Seeking Alpha·2026-01-06 06:15Core Insights - The article discusses the investment strategy of Right Tail, emphasizing a long-term approach focused on high-quality businesses rather than chasing short-term trends like artificial intelligence [4][19]. Performance Overview - Since its inception in May 2022, Right Tail's investments have increased significantly, with an initial $1 million growing to approximately $1.36 million under performance fees and $1.39 million under management fees [5]. - The portfolio's value is projected to grow to about $4.75 million in 10 years and $16 million in 20 years at a 13% annual compounding rate, or to approximately $3 million in 10 years and $6.5 million in 20 years at an 8% rate [6]. Market Comparison - In 2025, Right Tail's portfolio increased by approximately 0.34% before fees, lagging behind the S&P 500's 17.8% and the S&P 500 Equal Weight Index's 11.2% [7]. - Over a longer timeframe, Right Tail accounts have increased between 36% and 39%, which is significantly lower than the S&P 500's 79% increase [9]. Market Dynamics - The S&P 500 is increasingly concentrated, with the "Magnificent 7" companies representing 35-40% of the index, leading to a shift towards a large-cap growth index rather than a diversified one [10]. - The S&P 500 Equal Weight Index provides a different perspective, showing how most companies are performing amidst the AI-driven market enthusiasm [11]. Investment Philosophy - Right Tail's strategy focuses on investing in businesses with durable advantages and predictable earnings, aligning with the belief that markets reward such companies over time [19]. - The current market environment is seen as favorable for long-term active management, as passive investing has led to concentration in a few high-performing companies [21]. Specific Holdings - Alphabet (GOOG, GOOGL) has been a significant holding for Right Tail, with the company viewed as undervalued despite its strong performance in the AI sector [16][17]. - Other holdings include Constellation Software (CSU:CA), which is trading at low valuations despite strong fundamentals, and a coal royalty business expected to return substantial cash to shareholders [20]. Learning and Adaptation - The past year has reinforced the importance of patience and continual learning in investment practices, with a focus on improving investment processes over time [23].