Grit
The Value Fund returned -8.1% in Q1.(1) The outbreak of war in the Middle East caused the major benchmarks to sell off sharply.
While we cannot control geopolitical events or the market’s immediate reaction to them, we remain anchored by our process. History and our long-term track record both remind us that these periods eventually pass.
Rather than remaining passive, we used the market’s weakness as an opportunity to make a few changes to the portfolio. We increased our stakes in several core holdings and initiated a new position (discussed in the Portfolio Update below) after its valuation became too attractive to ignore.
Berkshire Hathaway and Mr. Market
A feature article in this weekend’s Barron’s captured the current market sentiment and the disconnect regarding our largest holding—Berkshire Hathaway (BRK.A/B).
The stock has declined 7% year-to-date and underperformed the S&P 500 by 40% over the past year. This marks one of the worst periods of relative performance in its history. We view Berkshire as fundamentally undervalued. Management appears to share our conviction, having resumed share buybacks last month. With its $370 billion cash pile, we suspect that it will continue to retire shares. The lower the price, the more aggressively they will act and capture value for long-term shareholders.
Fellow Canadian Greg Abel is now in charge. No successor to Buffett can ever hope to replicate his stock-picking genius. But we believe Greg brings a distinct set of strengths to the CEO role. Greg is hands-on, detail-oriented, and—crucially—willing to engage in the operational friction necessary to drive efficiency. Unlike the hands-off approach of the past, we believe Abel will hold subsidiary management teams to a higher standard of accountability, driving margin expansion across Berkshire’s diverse operations.
(1) All returns and Fund details are: (a) based on Class F units; (b) net of all fees; and (c) as of March 31, 2026.
Berkshire Hathaway is positioned to grow operating earnings at a high-single-digit clip for decades. It possesses a fortress balance sheet and a collection of businesses largely insulated from AI-driven disruption. Yet, “Mr. Market” currently remains indifferent, favouring speculative AI narratives over proven cash flow.
Berkshire may not be “sexy,” but it is a rock-solid compounder. We expect the tide to turn as valuations eventually reconnect with reality. When it does, our discipline and patience will be rewarded.
Portfolio Update
Our top performer in the first quarter was TVA Group (TVA.B) +103.8%. The stock benefited from a significant one-time retroactive revenue adjustment related to its specialty channels, stemming from the resolution of a longstanding carriage dispute. This allowed the company to eliminate all its outstanding debt. Management continues to execute on its restructuring plan, exiting unprofitable channels and rightsizing the cost structure. Despite the stock’s appreciation this quarter, we believe TVA remains materially underpriced; its audience share in Quebec remains dominant (above 40%), and several assets—including excess property—remain undervalued on the balance sheet. We continue to believe in the merits of the controlling shareholder, Quebecor Inc. (QBR.B), taking the company private.
Our second-best performer in the quarter was Automatic Bank Services Ltd. (SHVA) +22.5%. SHVA delivered strong Q4 transaction growth (+11%) despite regional geopolitical tensions. After several years of margin-compressing investments in core computing and cybersecurity, the company recently announced its intention to implement price increases this year. This highlights the inherent value of businesses with durable network effects: they possess pricing power that can be tapped. While the exact magnitude of these increases has yet to be disclosed, SHVA’s current pricing remains well below international card network rates, providing significant headroom for future price increases and margin expansion.
The Hershey Company (HSY) performed well during the quarter, gaining +14.2% as cocoa costs finally retreated, reversing the extreme inflationary pressures of the past two years. As this lower-cost inventory works its way through the balance sheet, we expect input-cost pressures to ease significantly. Crucially, consumer demand has proven resilient; volumes remain above management’s original expectations despite the price hikes taken to defend margins. This reinforces our original thesis: Hershey’s brand equity is robust enough to withstand significant macro shocks without compromising its long-term competitive position. Furthermore, the company’s expansion into salty snacks continues to diversify the earnings stream and support consistent profit growth.
Rounding out our top performers in the first quarter were our defense holdings: Lockheed Martin (LMT) +25% and General Dynamics (GD) +2%. Ongoing global conflicts and the fraying of the NATO alliance continue to underscore the critical need for sustained investment in national defense. Beyond their defense segments, both companies reached a historic milestone this quarter with the successful Artemis II mission—the first crewed flight around the moon since 1972. Lockheed Martin was responsible for the Orion crew module and the spacecraft’s complex flight software, while General Dynamics provided the essential emergency radios and transponders that linked the astronauts to mission control. With the crew now safely home, we can officially declare: “mission accomplished.”
ICON Plc (ICLR) -39.3% was our primary detractor this quarter following the February announcement of an internal Audit Committee investigation into revenue recognition practices from 2023 through 2025. While the market’s reaction was severe, we believe it was an overreaction. Management anticipates the revenue restatement will be less than 2% for each affected year. While disappointing, we believe this issue was an internal matter and will not have any material long-term impact on ICLR’s ability to serve its customers. It is also unlikely to have a material impact on the company’s $1 billion of free cash flow. We used the selloff as an opportunity to increase our position, and the stock has already begun to rebound. As the pharmaceutical environment continues to improve, we remain confident that the company will capture its fair share of clinical trial activity. With the stock trading at roughly 10x trailing earnings, we believe that the shares remain materially undervalued.
Our second-worst performer in the quarter was Visa Inc. (V) -13.8%. Visa’s fundamentals remain exceptional, with 2025 global payment volumes rising 8% and driving double-digit growth in both revenue and earnings. However, the stock has been pressured by macro concerns, specifically the risk of a global slowdown and rising oil prices stemming from the conflict in the Middle East. Higher fuel costs typically dampen cross-border travel—one of Visa’s highest-margin revenue streams. Despite these near-term headwinds, Visa remains one of the highest-quality businesses we have ever encountered. We remain confident that its long-term earnings power will compound at attractive rates for many, many years.
We added to several core positions during the quarter that were unfairly caught up in the broader narrative that AI will disrupt every software company. We also initiated a new position during the quarter: Amadeus IT Group (AMADY). Headquartered in Madrid, Amadeus holds a dominant duopoly position in each of its two major business segments.
The company was originally formed by a consortium of European airlines to create a global distribution system (GDS) that connects airline inventory to travel agency booking systems worldwide. Over decades, Amadeus has strengthened its competitive position and today holds roughly 50% share of all GDS air bookings, with the remainder split between Sabre Corp. (SABR) and privately held Travelport.
While airlines have attempted to bypass GDS providers through “New Distribution Capabilities” (NDC) to save on fees, to date, their efforts have been largely futile. Travel management companies require a centralized, aggregated platform to function efficiently. The sheer complexity of thousands of agencies connecting to hundreds of individual airline APIs creates a powerful network effect. Network effects, once firmly established, are very difficult to disrupt.
The other half of Amadeus’ business is its Airline IT segment, which provides mission-critical software that manages everything from passenger service systems to boarding and reservations to roughly 200 major airlines worldwide. Amadeus’ software holds about 45% market share among large carriers, and contracts often last for a decade. These platforms are deeply embedded in airline operations, creating massive switching costs and multi-year implementation hurdles for any competitor trying to replace the incumbent. This “stickiness” is reflected in the segment’s extraordinary 70%+ EBITDA margins. In our view, the fear that AI will displace this type of critical infrastructure is unfounded; Amadeus remains the backbone of global air travel.
While recent spikes in jet fuel prices—driven by the war in the Middle East—will likely pressure Amadeus’ near-term revenues, we recognize that this is a cyclical headwind rather than a structural one. Because both major business lines are tied to booking volumes, the market has sold off the shares in anticipation of this temporary lull. The selloff provided us with a rare opportunity to acquire a dominant, growing franchise at an attractive price. We remain constructive on the long-term growth of global travel and believe these tailwinds will drive significant long-term value for Amadeus shareholders.
Our top 10 holdings as of the end of Q1 are listed below. We recently released our 2025 Annual Report, which provides more detailed information about the portfolio and is available here.
* As of March 31, 2026. The Value Fund’s holdings are subject
to change and are not recommendations to buy or sell any security.
Annual Meeting
Mark Your Calendars: GreensKeeper’s Annual Meeting will be held on Tuesday, June 2, at 7:00 pm at the Mississaugua Golf & Country Club. Further details and formal invitations will follow shortly. We look forward to seeing you again at our annual gathering.
Michael Van Loon and I continue to scour the investable universe for high-quality companies trading at attractive valuations. In the current market environment, we are finding an abundance of quality, but a scarcity of “cheap.” Consequently, we simply add those names to our growing watchlist, wait for our buy price to be on offer, and move on to the next opportunity.
Investing is rarely easy, but as history has shown, having the discipline, patience and grit required to stay the course during periods of underperformance are what successful long-term value investing demands.
Thank you for your continued trust and for the opportunity to grow your wealth alongside our own.
Michael P. McCloskey Michael Van Loon
President, Founder & Associate Portfolio Manager
Chief Investment Officer