April 2026

The fund returned +9.3% in April, taking us back to the previous highs. The MSCI ACWI (AUD) returned +5%. Since inception (10 months), the fund is up 12.6% net versus the MSCI at 7.7%, with a Sortino ratio of 1.6.

In last month's letter we wrote that "the pessimism is loud, the data underneath tells a different story" and that we had "taken advantage of market weakness to invest a significant amount of the fund's capital." We increased AMD, Amazon and several other positions during the war fear, which contributed meaningfully this month.

A catalyst was earnings. Four of the Mag 7 reported and all four delivered.

Amazon. Revenue beat by around $4b. AWS grew 28%, the fastest growth in 15 quarters. EPS came in around 70% above expectations.

Microsoft. Azure grew 40%, reversing a multi quarter deceleration. The AI business is now running up 123% year on year.

Alphabet and Meta (not held) also delivered. Cloud growth and capex guidance were both raised.

The capex numbers continue to grow. Combined 2026 capex from the five US hyperscalers is now tracking $805b, up from a prior estimate of $765b. The 2027 forecast has been lifted to $1.1 trillion. The 2026 figure alone is roughly equal to what every non-tech company in the S&P 500 spent on capex combined in 2025. Over $1.4 trillion of this revenue is contracted at Microsoft, Alphabet's cloud business, and Amazon. The capex is locked in by signed customer commitments. Every CEO said the same thing on their call: capacity constrained, not demand constrained.

This spend is now driving the US economy. AI capex was 75% of US GDP growth in Q1, according to David Sacks, the White House AI Czar. Morgan Stanley sees AI contributing 2.5% to GDP this year and over 3% next year. The capital is flowing out of capital light businesses like search, social and software, into asset heavy infrastructure: GPUs, foundry, memory, networking, optical, power generation, grid equipment, cooling, and cabling. We see this as a meaningful reversal from the past two decades.

The revenue is keeping pace with the spend. Anthropic has lifted ARR by close to 50% in a single month.

The earnings backdrop is the strongest in four years. With 63% of the S&P 500 reporting Q1, earnings growth is tracking 27%, more than double the 13% expected and the highest since Q4 2021. 84% are beating consensus, above the 5 year average of 78%.

Forward earnings keep growing. Goldman Sachs has S&P 500 EPS at $275 in 2025, $309 in 2026 (+12%), and $342 in 2027 (+10%), with a year end 2026 target of 7,600.

The real risk is execution. If the AI buildout takes longer to monetise than current capex implies, returns on invested capital decline and capex eventually slows. We watch this closely and would reduce exposure if the data turns.

We finished April with 26% cash, 77% gross long and net exposure of 74%.

We continue to favour global equities over domestic large caps. US earnings growth is tracking at ~27% for Q1, with the AI capex cycle reshaping the economy and the key drivers firmly offshore. This is where earnings momentum and reinvestment are strongest.

Our view on the AI opportunity is clearer. The opportunity splits into two areas. Software AI: chips, memory, models, compute. Physical AI: power, energy storage, critical minerals, actuation. Both layers are required.

We hold exposure to both and are leaning further into physical AI

AMD is our largest holding at 7.8%. The stock hit all time highs at $345 in April. Data centre revenue is growing 60% annually, the MI400 and Helios platform launch in the second half, and AI revenue is set to scale meaningfully through 2027. AMD sits in the GPU layer of the hyperscaler capex cycle.

Amazon is our second largest at 7.3%. AWS reaccelerated to 28% growth, the fastest in 15 quarters. The 2026 capex plan is fully underwritten by signed customer commitments. The stock trades at 24x earnings on a business with structural margin expansion in retail, an accelerating cloud business, and an emerging high margin advertising arm. We added during the March drawdown when it traded at one of the lowest price to operating cash flow multiples in the past decade.

Micron at 5.6%. HBM demand exceeds supply through 2027 and pricing power has returned across DRAM and NAND. Memory is one of the largest line items in every hyperscaler capex plan. Micron trades at 6.3x forward P/E and 4.7x forward EV/EBITDA, both well below the 2-year average and around 1 standard deviation cheap on a long run basis. The market is still pricing memory like a cyclical despite a structural demand shift.

Nebius at 4.5% is our pure neocloud exposure. The company sits on a large multi year contracted backlog from Microsoft and Meta against a fraction of that in trailing revenue. Management guides to a roughly six fold revenue increase in 2026 with 40% adjusted EBITDA margins. Nvidia holds a strategic equity stake. On consensus 2027 numbers Nebius trades at around 7x EV/EBITDA and 3.8x EV/Revenue, which we view as undemanding given the contracted growth profile. The risk is execution at scale. Nebius has to deliver data centre capacity and ramp utilisation faster than any neocloud has done before. Operational missteps would be punished. We size the position to reflect this.

Talen Energy at 6.1% is our exposure to US power demand. Talen owns nuclear capacity that cannot easily be replicated and PPA pricing keeps moving up. Talen trades at 10.2x forward EV/EBITDA, on a business with significant earnings growth ahead as new PPAs ramp.

Viridis Mining at 5.1% is our rare earth exposure. The Colossus project in Brazil targets a final investment decision in Q3 2026. Western rare earth supply is a structural theme that benefits as Chinese export restrictions tighten. As a pre production developer, the risks are project funding, permitting and rare earth pricing. We size the position accordingly.

Our short book reflects our caution on the Australian economy. We continue to hold short positions in CBA and ANZ. Both trade at premiums to global bank averages on limited earnings growth. The government's answer to spending too much has been to tax more. We think public perception forces a reversal over the next 1 to 2 years, with fiscal spend potentially decelerating, immigration reduced, and the lagged impact of rate hikes finally biting. Property would soften in that environment and delinquencies rise. The banks are leveraged directly to all of it.

Top 5 contributors, consolidating stock and option positions for each underlying:

AMD: +268bp. Strong rally on increased AI capex spend. Some profits given back due to individual stock hedging. At month end this position is fully hedged into the earnings print.

Nebius: +184bp. The Meta deal expansion and the Nvidia equity stake repriced the entire backlog.

Viridis Mining: +169bp. Continued progress on Colossus and supportive thematic.

Loyal Metals: +168bp. Loyal received an all cash takeover offer at a 40% premium. We held a small weighting.

Amazon: +123bp. We deployed into the March weakness and the position recovered fully in April.

Top 5 detractors

Nasdaq Hedging: -113bp. This is the price of insurance in a month where the market ripped higher. We trimmed the hedge through April but kept residual protection on.

ServiceNow: -95bp. Exited. The position never recovered from the February software reset and we redeployed the capital into higher conviction names.

Twilio: -65bp. Same software displacement theme as ServiceNow. Stopped out.

BYD: -46bp. Trimmed into China consumer weakness. The long term thesis remains intact and BYD is well positioned in EVs and batteries globally. We continue to hold a meaningful position.

Unity: -39bp. Stopped out at the same time as ServiceNow and Twilio.

The fund is back at the highs. From inception on 1 July through October, we built positions into the AI and commodities themes. We hedged into the topping pattern in October, took losses on the way down, then redeployed into oversold names in March and early April. Over ten months we have delivered 12.6% net with a Sortino ratio of 1.6.

Cash is 26% and the pipeline of new ideas is full. We will deploy when the setup is right.

We have multiple stock specific catalysts approaching and have hedged some key positions accordingly.

The Iran war remains an active conflict and a real risk, but it is not the dominant market driver. Earnings growth has taken over. The US has been a net beneficiary of higher oil prices given its position as a net energy exporter, which has buffered the inflation impact. We keep residual hedges on and own several positions which benefit from higher energy prices,

We continue to own the companies receiving the capital flowing through this cycle, with positions across software AI and physical AI and an increasing weight to the physical side.

Please email or call any time if you'd like more detail.

Regards