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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
Buyside Digest is not affiliated with, and does not endorse, Cedar Grove Capital Management. This analysis is provided for institutional research purposes only and is not investment advice.
"Cedar Grove returned 12.8% in Q2 2026, rebounding from Q1 losses by diversifying into 16 positions across healthcare, biotech, and consumer sectors while aggressively shorting overvalued names. The manager explicitly avoids the AI momentum trade, instead focusing on unloved small-cap fundamentals including telehealth leader HIMS, gene therapy plays, and grid modernization."
Cedar Grove Capital Management returned 12.8% net in Q2 2026, rebounding from a difficult Q1 marked by the SaaS downturn and US-Iran conflict. The fund now holds 16 positions across healthcare, biotechnology, consumer discretionary, and technology, with a long/short strategy that delivered alpha through aggressive short positions in overvalued names. The manager explicitly avoids the AI momentum trade, viewing hyperscaler spending on infrastructure as unsustainable and reminiscent of past parabolic sector moves. Instead, the portfolio focuses on unloved small-cap companies with strong fundamentals, including telehealth plays like HIMS (second largest holding) and Hydreight Technologies, biotechnology positions in QURE, NKTR, and ABVX with positive clinical data, and grid modernization exposure through Tantalus Systems. Key detractors included KITS Eyewear (due to unwanted bitcoin exposure) and Sanuwave Health (Medicare reimbursement headwinds). The manager emphasizes patience and diversification, positioning for eventual capital rotation away from AI into fundamentally improving small caps. Despite near-term volatility, the long-term thesis remains intact with a marathon mindset.
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