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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Pernas Portfolio returned 30% in Q2, outperforming indexes substantially. Manager sees an extraordinary multi-year opportunity for active managers to beat the S&P 500 due to index concentration in richly valued mega-caps forced into an AI arms race."
The Pernas Portfolio returned 30.1% in Q2 2026, substantially outperforming major indexes, driven by large gains in holdings including VPG, BWEN, XMTR, CEPL, and RELY. The manager argues that the next several years will be the best environment in modern history for fundamental active managers to beat the S&P 500. The core thesis centers on the index's high concentration in richly valued mega-cap technology companies at the exact moment these companies are being forced into an existential AI arms race. Hyperscalers are committing roughly $750 billion in AI-related spending in 2026, diluting shareholders and issuing debt to fund buildouts. This creates a productivity subsidy for the rest of the economy, with opportunities in smaller companies that benefit from this spending without having to fund it. The manager expects large dispersion across companies based on their ability to convert AI infrastructure into better business economics. Revenue is accelerating behind the buildout, with agents emerging as a major demand catalyst. The portfolio is positioned to identify companies with the culture and operational flexibility to redesign workflows around AI and convert the technology into faster growth, lower costs, and higher margins.
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