Investment firm Hinde Group has released its partner letter detailing the portfolio performance for the second quarter of 2026, showcasing robust gains that outpaced its historical benchmarks. Led by Managing Partner Marc Werres, the firm highlighted how shifting geopolitical tensions and an accelerating artificial intelligence boom shaped global financial markets during the quarter.
According to the firm’s second-quarter update, the portfolio managed under 1578 Partners posted a gross return of 8.29% and a net return of 7.89% for the three-month period ending June 30, 2026. This brings the year-to-date gross performance to 12.40% and net performance to 11.57%. By comparison, the S&P 500 total return index registered 15.20% for the second quarter, bringing its year-to-date total return to 10.21%. Since its inception on August 1, 2015, the portfolio has achieved an annualized gross return of 22.24% and a cumulative gross return of 794.65%, comfortably ahead of the S&P 500’s annualized return of 14.31% and cumulative return of 330.57% over the same timeframe.
Global financial markets during the second quarter were heavily influenced by evolving developments in the military conflict between the United States and Iran. As optimism flickered and grew regarding a potential ceasefire and the eventual reopening of the Strait of Hormuz to commercial oil shipments, commodity markets reacted swiftly. The spot price of Brent crude plummeted by nearly half over the course of the quarter, settling at $70.46 per barrel—just beneath pre-conflict levels. The prospect of easing hostilities and the removal of supply disruptions in the energy sector triggered a powerful relief rally across global equity markets.
Running parallel to geopolitical developments, the artificial intelligence investment boom continued to serve as a massive tailwind for corporate earnings and broader economic expansion. Despite ongoing hurdles, including growing external funding requirements, acute supply bottlenecks, and soaring prices for essential hardware components, planned investments in AI data centers marched steadily higher. Companies strategically positioned at these manufacturing and technological bottlenecks saw their earnings surge to unprecedented heights.
A prime example cited by the firm is Micron Technology, a leading manufacturer of memory and storage solutions. During its quarter ended June 30, Micron reported a staggering 346% year-over-year increase in revenue, while its operating income multiplied by more than 14 times. Driven by this phenomenal operational growth, Micron’s stock skyrocketed 241.7% during the second quarter alone, contributing to an eye-popping 87.8% gain for the Philadelphia Stock Exchange’s Semiconductor Sector index.
While the S&P 500 mounted a dramatic comeback in the second quarter following a negative finish to the first quarter, Hinde Group’s portfolio had experienced a more resilient start to the year, ending the first quarter up a few percentage points. Consequently, the portfolio had less relative scope for a sharp rebound, though it still delivered solid positive results. The portfolio’s gains during the second quarter were spearheaded by strong performances from Interactive Brokers Group, Northeast Bank, Amazon.com, and Alphabet. These key holdings registered quarterly gains ranging from 29.8% for Interactive Brokers Group to 14.4% for Amazon. The only meaningful detractor during the period was Netflix, which saw its common stock decline by 25.7%.
In terms of performance attribution for the second quarter, Interactive Brokers Group contributed 4.16% to the portfolio’s gross performance, followed by Northeast Bank at 2.37%, Amazon.com at 2.32%, and Alphabet at 1.36%. Netflix detracted 1.56% from the quarter’s results, while other minor positions accounted for a drag of 0.35%, leading to the overall gross performance of 8.29%. For the year-to-date period, Interactive Brokers Group led contributors at 8.22%, followed by Northeast Bank at 3.49% and Amazon.com at 2.68%, while Uber detracted 2.46%.
At the close of the quarter, the portfolio’s asset allocation stood at 90.9% in long equities and 9.1% in cash. During the final days of the second quarter, the firm initiated purchases of a new investment within the "when-due" and "when-issued" markets. Because market liquidity was initially insufficient to build a meaningful stake, the new security accounted for less than 0.1% of the portfolio’s total value at quarter-end. A more substantial position was established once the security began trading on a regular-way basis at the start of the third quarter. In total, the portfolio comprised eight long equity positions alongside its cash reserves at the end of June.
Performance Attribution
Positions that had a material impact on the portfolio’s mark-to-market performance for the quarter and year-to-date reflect the firm’s concentrated approach. Interactive Brokers Group added 4.16% in the second quarter and 8.22% year-to-date. Northeast Bank contributed 2.37% in the quarter and 3.49% year-to-date. Amazon.com added 2.32% in the quarter and 2.68% year-to-date, while Alphabet contributed 1.36% in the second quarter. Conversely, Netflix subtracted 1.56% during the quarter, and Uber remained a notable year-to-date detractor with a negative attribution of 2.46%. Other positions accounted for a minor net subtraction of 0.35% in the second quarter and a positive contribution of 0.47% for the year-to-date period.
Portfolio Composition
The breakdown of the portfolio at the conclusion of the second quarter remained heavily weighted toward equities. Long equities constituted 90.9% of the total portfolio value, while cash and cash equivalents represented the remaining 9.1%. The portfolio held a total of eight long equity positions, maintaining a focused strategy designed to capitalize on high-conviction compounder investments.
Select Portfolio Updates
This quarter’s detailed portfolio review focused on Amazon.com, a long-standing compounder investment that Hinde Group has held since inception. The firm has actively managed the position over the years, trimming and adding shares at various points. While Amazon has occasionally served as either the largest or smallest position in the portfolio, it entered 2026 positioned as one of the smaller holdings at just under 1.0% of total portfolio value.
The firm significantly increased its stake in February at an average price of $203.37 per share. The accumulation occurred after Amazon shares suffered a sharp sell-off driven by what Marc Werres described as misplaced market concerns regarding the magnitude of, and prospective returns on, the company’s planned investments in artificial intelligence infrastructure through Amazon Web Services. Essentially all of the additional position initiated at the very end of the second quarter was ultimately purchased at the beginning of the third quarter, a move slated for detailed discussion in the subsequent partner letter.
From its origins as an online retail bookstore, Amazon has evolved into a vast global conglomerate anchored by three primary pillars: e-commerce marketplaces spanning over 20 countries, the ubiquitous Amazon Prime consumer subscription service, and Amazon Web Services, the world’s leading cloud computing provider.
Addressing market skepticism regarding whether Amazon is misallocating capital within AWS, Werres pointed to the company’s financial results for the second quarter of 2026 as definitive proof of the segment’s strength. AWS revenue growth accelerated to 37% year-over-year, climbing significantly from 28% in the first quarter of 2026 and 20% in the full year of 2025. Such acceleration at AWS’s massive operational scale—representing an annualized run rate of $169 billion, a figure that would position the cloud unit near the upper echelon of the Fortune 500 if it operated as an independent entity—is considered exceptional by the firm.
AWS profitability was similarly robust. Excluding the impact of gains on energy derivative contracts, AWS operating income surged 58.2% year-over-year during the second quarter. On this adjusted basis, the segment’s operating margin reached 38.1%, marking an increase of 514 basis points compared to the same period in the prior year and a 40-basis-point expansion sequentially from the first quarter.
The stellar operational metrics underpin a highly optimistic multi-year outlook for AWS. Demand for AI services within the cloud division is expected to remain heavily capacity-constrained through at least 2027, with the company already witnessing extraordinary customer demand extending into 2028. Furthermore, the broader utilization of AI applications is generating incremental demand for AWS’s core cloud services.
With corporate adoption of artificial intelligence still in its early stages of integration into production workflows and applications, the long-term outlook for AWS’s growth, margins, and returns remains highly favorable. As the AI business matures, its internal financial mix is expected to improve through several catalysts: customer concentration involving partnerships with firms like Anthropic and OpenAI is projected to decrease; higher-margin AI services such as Bedrock and SageMaker will command a larger share of revenue; and an increasing volume of AI workloads will run on Amazon’s proprietary, low-cost custom silicon chips.
During the company’s second-quarter earnings call, Amazon CEO Andy Jassy noted that the trajectory of the AWS AI business is currently tracking slightly ahead of where the core cloud business stood in terms of margins and returns at a comparable stage of its corporate evolution. Consequently, Jassy expressed growing confidence that AWS possesses the long-term potential to achieve $1 trillion in annual revenue, representing roughly a sixfold expansion from its current run rate.
AMZN shares closed the second quarter at $237.35. Although the stock experienced a notable upward move in late July following the release of its quarterly financial report and subsequently trades higher, Marc Werres maintains that the equity remains meaningfully undervalued. The firm estimates that Amazon shares continue to offer a prospective annualized return exceeding 20.0% over a long-term investment horizon.
Concluding the partner letter, Werres noted that the portfolio has achieved a strong start to the third quarter. Expressing confidence in the individual security selections and the overarching asset allocation, the managing partner emphasized an ongoing commitment to identifying exceptional new investment opportunities to further optimize the portfolio’s structure.
