Dear Partners,
In the first quarter of 2026, our partnership declined by approximately 7.8%. As of this writing, we have recovered much of that decline and are now down about 1.7% for the year. Over the same first quarter period, the S&P 500 Total Return Index fell 4.3%.
The sharp swing between quarter-end and the date of this letter reflects how quickly prices can move in unsettled markets, even when underlying business performance has changed little.
We entered the second quarter with meaningful capital to deploy into what is, finally, a more rational pricing environment. For a partnership built on patience and process, this is the setup we have been working toward.
A completed cycle
In January, we sold a final small position in goeasy limited (TSX: GSY), completing an investment we first made in 2019. Over nearly seven years, the investment compounded at 34.6% annually. That result deserves a moment's reflection.
The business extended credit to borrowers who could not access conventional lenders, which was enough to keep most institutional investors away. We bought shares at a price that assumed a great deal could go wrong, but we saw something different: disciplined underwriting, a management team that had spent years refining a model built around improving the lives of fragile borrowers, and a regulatory environment that limited meaningful competition.
What followed over seven years of ownership was not smooth. There were long periods when the stock was deeply out of favor, when the thesis was questioned, and when patience was required. What kept us invested was the familiarity that comes from spending years with management, understanding how the business behaves under stress, trusting the people running it, and knowing, with reasonable confidence, what the business is worth.
It was a good investment, and we are grateful for what it taught us about staying the course.
Harvested gains, patient capital
Following the substantial gains realized in 2025, we continued taking profits on positions that had approached fair value.
Our portfolio consists of companies that are selling products or services that are essential to their customers, primarily in domestic or regional markets, and with limited direct exposure to the global trade disruptions dominating the headlines. In the first quarter, their share prices were volatile, but their business performance was not. Most public companies will release their first quarter results in April and May. Prices follow earnings, on their own schedule, but they do follow.
Looking forward
Every investment decision we make still comes down to the same questions: Is this a good business? Is management incentivized to deploy capital wisely? Is the price low enough to offer a real margin of safety in difficult times? Those questions require judgment and will continue to do so.
What has changed, with the help of Phoenician Intelligence™, is our capacity to execute the strategy. We cover more ground, move faster, and manage a more globally diversified portfolio than at any point in our history. Our investment philosophy is unchanged, but the tools at our disposal are better than they have ever been.
We continue to look for founder-led, well-managed businesses trading at meaningful discounts to what they are worth. Thanks to current volatility, the pipeline is now active, and several opportunities are in various stages of underwriting. Over the years, our best investments have not been made in calm, rising markets, but in moments of disruption, when the gap between price and value was widest.
Thank you, as always, for the trust you place in us. Please do not hesitate to reach out if you have any questions. I look forward to reporting again in July.
Cordially,
John G. Khabbaz