Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTSoumya EswaranFri, July 17, 2026 at 4:19 PM GMT+2 4 min readWedgewood Partners, an investment management company, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. Wedgewood Composite delivered a net return of 9.4% in the second quarter compared to 15.2% for the Standard & Poor's 500 Index, 16.7% for the Russell 1000 Growth Index, and 13.9% for the Russell 1000 Value Index. The firm is optimistic about the long-term growth of hyperscalers and has increased its investments in this sector, citing their significant earnings potential and crucial role in AI adoption. Capital has also been redirected towards technology hardware stocks, especially semiconductors, which now make up a larger share of the S&P 500 Index. Semiconductor stocks have benefited from hyperscalers' spending, but the firm expresses caution about cyclical risk and volatility. However, the momentum-driven market negatively affected the Wedgewood fund's high-quality stocks, leading to a 25% return over the past 15 months, significantly underperforming the 90% gain of the S&P 500 Momentum ETF (SPMO). In addition, please check the Fund's top five holdings to know its best picks in 2026.In its Q2 2026 investor letter, Wedgewood Partners highlighted Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) as a top contributor to performance. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world's leading contract chip manufacturer, producing advanced semiconductors for major global technology companies. On July 16, 2026, Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) closed at $409.74 per share. One-month return of Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) was -13.23%, and its shares gained 66.80% over the past 52 weeks. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) has a market capitalization of $1.98 trillion.Wedgewood Partners stated the following regarding Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) in its Q2 2026 investor update:"Top performance contributors for the second quarter include Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Alphabet, United Rentals, Apple, and Visa.Another beneficiary of the AI spending boom has been Taiwan Semiconductor Manufacturing. Revenues grew by more than 40% (in USD), on top of 40% growth last year. Its leading-edge fabs and packaging capacity are fully booked, driving margins to all-time highs. Much of this capacity was put in place a few years ago, before generative AI was a household and business-wide term. More recent demand signals from customers - including Nvidia, Broadcom, and even Micron - indicate AI-related growth of over 50% per annum through 2029. Whereas the Company used to have demand visibility only a few quarters out, it now has visibility a few years out. As with long-held portfolio risk mitigation, we limit all positions to 10% weightings. We believe it is prudent to maintain this risk-management limit on the stock, especially given the massive investor inflows into semiconductor-levered stocks and the large speculative ecosystem (e.g., 2x- and 3x-leveraged single-stock ETFs) that has recently sprung up around them."Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info