A few thoughts as we close Q1 2026….

Q1 2026 proved to be a reminder that markets rarely move in a straight line. After finishing 2025 on a strong note, the first quarter brought a more difficult environment — tariff uncertainty, a Federal Reserve navigating stubborn inflation against a backdrop of rising oil prices, and the resulting rotation into more defensive names. Despite the noise, I believe the underlying thesis for growth investing remains firmly intact.

Reminder that Peattie Capital manages separate accounts and builds portfolios based on specific client needs, goals and constraints, and that past performance is not a guarantee of future returns.

The Macro Backdrop: Tariffs, Liquidity, and a Cautious Fed

Early in Q1 the dominant macro story was the return of tariff uncertainty, but subsequently that was replaced by the war in Iran. New and threatened tariffs on imports from a wide range of trading partners created a familiar headwind for markets, particularly for companies with global supply chains. While equity markets absorbed much of this with relative composure, there was unmistakable rotation under the surface — away from high-multiple growth names and toward more defensive positions.

On the monetary policy front, the Fed held rates steady through the quarter, but with inflation still running above the 2% target, the case for lower rates is fading. For me, interest rates and liquidity are the most important factors in prices, and I characterize current events as volatility, but not real financial danger.

Whether the war progresses (or not) and oil prices recede (or not) and interest rates steady at or below current levels (or not) will go a long way to determining equity prices for now. The bear case is the war continues, oil prices continue rising and the Fed is compelled to raise rates.

On the other hand, early Monday morning March 23rd the President backed away from his threat made Saturday the 21st and futures prices immediately reversed from -1% to +2%.

More so than any time since the 2008-2009 great financial crisis, the headlines are driving equity prices. The threat/announcement, followed quickly by backing off, and the surrounding confusion of whether Iran and the U.S were actually having conversations reminds me of the U.S. and China confusion last spring. To be clear, I am NOT comparing war to tariffs, just observing a similarity in the administration’s actions and characterization of events.

AI Infrastructure: Still the Best Opportunity in the Market

My conviction around AI infrastructure has only strengthened. The buildout of data centers, networking, power infrastructure, and security continues at a remarkable pace. Capital expenditure commitments from the hyperscalers — Microsoft, Amazon, Google, and others — remain at record levels, and the downstream beneficiaries of that spending are companies Peattie Capital has been focused on.

Agentic AI, in which AI goes a step further by (for example) buying and booking all the flights and hotels for a lengthy trip, not just identifying them, has begun to emerge as a next step in the rollout of AI. Most portfolios own Digital Ocean (“DOCN”) which has had a terrific start to the year and the shares have gained about 80%....a good example of how powerful owning some of the right names can be.

The sheer scale of genuine end-user demand for AI products and services makes this feel less like a house of cards and more like a genuine productivity revolution in its early innings. This bears careful watching, and I’ve continued nibbling at favorite names during this volatility.

Space: The Long Game Continues

The space economy continues to develop as a multi-decade opportunity, and Q1 brought further validation. Rocket Lab (RKLB) remains one of my favorite names — the company continues to win contracts and execute its mission to become the go-to launch provider for smaller spacecraft. Volatility in the stock has been real (as I noted in December, those swings are simply the price of admission in emerging industries), but the business fundamentals continue to strengthen.

AST SpaceMobile (ASTS) is making tangible progress on its satellite broadband network, with commercial service expanding and carrier partnerships deepening. This remains a higher-risk, higher-reward position, and sizing reflects that.

The market expects Elon Musk’s SpaceX to file for an IPO at any time, which should be a near-term catalyst for the space industry.

Blue Chips Providing Balance?

As I mentioned at year-end, I like to include a few larger, more established names that provide some stability amid the volatility of emerging sectors. Abbott Labs (ABT), JP Morgan (JPM), and Bristol-Myers Squibb (BMY) are current examples, and even though they are not immune from turbulence they have been around for decades, pay solid dividends, and will be around for decades to come. More conservatively managed portfolios have more of these large cap companies.

However, smaller, faster growing companies will provide better returns over the next several years, but the price to own them is enhanced volatility. I expect to continue to focus on these growth companies.

That said, building portfolios that reflect each client’s specific goals — not one-size-fits-all solutions is the mission of Peattie Capital.

Why I continue to own TransMedics

I want to spend a bit more time on TransMedics this quarter, because I think it deserves a fuller explanation. TMDX gained 105% in 2025 and remains one of the largest positions across many Peattie Capital portfolios. The question I get most often is: after a move like that, why are you still holding? The answer is that I believe the story is still in its early chapters, for at least three reasons.

1. A Dominant and Growing Position in Organ Transplants

TransMedics has built something genuinely rare: a dominant market position in a field that is both essential and expanding. The company’s Organ Care System (OCS) — sometimes called “the heart in a box” — keeps donor organs viable outside the body far longer than traditional cold storage, and does so in a way that meaningfully improves transplant success rates. This is not a feature upgrade; it is a platform change for how organ transplant logistics work.

The numbers reflect the momentum. Full-year 2025 revenue came in at $605.5 million, up 37% from 2024, with more than 5,100 U.S. OCS cases completed during the year. Management is guiding for $727 to $757 million in revenue for 2026 — continued 20-25% growth — and has set a longer-term target of 10,000 annual U.S. transplants by 2028. They have beaten guidance in the past.

What makes this even more compelling is the runway ahead. The OCS Kidney program could expand the company’s addressable market significantly and is moving toward clinical launch. European expansion under the National OCS Program model represents a separate, incremental growth driver. Each of these is meaningful revenue on top of a business already compounding at 20-37% annually.

2. Insider Ownership

Founder and CEO Dr. Waleed Hassanein built this company from the ground up and owns a meaningful stake. Twice in the past six months he has purchased blocks of shares in the open market.

It is worth noting that some directors have sold shares recently — but in many cases those sales accompanied option exercises at prices far below market, which is a structurally different transaction than a discretionary sell. Looking at the overall pattern of insider behavior, the picture at TMDX remains constructive.

3. Compelling Valuation Relative to Medtech M&A Comparables

This may be the most underappreciated part of the TMDX story. The medtech M&A market has been active and acquisitions have been made at full — and in many cases premium — valuations: Johnson & Johnson paid $13.1 billion for Shockwave Medical (13x forward sales), Stryker acquired Inari Medical, Boston Scientific bought Axonics, and Abbott announced a $21 billion deal for Exact Sciences. Other med tech companies that have been purchased include MAKO Surgical and OrganOx at 16x and 21x sales respectively. These are strategically motivated buyers paying up for innovative medical technology businesses with strong market positions.

TransMedics, with its dominant position in organ transplant logistics, proprietary technology, rapidly growing revenue, and expanding international opportunity, looks like exactly the kind of asset that would attract that type of attention. At current prices, the stock trades at a meaningful discount to where comparable businesses have been acquired — which means investors are not paying a stretched price for the organic growth story, and a strategic transaction would represent significant additional upside.

I am not holding TMDX because I expect it to be acquired. I am holding it because I believe the business will continue to grow and the stock will follow. But the M&A optionality is real, and it provides a useful reference point for thinking about intrinsic value.

In short: a dominant and growing market position, a founder-led management team with meaningful skin in the game, a long runway of organic growth across new organs and new geographies, and a valuation that compares favorably to what strategic acquirers have been willing to pay for similar businesses. That combination is why TMDX remains a core holding.

Looking Ahead to Q2 and Beyond

I remain optimistic — though not uncritically so. Valuations in many corners of the market are still elevated, and the macro environment carries real uncertainty. The tariff situation will likely resolve itself one way or another over the coming months, and any clarity there could be a meaningful catalyst for risk assets.

Also, as I’ve said, mid-term years tend to have more volatility than any of the other years in the Presidential cycle, at least until the outcome of the elections is clear.

The AI infrastructure buildout shows no signs of slowing. Space continues to mature. And despite the choppiness of Q1, I believe we are still in the early chapters of both of these stories. Patient, disciplined investing in the best companies within these themes remains the playbook.

I’ve included a few charts from my research below, and, as always, I welcome any questions or conversations about your specific portfolio. Thank you for your continued trust.

Best regards,
Bill