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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Spyglass Capital Management 2026 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Spyglass Capital Management)

Primary Source Intelligence • Q3 2026 Letter Analysis

Spyglass Capital Management Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Spyglass Capital Management. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD-6.89%

Annualized+11.67%

Positioning StanceCONSTRUCTIVE

Market CapMid Cap

GeographyUS

Digest Analysis

Quick Take

"Constructive on secular software and asset-light market leaders, initiating a new position in TKO Group Holdings while fully exiting Fair Isaac Corporation amid regulatory scrutiny and selectively adding to oversold holdings."

Executive Summary

The Spyglass Growth Strategy declined 6.89% net of fees in the third quarter of 2026, underperforming the Bloomberg Midcap Growth Index benchmark decline of 4.81% and the broader Bloomberg 500 Index gain of 2.32%, while outperforming the Bloomberg 2500 Growth Index loss of 7.54%. Portfolio earnings growth remains exceptionally robust, with internally estimated earnings growth rates of 59% in 2026 and 49% in 2027 across the firm's concentrated 25-name holdings. All portfolio holdings were profitable during the past three quarters, and 24 of 25 companies met or exceeded consensus revenue and earnings estimates in the third quarter. The strategy maintains zero energy allocation and holds an asset-light, US-centric tilt. Macroeconomic headwinds and cross-asset volatility were driven by renewed geopolitical conflict between the United States and Iran in July alongside an unexpected 25-basis-point interest rate hike by the Federal Reserve in September, marking its first rate increase since 2023. Higher oil prices and interest rate shifts disproportionately penalized mid-cap growth equities while boosting cyclical sectors like Energy. Management views these macro disruptions as transitory within its five-year horizon and continues to identify artificial intelligence as a generational expansion driver for high-margin software business models capable of substituting for labor. Portfolio turnover reflected strict discipline within the fund's fixed 25-stock framework. Spyglass initiated a 2.20% position in TKO Group Holdings, funded by the complete liquidation of a 4.79% holding in Fair Isaac Corporation due to regulatory scrutiny widening its range of outcomes. The fund capitalized on market dislocations to add to AppLovin, AAON, and QXO, while trimming winners including Snowflake, Illumina, and Medpace Holdings.

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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

78%

CautiousHigh

High Conviction (78%)

Management maintains a disciplined, highly concentrated 25-stock portfolio where every holding is profitable, and executed a decisive 1-in-1-out trade replacing a 4.79% position in FICO with a 2.20% new long in TKO. Portfolios are tracked rigorously across internal valuation phases and revenue buckets, with strong willingness to hold through market dislocations. The score is moderated from the highest tier only because exact dollar sizes are disclosed for entries/exits rather than every single position.

Growth Outlook

65%

BearishBullish

Bullish (65%)

The manager remains distinctly optimistic regarding underlying portfolio earnings growth of 59% in 2026 and 49% in 2027, viewing recent stock price underperformance as a temporary dislocation. However, tone is balanced by explicit recognition that Federal Reserve rate hikes and Middle East geopolitical conflict created challenging macro headwinds. The constructive medium-term view outweighs near-term macro turbulence.

Risk Appetite

70%

DefensiveAggressive

Balanced (70%)

Capital remains fully invested across 25 growth companies with zero energy hedges or high cash balances, and capital was aggressively deployed to add into oversold positions such as AppLovin, AAON, and QXO. The fund selectively liquidated FICO to avoid regulatory uncertainty rather than taking market risk off the table. The posture reflects high operational risk tolerance underpinned by 100% portfolio profitability.

Capital Deployment

52%

De-riskingDeploying

Net Neutral (52%)

Capital activity was balanced within a fixed 25-stock portfolio framework, where the complete exit of a 4.79% holding was matched with a new 2.20% long position and targeted additions to top detractor holdings. Capital recycling rather than net fund-level cash raising or aggressive net leverage characterizes overall activity.

Forward Guidance

68%

CautiousExpansionary

Expansionary (68%)

Spyglass demonstrates an active deployment posture by buying dips in high-conviction positions that experienced non-fundamental pullbacks, while selectively recycling capital into new ideas like TKO Group. Forward action bias is constructive and focused on exploiting price dislocations relative to business operating performance. No cash-raising or portfolio hedging actions were flagged.

Language Signal

62%

BearishBullish

Balanced (62%)

Bullish descriptors around secular AI market expansion, durable earnings power, and operational execution appear consistently alongside quarterly earnings beats. Nonetheless, language is tempered by references to Fed inflation battles, rate hikes, geopolitical hostilities, and ad model disruptions.

Perceived Risk

62%

Low RiskElevated

Moderate Risk (62%)

Management explicitly details meaningful macro headwinds including Middle East war escalation, Strait of Hormuz transit disputes, oil price shocks, and renewed Federal Reserve monetary tightening. Regulatory risk is also cited as sufficiently severe to force a complete exit of Fair Isaac Corporation. While these risks are viewed as manageable over five years, their near-term disruptive potential is clearly emphasized.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

The manager identifies significant investment opportunities stemming from stock price-to-earnings dislocations in high-growth companies and ongoing AI infrastructure rollouts. Still, opportunity density is constrained by Spyglass's selective 25-name restriction, requiring a one-out-one-in replacement threshold. The universe of qualified profitable compounders is portrayed as focused rather than broad-based.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Spyglass explicitly anchors its investment decisions to a five-year time horizon, treating macro disruptions such as the Iran War and Fed rate hikes as transitory phenomena. Management emphasizes multi-year compounding potential in names like TKO and Credo rather than trading quarterly earnings prints. The approach is patient and fundamentally oriented.