In the first quarter of 2026, the Cambiar SMID Fund experienced an underperformance compared to the Russell 2500 Value Index, with its investor class returning 2.21% and institutional class returning 2.27% against the index's 4.77%. This was largely attributed to declines in its healthcare and industrial holdings, alongside reduced exposure to the high-performing Energy sector. The broader US equity market displayed mixed results, with the S&P Index falling by 4.3% and the Russell 2000 rising by 0.9%. Economic headwinds, including substantial capital expenditures by the 'Magnificent Seven' stocks, fears surrounding AI disruption, and redemption gates in private credit, were intensified by geopolitical events in Iran, contributing to a general downturn in stock prices. Amidst this volatility, value stocks demonstrated resilience, offering some protection against market slides.

A notable holding for the Cambiar SMID Fund during this period was CF Industries Holdings, Inc. (NYSE: CF), a prominent chemical company and a leading global producer of ammonia and nitrogen fertilizers. The company's performance was significantly bolstered by the closure of the Strait of Hormuz, a critical waterway through which approximately 60% of the world's nitrogen fertilizer demand is sourced. This geopolitical event led to an increase in global fertilizer prices. CF Industries, being a US-based producer, benefited from both lower feedstock costs, such as natural gas, and the elevated selling prices of its products, resulting in enhanced profits and cash flow. By June 3, 2026, CF Industries' shares were trading at $116.60, having seen a 26.35% increase over the preceding 52 weeks, although it recorded a slight monthly decrease of 1.75%. The company commanded a market capitalization of $17.91 billion. The Cambiar fund strategically capitalized on these market dynamics, closing out its position in CF Industries after its stock surged over 58% within the quarter, anticipating that fertilizer prices would normalize once the Strait reopened.

The impressive performance of CF Industries Holdings, Inc. underscores the intricate connection between global geopolitical events and market dynamics. Companies with adaptable supply chains and diverse sourcing capabilities are better positioned to mitigate risks and capitalize on opportunities during periods of international instability. This situation highlights that informed investment decisions, rooted in a deep understanding of market sectors and global influences, are crucial for navigating complex economic landscapes. Embracing vigilance and strategic foresight allows investors to transform challenges into growth, fostering a robust and resilient financial future.