July 10, 2026
Dear Fellow Shareholders,
I am pleased to report a successful second quarter after a more difficult first quarter, when the Iran war commenced. The U.S. called for a truce in late March, and from that point forward, the broad market – led by “all things A.I.” – had one of its better three-month performances in several years. For the second quarter, the portfolio was up 6.57%, bringing year-to-date results to +5.58%. For the trailing twelve months ending 6/30/26, the portfolio was +14.04%, which was in line with our expectations for a portfolio of stocks, bonds, and cash, as well as that of our comparative peer group of similar funds. In addition, the fund paid a cash dividend of $0.066143 per share on 6/30/26. In our attempt at consistency, the fund’s three-year annualized performance, which was remarkably similar to our one-year results, was 14.05%. This will be difficult, if not impossible, to replicate over the next three years, so stay tuned!
Beneath the surface of the market, cracks have started to appear in the “all things A.I.”-driven market. Participants are now starting to price into their calculus that the once-free-cash-flow gushers known collectively as the “Mag Seven” have gone from generating lots of cash to needing lots of cash for their build-out of A.I. For example, Google did an $85 billion – with a “B” – equity raise, along with a $20 billion debt offering. For one, most management teams won’t sell equity if they think it’s cheap, and two, most won’t borrow if they don’t need to, so I will let you draw your own conclusions.
To put a “cherry on the cake” of speculation, the SpaceX IPO was offered to the public at $135/share in mid-June by the investment bank consortium of Goldman Sachs and Morgan Stanley. They were paid the princely sum of $500 million to convince buyers – which represented only 5% of shares outstanding – that this small offering, which they made sure was oversubscribed at 90 times sales, was a great investment! I know the insiders (both employees and early investors) were excited to have a huge liquidity event, as their basis was more likely 2 times sales. The old saying on Wall Street is, “When the ducks quack, feed them.” My concern here is that the investment banks did just that. Now, a little mea culpa on my part: I have doubted Elon Musk in the past, unsuccessfully, I might add. It is hard for me, as a conservative and absolute portfolio manager, to consider a business that lost $4 billion in its most recent quarter, with a desire to colonize Mars, as a worthy investment of our hard-earned dollars. Time will tell.
To celebrate our Republic’s 250th anniversary, I have simultaneously been watching “An American Revolution” on Netflix and reading The Killing of Lincoln. Reflecting on both, I think how lucky we are to be here and what struggles our forefathers endured to give us the United States and the freedoms we have today. Watching the reenactment of Washington crossing the Delaware River on Christmas Day in horrible weather for a surprise attack on Trenton, N.J. – a turning point in the Revolution – or reading of the absolute carnage in the Civil War leading up to Lee’s surrender at the Appomattox Courthouse in April of 1865 (closely followed by Lincoln’s assassination), I realize it is lucky we aren’t a British colony in the first case, or that we didn’t break out into total anarchy in the second. We should all appreciate the stability of our three branches of government designed over 250 years ago!
As I am fond of family-controlled, cash-generative businesses (as I think we generally receive better treatment as a minority shareholder over time), it was particularly pleasing to complete the final month of the quarter up, while many of the indices were down. It is my hope that the market is beginning to appreciate the benefits of our holdings and is considering other investments not involved in the artificial intelligence build-out.
Top contributors for the quarter ending June 30, 2026:
| Alphabet | +24.35% |
| Madison Square Garden Sports | +25.03% |
| Atlanta Braves | +21.55% |
| Acuity Brands | +34.51% |
| Take Two Interactive Software | +26.57% |
Top detractors for the quarter ending June 30, 2026:
| Sprott | -21.13% |
| iShares Gold Trust | -14.35% |
| Permian Resources | -12.91% |
| BJs Wholesale Club | -11.38% |
| Copart (CPRT): | -15.09% |
Top contributors for calendar year-to-date 2026:
| Madison Square Garden Sports | +55.36% |
| Alphabet | +14.32% |
| Atlanta Braves | +31.56% |
| Unifirst | +37.48% |
| Permian Resources | +33.43% |
Top Detractors for calendar year-to-date 2026:
| SS&C Technologies | -28.49% |
| Copart | -27.99% |
| Jefferies Financial | -18.10% |
| iShares Gold Trust | -6.97% |
| Markel | -9.15% |
Thank you for your continued support. If there is anything we can do to serve you better, please don’t hesitate to call.
All the best,
Mark F. Travis, President
Intrepid Income Fund Co-Portfolio Manager