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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Constructive on misunderstood global smaller companies with resilient balance sheets, initiating a new holding in Volex and backing L1 Group while fully exiting Freee on cash flow resilience concerns."
The Langdon Global Smaller Companies Portfolio posted a net return of -1.1% in Q3 2026, outperforming the MSCI World Small Cap Net Index benchmark return of -3.6% by approximately 2.5 percentage points. Year-to-date, the portfolio has generated a net return of -8.7% compared to 16.3% for the benchmark, reflecting an annual return of -9.2% net of fees over the trailing one-year period. Relative performance was heavily influenced by sector positioning: roughly 40% of year-to-date underperformance stemmed from zero exposure to hardware and semiconductors, biotechnology, and materials, although this same underweight contributed roughly 60% of relative outperformance in Q3. The portfolio maintains strong balance sheet quality, with approximately 80% of holdings operating with net debt below 1.0x EBITDA. From a thematic and macroeconomic perspective, the manager focuses on second-order beneficiaries of technological disruption, particularly in artificial intelligence. While expressing skepticism toward the heavy debt and aggressive return assumptions funding foundational AI infrastructure and hardware, the manager identifies attractive opportunities in businesses leveraging inexpensive intelligence models to expand operating margins, improve service delivery, and reduce administrative bottlenecks without incurring linear labor cost inflation. Portfolio activity was marked by disciplined reallocation. The fund initiated a high-conviction position in Volex across data center and electrification end-markets, served as a cornerstone investor in L1 Group's capital raise, and maintained large core holdings in Euronext, Hypoport, and Goosehead Insurance. Capital was harvested from Baycurrent following a 2.5x return as multiples expanded to 30x, while Freee was completely liquidated due to concerns regarding cash profit resilience and Burford Capital was sold following slower collections and increased debt.
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