Executive Summary
During the first quarter of 2026, the Hutner Capital Core Quality Portfolio returned 4.2% net of fees, compared to 3.1% for the S&P 500. Our disciplined adherence to high-quality compounding businesses continues to shield capital from broader macroeconomic headwinds.
In this letter, we outline our performance attribution, highlight our core holdings, and explain recent adjustments made to our financial and industrial allocations.
Performance Attribution
Our outperformance this quarter was driven by strong earnings reports from our top holdings. These companies successfully demonstrated pricing power, maintaining their operating margins despite persistent wage inflation.
- Technology & Network Effects: Our software-as-a-service allocations rose 8% on the back of expanded multi-year contract values and low churn rates.
- Consumer Moats: Our beverage and consumer retail positions provided stable dividend cash flows and steady gains, highlighting their inelastic brand loyalty.
- Financial Services: We maintained a cautious stance on regional banking, focusing our exposure on major payment rails which benefit directly from transaction volume growth.
Core Allocation Updates
We initiated one new position this quarter and completely exited our holding in a logistics provider due to a perceived narrowing of its competitive advantage.
New Allocation: Quality Payment Processor
We added a 2.5% position in a global payment network. This company boasts an insurmountable network effect—connecting millions of merchants with billions of consumers. Its operating margin exceeds 40%, and it acts as a royalty on global commerce.
Exit: Industrial Logistics
We sold our remaining shares in a global shipping and courier firm. While historically profitable, rising capital expenditures required to maintain its fleet, coupled with intense low-cost competition, have diminished its pricing power.
Confidentiality Notice
Privileged & Confidential. This briefing contains private, historical performance data for the Hutner Capital Core Quality Portfolio. Distribution or publication of this memorandum to unauthorized individuals is strictly prohibited.
