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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Constructive on deeply undervalued rate-sensitive platforms and cash-generating compounders, exiting CoStar and Rentokil over AI disruption risks while maintaining high-conviction positions in Rocket Companies, Real Matters, Grifols, and Canadian Solar."
White Falcon Capital Management generated a net return of 2.7% in Q3 2026, matching the S&P 500 TR (CAD) return of 2.7% and outperforming both the MSCI AC TR (CAD) at 1.1% and the S&P TSX TR at 1.6%. Year-to-date, the portfolio has advanced 4.6% net of fees, lagging the primary indices due to portfolio headwinds from rising long-term interest rates that weighed on valuations despite solid underlying fundamental business performance. Performance was strong through August but surrendered gains during September. The strategy maintains an active absolute-return orientation across its Compounders, Value Today, and Value Tomorrow allocations without holding exposure to energy. The macroeconomic backdrop has been defined by rising real long-term treasury yields around 2.7%, driven by intense capital spending for AI infrastructure—reminiscent of the 1873 railroad boom—rather than heightened inflation expectations. The manager views these elevated real rates as unsustainable over the long run given heavy U.S. sovereign debt obligations and the resulting strain on borrowing costs across rate-sensitive sectors of the economy. Concurrently, systemic risks are building in passive equity markets, where the top ten S&P 500 mega-caps now represent nearly 40% of index weight, effectively transforming passive funds into concentrated artificial intelligence wagers. Portfolio activity was marked by disciplined capital reallocation away from positions facing structural technological friction toward higher-conviction holdings with superior valuations. The fund fully liquidated long-term investments in CoStar Group and Rentokil Initial after determining that generative AI search disruptions and autonomous agents threaten their customer acquisition pipelines and digital moat dynamics. Capital was reallocated to deep-value opportunities including an approximate 10% combined allocation to rate-sensitive platforms Rocket Companies and Real Matters, as well as high-torque value investments in Grifols and Canadian Solar.
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