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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Liberty Park is defensively raising cash while navigating pullbacks in core industrial compounders, warning that compounded efficiency and price collapse will trigger a severe bust across speculative AI infrastructure."
Liberty Park Select Opportunities Fund, LP returned -6.46% net of fees in the third quarter of 2026, outperforming the Russell 2000 Index return of -7.23%. Year-to-date, the fund has advanced +6.82% net of fees compared to +13.71% for the benchmark. Gross exposure across the portfolio averaged approximately 96% during the period. Volatility was driven by sharp drawdowns in several longer-held compounders despite deliberate avoidance of direct factor tilts tied to the artificial intelligence buildout, prompting the management team to actively raise cash reserves in anticipation of broader market turbulence. The investment team articulates an extensive macro thesis warning that current artificial intelligence infrastructure spending represents an unsustainable bubble. Drawing historical parallels to the dense wavelength division multiplexing (DWDM) optical fiber glut of 2001, the manager highlights that rapid 10x annualized efficiency gains in serving software, open-weight models, and specialized silicon will trigger extreme price deflation. Rather than expanding compute spending via Jevons paradox, overcapacity and heavily subsidized consumption are expected to severely compress industry margins, with downstream enterprise end-users capturing the economic surplus instead of infrastructure providers. Portfolio performance reflected divergent company-specific dynamics across small-cap holdings. Positive contributors included HireQuest (+52.9%), Flotek Industries (+24.7%), and Xometry (+6.56%), propelled by organic operational acceleration and margin expansion. Conversely, returns were dragged down by sharp pullbacks in Limbach Holdings (-36.5%) following an EBITDA guidance cut, VSE Corp (-27.88%) amid multiple contraction despite record fundamental execution, and Bel Fuse (-26.68%) following an equity offering to fund an acquisition.
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