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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Douglass Winthrop sees AI speculation creating a dotcom-style bubble with extreme valuations disconnected from fundamentals. Rather than chasing speculative infrastructure plays, they own proven cash generators—Alphabet, Microsoft, Amazon—gaining AI exposure as an accelerating tailwind to existing franchises."
Douglass Winthrop's Q2 2026 letter emphasizes investment discipline amid AI-driven market euphoria. The manager draws parallels to the dotcom bubble, citing historical examples like Sun Microsystems and Cisco Systems where transformative technologies disappointed investors who overpaid, with shares declining 90-96% despite continued business growth. Rather than owning speculative AI infrastructure directly, the portfolio gains exposure through proven cash-generative businesses—Alphabet, Microsoft, and Amazon—which are the largest data center owners powering AI while maintaining multiple earnings streams. The manager highlights that high price-to-revenue stocks have historically delivered half the return of the S&P 500, yet extreme valuations persist with governance shortcuts going unchallenged. S&P Global exemplifies the opportunity set, having become 27% cheaper since November 2022 while the broader market became 20% more expensive. The portfolio demonstrated resilience during brief selloffs in crowded AI trades. Competition is intensifying in semiconductors as Amazon and Alphabet's custom chips reduce Nvidia dependence. The strategy focuses on standards-based moats and businesses with enduring competitive advantages positioned to compound steadily through market cycles.
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