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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Southeastern's Global Fund significantly underperformed in Q2 2026 due to avoiding overvalued AI and technology stocks the manager views as bubble territory. The concentrated 20-stock portfolio trades at mid-50s% P/V with the lowest multiples of real free cash flow."
Southeastern's Global Fund returned 5.90% in Q2 2026, underperforming the MSCI World's 13.76% return as over 100% of relative underperformance came from underweight positions in overvalued Information Technology and AI-related stocks. The manager views current market conditions as dangerously speculative, with both earnings and price multiples in bubble territory for the first time in history. Their concentrated portfolio of 20 holdings trades at mid-50s% P/V with 9% cash, focused on quality businesses at the lowest multiples of real free cash flow. Key contributors included Delivery Hero (exited after M&A interest drove shares to fair value), Canal+, Fortune Brands (new CEO hire), and Glanbia. Detractors included IDP Education (policy headwinds and index deletion), Regeneron (disappointing trial results), Albertsons (intense competition), and Jollibee (margin pressure and index deletion). The manager increased engagement activity with positive results at Tripadvisor (+29%), Fortune Brands, and Mattel. They believe absolute and relative returns have been deferred, not foregone, with considerably less risk going forward as mean reversion eventually occurs. The portfolio offers multiple paths to win through free cash flow growth, multiple expansion, and strategic actions to realize value.
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