McIntyre Partnerships Q2 2026 Letter: 0% Gross While Russell 2000 Value Gained 23%

Q2 2026 Put Underperformance Back Center Stage

This quarter shifted the discussion. McIntyre posted approximately 0% gross and -1% net through Q2, while the Russell 2000 Value rose 23%. That does not erase the longer record, but it does raise the burden of proof. The fund still carried ~10% gross and ~8% net per annum over the trailing five years versus about 8% for the benchmark.

Concentration made the quarter more visible

Concentration explains part of the volatility. McIntyre runs a 130/30 hedge fund structure with typically 5-10 investments, so individual results can dominate fund performance. In Q2, the effect worked both ways: STRZ, CC, SEG, GTX, ICLR, and STHO contributed 100-500bps, while FTRE lost 100-500bps, and QDEL lost over 500bps. Management also said Q2 was, almost to the penny, a complete reversal of our Q1 results. That points less to clean stock-picking skill and more to how exposed the fund remains when its core names do not reprice.

Why the quarter matters for positioning

The cleanest read is a narrow one. One weak quarter does not prove the edge has faded, but it does test whether the strategy is still being held up by market sentiment or is starting to lose its ability to unlock value on schedule. In a concentrated vehicle, that matters quickly: another quarter of small-cap beta without repricing in the main positions can keep performance weak.

Why a Broad Rally Did Not Rescue Performance

The key question is not whether the market rallied. It did. The question is why a strategy built to outperform through stock selection still ended flat while the benchmark surged. The answer is structural: McIntyre's 130/30 hedge fund structure and typically 5-10 investments mean the portfolio needs its biggest positions to reprice, not just the asset class.

Broad beta helped many names, but not the fund overall

A rally in Russell 2000 Value can lift many stocks at once, but concentrated special-situations funds usually need the market to change its mind on the specific stories behind the discount. In Q2, that happened only unevenly. Several holdings still added 100-500bps, so the portfolio was not universally punished. At the same time, one large position fell over 500bps and another lost 100-500bps. In a portfolio this concentrated, that unevenness matters more than the headline return.

Benchmark comparisons are less useful, but the gap still matters

Management made a fair point that market comparisons are less useful at present because the fund's QDEL position is significantly concentrated. A 23% benchmark gain in a single quarter is unusual, and index returns can be distorted by a handful of fast-moving names. Still, the performance gap cannot be waved away. If the heaviest positions remain discounted, broad small-cap strength alone will not close it.

QDEL Is the Main Test of the Thesis Going Forward

One flat quarter does not reset the record, but it does raise the burden of proof.

The catalyst that matters most

For the next few quarters, the central test is whether QDEL can convert disclosed value into a visible balance-sheet and capital-allocation reset. Management highlighted reports that QDEL is in the later stages of divesting its Point of Care business for around $1.5B, at roughly ~10x EV/EBITDA versus QDEL overall at ~5x. If that transaction closes, management said it would substantially delever the company and pave the way for share repurchases. That is the clearest path back to confidence because it turns a discount into cash rather than narrative.

What should be watched next

This fund's edge comes from a concentrated portfolio of five-to-ten names, with the top five investments targeting more than 70% of assets. In that setup, a few clear signals matter more than broad sentiment:

• Deal confirmation: a signed sale for the Point of Care unit, not just another headline.
• Use of proceeds: evidence that proceeds are used to reduce leverage or repurchase shares, as management has suggested.
• Breadth of progress: other holdings continue to produce idiosyncratic progress rather than leaving one name to carry the book.

What would weaken the setup

The thesis weakens if:

• the Point of Care sale stalls or closes at a value far below current implications;
• QDEL holds cash without deleveraging or repurchasing;
• the portfolio goes another quarter without new value-unlocking events across the larger holdings.

That last point matters because investors are not judging a generic small-cap value strategy. They are judging a concentrated vehicle whose case rests on catalysts showing up. If they do, skepticism can reverse quickly. If they do not, patience starts to look more like anchoring.