United States – October 31, 2026 -- BlackBird Financial returned 15.7% net of fees in the first half of 2026, beating the S&P 500's 10.2% (dividends included) by 5.5 percentage points, according to a July 30 letter to partners from Judah Spinner, CFA. All figures are as of June 30, 2026.
Builders FirstSource becomes the fund's largest holding after a market-cap slide to $7.1 billion
Builders FirstSource shares fell sharply after the fund's 2025 annual letter, as weakness in the housing market cut the company's market capitalization from $12.2 billion to $7.1 billion at its May low. Spinner added aggressively, using capital from new partners and funds reallocated from several smaller investments.
He said he did not know where the bottom was, but the fund was buying a strong business at a substantial discount to intrinsic value. He considers the risk of permanent capital impairment over a multiyear holding period exceptionally low.
Tidewater appreciated meaningfully over the same period, which left little room to add to the position. The fund also opened two new investments in the first half, neither large enough to materially affect results.
Five hyperscalers plan $700 billion in capex this year, with outlays set to pass $1 trillion by 2027
Spinner expects the euphoria in AI valuations to end badly, though he cannot time it. He still expects AI to reshape the global economy. He cites three economic constraints:
- Competition: rivalry at every layer of the AI value chain, from semiconductors and cloud infrastructure to foundation models and applications, shifts value to customers and erodes shareholder returns.
- Overbuilding: past technologies such as railroads and telecommunications saw capacity expand beyond demand, driven by boundless expectations, fear of falling behind and long infrastructure lead times.
- Earnings hurdle: the scale of spending requires extraordinary earnings growth just to sustain current returns on capital, and hundreds of billions of dollars in annual depreciation will begin flowing through income statements in the coming years.
Alphabet, Amazon, Meta, Microsoft and Oracle are expected to spend a combined $700 billion on capital expenditures this year, mostly on AI infrastructure. Spinner said the race is unlikely to ease until a glut forms and depresses returns.
Spinner cites Citigroup's 75% share-price shortfall as a warning on late-cycle speculation
Spinner pointed to Citigroup CEO Chuck Prince's July 2007 remark on the credit boom: "We're still dancing." Sixteen months later, Citigroup was close to collapse, and its shares remain roughly 75% below their pre-crisis peak nearly two decades on.
He argued that investors extrapolate the recent past. Since the Global Financial Crisis, aggressive speculation has been rewarded while cautious investors have lagged, which pushes even rational investors to relax their standards.
BlackBird avoids fast-evolving industries and holds virtually no AI-related companies
The fund will not change course. Spinner said BlackBird has always avoided companies in rapidly evolving industries, which has kept it out of virtually everything related to AI.