Night Watch Investment Management LP reported a 2.69% appreciation net of fees for the first quarter of 2026. The firm navigated market volatility driven by AI narratives and the war in Iran, highlighting strong performances from positions like Brookdale and AAR Corp. Its portfolio emphasizes resilient businesses amid geopolitical tensions.
Night Watch Investment Management LP achieved a 2.69% net return in the first quarter of 2026, despite heightened market volatility. January and February saw shifts toward physical asset businesses as investors avoided AI-disrupted companies, but March's war in Iran and rising oil prices triggered a correction, eroding some year-to-date gains, according to the firm's investor letter signed by Chief Investment Officer Roderick van Zuylens and Chief Operating Officer Eileen Ke. The firm noted no edge in predicting short-term events like geopolitical developments or policy tweets, focusing instead on companies with impending earnings improvements and accessible management teams. Brookdale Senior Living (BKD) delivered strong results, with shares rising 75% since September 2025 following an activist push for management changes and asset optimization. The firm anticipates a senior living shortage as baby boomers turn 80, with no new construction since 2017 due to prior oversupply, COVID-19, and staffing issues, projecting favorable dynamics through 2030. AAR Corp (AIR), at about 8.3% of the portfolio, benefited from an aging airplane fleet and a shift to higher-margin services; defense contracts now comprise 30% of revenue, growing at 50%. Marex (MRX) remains the top holding at 14.1%, profiting from volatility in futures clearing for oil and metals. The firm sold its Copa Holdings (CPA) position amid oil price surges from the Strait of Hormuz closure. Other major holdings include Distribution Solutions Group (8.6%), Haypp (8.2%), and Stride (5.0%). Night Watch described its strategy as targeting value stocks with catalysts, high insider ownership, and unique names for diversification.