One Year and Long-Term Results Remain Strong!
The portfolio gave back a portion of its strong first-quarter gains and trailed The Russell 2000 Index during the second quarter. While disappointing in the short run, periods like this are an expected part of our investment approach. More importantly, the one year, rolling five-year and since-inception performance, remain strong.
Since inception, we have underperformed The Russell 2000 in 10 of 26 quarters, nearly 40% of the time. Yet over that same period, patient investors have been rewarded with substantial long-term outperformance. That is the tradeoff of concentrated active management. If a portfolio truly differs from the benchmark, periods of underperformance are the price of potential superior long-term returns.
Momentum Investing
Momentum investing, buying what’s already working regardless of valuation, can seem compelling in the short run, but it often leads to overpaying for future growth.
The Russell 2000 had a strong first half, but gains were concentrated in a small group of AI-related companies, especially in semiconductors, electrical equipment, and power infrastructure. We believe AI will be transformative and expect to own beneficiaries over time. But demand and earnings expectations are very uncertain and speculative, making it hard for us to have a differentiated opinion.
Our strategy works if we invest only in areas where we have a strong differentiated opinion and we are correct. In fact, nothing else matters. We are happy to own growth, stocks that have already run, stocks that are down etc. The point is that what the stock has done in the past is irrelevant as long as we are correct about future value. One of the costs of our approach is that the timing of success is uncertain.
Q2 Reversal
The biggest story in Q2 was Energy Fuels. After an exceptional 2025 and a strong first quarter, the stock is now roughly flat for the year. Part of the decline in Q2 reflects the market’s rotation away from commodity-related investments and toward AI and technology. Another factor has been investor uncertainty surrounding the company’s acquisitions and its transformation from a uranium miner/processor into a fully integrated critical minerals company.
Our conviction has not changed. We believe no Western company is better positioned to build an independent rare earth supply chain quickly at scale and low cost and that its combination of mining, processing, and downstream manufacturing remains underappreciated. As governments and manufacturers increasingly prioritize secure and reliable domestic supply chains, we believe those assets will become substantially more valuable.
The opposite occurred at BGC Group.
One of our largest disappointments in 2025 has become one of our strongest contributors in 2026. Earnings continue to grow regardless of economic conditions, valuation remains attractive, and management is executing on what we believe is the company’s most important long-term initiative: building FMX into a meaningful competitor in U.S. interest-rate futures and other exchange-traded products.
While the market has begun to recognize that opportunity, we continue to believe the long-term earnings potential of the exchange business is not reflected in today’s valuation.
Valuable for the Modern Portfolio
The characteristics of our strategy are increasingly relevant in today’s market. With performance heavily influenced by large cap indexes, algorithmic trading, and short-term positioning, it has become more difficult to find strategies that are both fundamentally driven and genuinely differentiated.
We are always here to answer any questions, please don’t hesitate to call or email.
With Kind Regards,
Zack Perry
Small Cap Q2 2026 Commentary
Zack Perry
One Year and Long-Term Results Remain Strong!
The portfolio gave back a portion of its strong first-quarter gains and trailed The Russell 2000 Index during the second quarter. While disappointing in the short run, periods like this are an expected part of our investment approach. More importantly, the one year, rolling five-year and since-inception performance, remain strong.
Since inception, we have underperformed The Russell 2000 in 10 of 26 quarters, nearly 40% of the time. Yet over that same period, patient investors have been rewarded with substantial long-term outperformance. That is the tradeoff of concentrated active management. If a portfolio truly differs from the benchmark, periods of underperformance are the price of potential superior long-term returns.
Momentum Investing
Momentum investing, buying what’s already working regardless of valuation, can seem compelling in the short run, but it often leads to overpaying for future growth.
The Russell 2000 had a strong first half, but gains were concentrated in a small group of AI-related companies, especially in semiconductors, electrical equipment, and power infrastructure. We believe AI will be transformative and expect to own beneficiaries over time. But demand and earnings expectations are very uncertain and speculative, making it hard for us to have a differentiated opinion.
Our strategy works if we invest only in areas where we have a strong differentiated opinion and we are correct. In fact, nothing else matters. We are happy to own growth, stocks that have already run, stocks that are down etc. The point is that what the stock has done in the past is irrelevant as long as we are correct about future value. One of the costs of our approach is that the timing of success is uncertain.
Q2 Reversal
The biggest story in Q2 was Energy Fuels. After an exceptional 2025 and a strong first quarter, the stock is now roughly flat for the year. Part of the decline in Q2 reflects the market’s rotation away from commodity-related investments and toward AI and technology. Another factor has been investor uncertainty surrounding the company’s acquisitions and its transformation from a uranium miner/processor into a fully integrated critical minerals company.
Our conviction has not changed. We believe no Western company is better positioned to build an independent rare earth supply chain quickly at scale and low cost and that its combination of mining, processing, and downstream manufacturing remains underappreciated. As governments and manufacturers increasingly prioritize secure and reliable domestic supply chains, we believe those assets will become substantially more valuable.
The opposite occurred at BGC Group.
One of our largest disappointments in 2025 has become one of our strongest contributors in 2026. Earnings continue to grow regardless of economic conditions, valuation remains attractive, and management is executing on what we believe is the company’s most important long-term initiative: building FMX into a meaningful competitor in U.S. interest-rate futures and other exchange-traded products.
While the market has begun to recognize that opportunity, we continue to believe the long-term earnings potential of the exchange business is not reflected in today’s valuation.
Valuable for the Modern Portfolio
The characteristics of our strategy are increasingly relevant in today’s market. With performance heavily influenced by large cap indexes, algorithmic trading, and short-term positioning, it has become more difficult to find strategies that are both fundamentally driven and genuinely differentiated.
We are always here to answer any questions, please don’t hesitate to call or email.
With Kind Regards,
Zack Perry
Disclosure and Source
Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens Wealth Management, LLC”), an SEC-registered investment advisor. Registration does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. This material is confidential and is for the use of the intended recipient only. This material is for general informational purposes only and should not be construed as investment, tax or legal advice. It does not constitute a recommendation or offer to buy or sell any security and should not provide the basis for any investment decision. Please consult with your Advisor prior to making any Investment decisions. The information contained herein was carefully compiled from sources believed to be reliable, but Robertson Stephens Wealth Management, LLC cannot guarantee its accuracy or completeness. Information, views and opinions are current as of the date of this presentation, are based on the information available at the time, and are subject to change based on market and other conditions. Robertson Stephens Wealth Management, LLC assumes no duty to update this information. Unless otherwise noted, any individual opinions presented are those of the author and not necessarily those of Robertson Stephens Wealth Management, LLC. Indices are unmanaged and reflect the reinvestment of all income or dividends but do not reflect the deduction of any fees or expenses which would reduce returns. Past performance does not guarantee future results. Forward-looking performance targets or estimates are not guaranteed and may not be achieved. Investing entails risks, including possible loss of principal. Alternative investments are speculative and involve substantial risks including significant loss of principal, high illiquidity, long time horizons, uneven growth rates, high fees, onerous tax consequences, limited transparency and limited regulation. Alternative investments are not suitable for all investors and are only available to qualified investors. Please refer to the private placement memorandum for a complete listing and description of terms and risks.
Net returns include a hypothetical Robertson Stephens Wealth Management, LLC annual investment advisory fee. Actual client fee will vary based on the rate agreed upon with the client as documented in the individual client investment advisory agreement. Fees act to reduce portfolio level returns and increase portfolio expenses. See the chart below for a visual illustration of the effect of advisory fees on investment returns over time.
Hypothetical growth of $100,000 to show the effect of advisory fees on investment returns over time
Performance may be compared to several indices. Broad-based securities indices are unmanaged and are not subject to fees and expenses typically associated with managed accounts or investment funds. The number and types of securities found in an index can differ greatly from that of the accounts held in the strategy shown. The benchmarks/indices are chosen based on similar risk between the benchmark and the respective investments. The benchmarks have not been selected to represent that an investor’s performance would follow them closely, but rather to allow for comparison of an investor’s performance to that of well-known and widely recognized indices. Investments cannot be made directly in an index.
All investmenting involves risk, including the possible loss of principal amount invested. Some important investing risks include: market risk: the market value of shares of common stock can change rapidly and unpredictably and have the potential for loss; company risk: equity securities represent ownership positions in companies. Over time, the market value of a common stock should reflect the success or failure of the company issuing the stock; financial services risk: investing a significant portion of assets in the financial services sector may cause a fund to be more volatile as securities within the financial services sector are more prone to regulatory action in the financial services industry, more sensitive to interest rate fluctuations, and are the target of increased competition; fees and expenses risk: fees and expenses reduce the return which a shareholder may earn by investing in a fund; under $10 billion market capitalization risk: small- and mid-size companies typically have more limited product lines, markets and financial resources than larger companies, and their securities may trade less frequently and in more limited volume than those of larger, more mature companies; foreign country risk: foreign companies may be subject to greater risk as foreign economies may not be as strong or diversified, foreign political systems may not be as stable, and foreign financial reporting standards may not be as rigorous as they are in the United States; emerging market risk: securities of issuers in emerging and developing markets may offer special investment opportunities, but present risks not found in more mature markets; margin and short selling: involves significant risks, including the possibility of losses that may exceed the amount invested.
This material is an investment advisory publication intended for investment advisory clients and prospective clients only. Robertson Stephens Wealth Management, LLC only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Robertson Stephens Wealth Management, LLC’ current written disclosure brochure filed with the SEC which discusses, among other things, Robertson Stephens Wealth Management, LLC’ business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov. © 2026 Robertson Stephens Wealth Management, LLC. All rights reserved. Robertson Stephens Wealth Management, LLC is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere. A3553
Talk To Us