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Artisan Global Discovery Fund Q1 2026 Performance Analysis

Single Slide

In the first quarter of 2026, the Artisan Global Discovery Fund faced challenges, primarily due to adverse stock picking decisions. This resulted in an overall underperformance relative to its benchmarks. However, strong performance in the industrials sector and a deliberate underweighting of financial stocks partially mitigated these negative impacts. Several key holdings demonstrated robust results, with new strategic investments also being initiated during this period.

The global equity markets saw a downturn in the first quarter of 2026, retracting from their previous all-time highs. This market correction was influenced by a confluence of factors, including heightened geopolitical tensions, evolving expectations regarding monetary policy, and increased uncertainty in the broader macroeconomic landscape. Amidst these turbulent conditions, energy stocks emerged as a significant outlier, delivering returns exceeding 30% across major indices. This surge underscores a flight to commodities and a defensive posture adopted by investors in response to the volatile environment.

Artisan Global Discovery Fund's performance was notably affected by its stock selection within specific sectors. The negative contributions stemmed primarily from holdings in information technology, consumer discretionary, and real estate sectors. Software companies, in particular, were significant detractors. Conversely, the fund's strategic underweighting in the energy sector, while broadly beneficial to the market, did not fully offset the impact of the underperforming selections in other areas. This dynamic highlights the intricate balance required in portfolio management amidst shifting market tides.

Individual companies within the fund's portfolio showcased diverse performances. Modine Manufacturing, for example, revised its growth forecasts upwards, signaling strong operational momentum. Twist Bioscience reported results that surpassed market expectations, demonstrating both revenue growth and improved gross margins. Similarly, MongoDB delivered figures that were ahead of analyst predictions, indicating healthy demand for its database solutions. These strong individual performances were crucial in cushioning the fund's overall results against broader market headwinds and sector-specific underperformance.

During the quarter, the Artisan Global Discovery Fund undertook several strategic portfolio adjustments. New positions were established in promising companies such as ROBLOX, a leading online entertainment platform; H World Group, a prominent hospitality company; and ASM International, a key player in the semiconductor equipment industry. Concurrently, the fund divested from investments in JFrog, JBT Marel, and Sartorius, concluding their investment campaigns. These adjustments reflect a proactive approach to re-aligning the portfolio with evolving market opportunities and perceived growth drivers.

The first quarter of 2026 presented a complex investment environment, marked by global equity declines and significant sector-specific shifts. Despite these challenges, the Artisan Global Discovery Fund demonstrated resilience through strategic portfolio management and the strength of certain key holdings. The fund's ability to identify and invest in companies with robust growth prospects, even amidst a challenging macroeconomic backdrop, remains a core tenet of its strategy. The careful recalibration of its portfolio through new investments and divestitures positions the fund to navigate future market uncertainties and capitalize on emerging opportunities.

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Coastal Financial Corp: Re-evaluating Investment Potential Amidst Challenges

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Despite a notable 39% decline in its stock value, Coastal Financial Corporation (CCB) continues to hold a 'neutral' investment recommendation. This stance is primarily due to its valuation remaining elevated when compared to its industry peers. The company's innovative CCBX Banking-as-a-Service sector, while a significant growth driver, concurrently introduces increased credit risk and raises questions about its asset quality. Currently, its non-performing assets and non-accrual loans surpass established thresholds, and there's a noticeable uptick in delinquencies across credit card and consumer loan portfolios. Furthermore, Coastal Financial's profitability metrics trail behind those of its competitors, suggesting that its premium market valuation may not be fully supported by its present asset quality or financial returns.

Coastal Financial Corp. Faces Scrutiny After Stock Plunge

In a recent development impacting the financial sector, Coastal Financial Corporation (CCB) has experienced a substantial downturn in its stock performance, plummeting by 39% since December of last year. Despite this significant drop, the company has retained a 'hold' recommendation from financial analysts, highlighting ongoing concerns about its market valuation relative to its industry counterparts. Daniel Jones, a prominent financial analyst, initially expressed interest in CCB in December, citing its robust deposit growth and profitability as key attractions. However, subsequent analysis reveals a more complex picture. The core of CCB's growth strategy lies in its distinctive CCBX Banking-as-a-Service segment. While this innovative platform has been instrumental in driving expansion, it simultaneously introduces a heightened level of credit risk and raises valid questions regarding the overall quality of the company's assets. A closer examination of CCB's financial health uncovers that its non-performing assets and non-accrual loans have exceeded predefined acceptable thresholds. This situation is further exacerbated by a noticeable increase in delinquencies within its credit card and consumer loan portfolios. These indicators collectively point to potential vulnerabilities in the company's lending practices and risk management. Moreover, when compared to its peers, Coastal Financial's profitability metrics consistently lag. This underperformance in profitability, coupled with the deteriorating asset quality, suggests that the current premium valuation enjoyed by CCB in the market may not be justifiable. Investors are urged to consider these factors carefully, as the interplay between growth, risk, and valuation continues to evolve for Coastal Financial Corporation.

This situation with Coastal Financial Corporation provides a critical lesson for investors and market observers: growth, while desirable, must always be viewed through the lens of risk and sustainability. The company's innovative Banking-as-a-Service model initially promised exciting growth avenues, yet it underscores the inherent trade-offs between aggressive expansion and prudent risk management. The rising delinquencies and non-performing assets serve as a stark reminder that even seemingly robust business models can harbor hidden vulnerabilities. For me, this emphasizes the importance of a holistic investment approach—one that doesn't just chase growth narratives but deeply scrutinizes the underlying financial health, asset quality, and risk exposures. It's a call to look beyond superficial market excitement and delve into the granular details of a company's operations, particularly in the ever-evolving financial landscape. This experience reinforces the timeless wisdom of balancing ambition with caution, ensuring that a premium valuation is always backed by solid, sustainable fundamentals.

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Fidelity International Small Cap Fund's Q1 2026 Performance Analysis

Single Slide

Fidelity International Small Cap Fund’s Retail Class shares demonstrated resilience in the first quarter of 2026, outperforming its benchmark index, the MSCI All Country World Index ex U. S. Small Cap Net MA Linked Index. The fund posted a return of -0.22%, which was favorably higher than the benchmark’s -0.45% decline. This positive divergence highlights the fund management's adept strategies in navigating the global small-cap market. Significant contributions to this performance included tactical allocations in emerging markets, notably a reduced exposure to India and astute stock-picking within South Korea, with Vitzrocell emerging as a particularly strong performer. However, in a move to mitigate potential risks from rapid technological shifts, the fund divested its stake in TIS, a Japanese IT company, citing concerns over AI disruption within the software sector.

Fidelity International Small Cap Fund Navigates Q1 2026 with Strategic Market Moves

In the first quarter of 2026, spanning from January 1 to March 31, Fidelity International Small Cap Fund’s Retail Class shares showcased a notable performance. The fund recorded a return of -0.22%, successfully surpassing the MSCI All Country World Index ex U. S. Small Cap Net MA Linked Index, which registered a return of -0.45% during the same period. This outperformance underscores the fund's strategic investment decisions. A significant factor in this positive outcome was the fund's deliberate underweighting in the Indian market within its emerging markets allocation. Furthermore, the fund benefited substantially from exceptional stock selection in South Korea. Among its holdings, Vitzrocell, a company outside the benchmark index, delivered robust returns, significantly bolstering the fund’s overall performance. Despite its strong showing, fund management opted to reduce its share count in Vitzrocell. This decision was primarily driven by risk-management considerations, even as the firm's long-term prospects remained attractive. Concurrently, the fund initiated the sale of its investment in TIS, a Japanese IT company, during this quarter. This divestment was part of a broader strategy to minimize the portfolio's exposure to potential disruptions from artificial intelligence technologies impacting certain software and IT firms.

This quarterly commentary from Fidelity Investments highlights the dynamic nature of global small-cap investing. The successful navigation of volatile emerging markets and proactive risk management through strategic divestments, such as the sale of TIS due to AI disruption concerns, provides valuable insights for investors. It emphasizes the importance of active management and meticulous stock selection in achieving superior returns, even in challenging market conditions. The fund's ability to identify and capitalize on opportunities, like Vitzrocell's growth, while prudently managing risks, serves as a compelling example of effective investment stewardship. It also prompts a broader consideration of how technological advancements, like AI, are reshaping investment landscapes and necessitating adaptive portfolio strategies.

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