Giverny Capital Asset Management, LLC, an investment management company, recently released its second-quarter 2026 investor letter. The model portfolio saw a return of 13.70% this quarter, slightly below the S&P 500’s return of 15.20%. Year-to-date, the portfolio gained 5.89%, while the index increased by 10.21%. The letter emphasized the strong correlation between stock appreciation and earnings growth, citing Benjamin Graham’s analogy of the market as a “voting machine” in the short term and a “weighing machine” in the long term.
Despite the S&P 500’s overall rise in the first half of the year, 210 stocks actually lost value, indicating market anomalies. The letter highlighted the importance of investing in high-quality earnings compounders that leverage AI capabilities to maintain a competitive edge. While the market has been driven by momentum, especially in the tech sector, the author cautioned against overreliance on “moonshot” investments, which could raise sustainability concerns.
One of the key holdings highlighted in the investor letter was Mastercard Incorporated (NYSE:MA), a global payment technology company. Mastercard closed at $547.44 per share on July 20, 2026, with a market capitalization of $483.71 billion. Despite posting a one-month return of 11.06%, the stock had lost 2.99% over the past 52 weeks.
Giverny Capital Asset Management noted that despite solid earnings growth, stocks like Mastercard were lagging behind the index. The company’s earnings per share were expected to compound by 15% over the next few years, in line with its historical performance. However, the stock had underperformed the index in the past five years, presenting a potential buying opportunity.
In addition to Mastercard, the investor letter recommended investing in both emerging tech leaders and established firms to diversify the portfolio. The letter also encouraged readers to check out the strategy’s top five holdings to gain insights into the best picks for 2026.
Overall, Giverny Capital Asset Management’s investor letter highlighted the importance of a balanced investment approach, focusing on companies with strong earnings growth potential and sustainable competitive advantages. By staying vigilant against market anomalies and maintaining a diversified portfolio, investors can position themselves for long-term success in the ever-changing market landscape.
