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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"FMI is avoiding the AI bubble and buying quality businesses at compelling valuations. While semiconductor stocks posted their best quarter ever and AI themes skyrocketed, the manager sees speculative excess with challenging return math for hyperscalers."
Fiduciary Management spent Q2 2026 buying businesses the market has written off while global stock markets were carried higher by AI momentum, with the Russell 2000 and S&P 500 posting their best quarterly returns since 2020. The AI complex experienced parabolic gains, with semiconductor stocks posting potentially their best quarter ever and the Philadelphia Stock Exchange Semiconductor Index gaining 88%. FMI views this as a bubble with extraordinarily high valuations and minimal room for error, noting that hyperscalers are projected to spend over $725 billion on capex in 2026 with challenging return math. The manager is positioned to benefit from AI on the cost side through portfolio companies like FTI Consulting, Capital One, and Fluidra that could realize productivity gains rather than owning companies selling into the AI investment cycle. Quality Compounders fell 1% YTD while AI themes skyrocketed, creating a valuation gap rivaling the dot-com bubble. FMI owns businesses with durable competitive advantages trading at meaningful discounts to intrinsic value, believing the long-term setup is the strongest in many years with a 3- to 5-year outlook looking very bright.
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