%

YTD+14.04%

Annualized+39.22%

Positioning StanceCONSTRUCTIVE

Market CapSMID Cap

GeographyUS

Digest Analysis

Quick Take

"Underperforming the Russell 2500 Growth Index (-10.35%) by 311 basis points due to a severe momentum reversal and benchmark reconstitution effects in technology."

Executive Summary

During the third quarter of 2026, small- and mid-cap equities faced broad headwinds, driven by surging long-term interest rates, elevated energy prices, and geopolitical tensions surrounding Iran. The Hood River New Opportunities Fund fell -13.46%, trailing the Russell 2500 Growth Index's -10.35% return by 311 bps, primarily as prior winners experienced sharp momentum unwinds and stock selection detracted -323 bps (led by Information Technology at -92 bps). Relative exposure was further exacerbated by June's Russell index reconstitution, which mechanically widened the Fund's relative AI overweight to approximately 700 bps. Despite these quarterly challenges, the Fund remains up +14.04% year-to-date (+676 bps of relative outperformance) with an annualized return of 39.22% since inception. Having proactively trimmed ~800 bps of appreciated holdings in early summer, management actively reallocated capital toward high-visibility defense contractors and discounted AI suppliers with resilient order books.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

55%

CautiousHigh

Moderate (55%)

The fund articulates strong adherence to bottom-up fundamentals and willingness to maintain an overweight AI stance, yet conviction scoring is moderated because no individual portfolio holdings are named or sized. The letter discusses sector allocations and benchmark dynamics in aggregate rather than detailing concentrated stock-specific theses. Position trimming of 800 bps in winning holdings demonstrates a measured, risk-managed portfolio approach.

Growth Outlook

55%

BearishBullish

Neutral (55%)

Management maintains a constructive stance on underlying secular drivers like enterprise AI spending and defense replenishment, but acknowledges broader market valuation multiples sit in the top historical quartile. They highlight headwind factors such as rising long-term yields, oil prices, and geopolitical unrest. Overall sentiment reflects balanced optimism anchored by bottom-up earnings expectations rather than unhedged macro bullishness.

Risk Appetite

60%

DefensiveAggressive

Balanced (60%)

The portfolio remains net long with a 700 bps overweight in AI-related equities and an overweight in financials, reflecting risk-tolerant growth exposure. However, this risk-on orientation is balanced by proactive de-risking, evidenced by trimming 800 bps of appreciated holdings and exiting defense names vulnerable to regulatory contract margin caps. The portfolio is actively risk-calibrated across duration and consumer exposures.

Capital Deployment

45%

De-riskingDeploying

Net Neutral (45%)

Net capital deployment was relatively balanced across the period, as the managers trimmed roughly 800 bps of appreciated positions in late June and early July while selectively reallocating capital into oversold defense names and sound fundamentals. Cash reserves or net inflows were not explicitly reported, pointing to an active rotation rather than net aggressive capital injection.

Forward Guidance

60%

CautiousExpansionary

Neutral (60%)

Management displays a selective deployment bias, reallocating into beaten-down defense holdings with sound margin profiles and retaining exposure to discounted AI suppliers. While not signaling massive aggressive balance sheet expansion, the team explicitly intends to capitalize on mispriced opportunities into the fourth quarter. Their posture focuses on disciplined capital reallocation as fundamentals dictate.

Language Signal

60%

BearishBullish

Balanced (60%)

The document combines positive terminology like attractive valuations, durable growth, and meaningful discounts with realistic assessments of detraction, momentum reversals, and top-quartile market multiples. The net linguistic tone is moderately constructive, emphasizing long-term earnings power over short-term volatility. Cautious commentary is largely confined to cyclical and rate-sensitive pockets such as consumer discretionary.

Perceived Risk

55%

Low RiskElevated

Moderate Risk (55%)

Management explicitly details external macroeconomic risks including elevated 10-year Treasury yields, high oil prices, Middle Eastern geopolitical conflict with Iran, and Pentagon margin policy shifts. However, these issues are contextualized as manageable or company-specific rather than systemic financial crisis threats. Risk perception remains measured and standard for late-cycle growth investing.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Opportunities are viewed as attractive within specific subsectors such as AI infrastructure, defense technology, and select financials following recent pullbacks. However, broader market index multiples trading in the top quartile constrain universal opportunity across the small- and mid-cap space. Selectivity is stressed across both biotechnology and defense procurement.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The fund emphasizes a multi-year investment horizon spanning corporate earnings power through 2027 and 2028 capex expectations. Additionally, defense replenishment cycles are explicitly framed as multi-year runways extending into the 2030s. The team consciously looks past single-quarter momentum reversals in favor of long-term fundamental progress.