Dear Valued Investors,
2025 was a year where discipline and selectivity were more important than broad market exposure. With the year now complete, I want to update you on Talguard’s positioning and results.
Talguard is designed to compound capital across market cycles while reducing volatility and protecting against permanent loss. Since inception, we have compounded capital at net double-digit average annual returns while maintaining portfolio volatility, as measured by standard deviation. From the outset, our objective has been to preserve and grow capital with discipline, prioritizing durability and risk control alongside long-term compounding. We believe this record reflects that we have achieved what we set out to do.
In a year where broader markets delivered strong headline returns but experienced increasing concentration and elevated valuations, our more conservative positioning prioritized capital preservation and consistency. This approach reflects our focus on long-term compounding rather than short-term market movements.
For context, long-term annualized volatility has historically averaged approximately 15%–16% for the S&P 500, 14%–15% for the Dow Jones Industrial Average, 18%–20% for the Nasdaq Composite, and approximately 6%–8% for the Barclays Hedge Fund Index. Talguard’s realized volatility remains lower than that of all major indices referenced above. Achieving consistent returns with materially lower variability remains central to our approach.
Talguard Value Fund LP maintained discipline and selectivity in 2025, focusing on high-quality opportunities with an emphasis on risk control and consistency.
Long-Term Orientation
Talguard was built to grow capital across full market cycles rather than optimize for any single year. That philosophy has guided the portfolio through a global pandemic, generational inflation, rapid interest rate shifts, geopolitical conflict, and elevated policy uncertainty. Throughout these periods, our focus has remained on high-quality businesses with durable economics, strong balance sheets, and rational capital allocation.
Portfolio Management and Risk Control
We were selective in deploying new capital. In environments where market leadership narrows and volatility appears episodically, patience becomes an advantage rather than a constraint.
We are observing an increasing distinction between companies associated with artificial intelligence and those generating measurable economic returns. While investment and attention around the theme remain elevated, durable value creation continues to be concentrated in businesses that translate adoption into pricing power, productivity gains, and sustained free cash flow.
Sector Perspective
Technology
Artificial intelligence continues to reshape software, data, and infrastructure, though results remain uneven. Our exposure is focused on companies already demonstrating tangible economic benefits from adoption, including improved margins, recurring revenue streams, and the ability to scale efficiently. Platforms that convert innovation into durable economic value remain central to our exposure.
Healthcare
Healthcare remained volatile amid regulatory and policy uncertainty. Our exposure is concentrated in businesses with durable franchises, strong pipelines, and financial strength that generate meaningful free cash flow and return capital to shareholders. Periods of pressure often create long-term opportunities for disciplined investors.
Financial Services
Our financial services holdings benefit from activity rather than economic prediction. Payment networks, data providers, and financial infrastructure companies compound value through scale, recurring revenue, and high switching costs, contributing to portfolio stability across market environments.
Consumer Services / Retail
Within consumer services and retail, we focus on companies tied to habitual or essential spending. Strong brands, pricing power, and operational discipline have allowed these businesses to perform across cycles while generating consistent cash flow.
Looking Ahead
As we move into 2026, valuation discipline remains central to our approach. Capital preserved through a more conservative posture in 2025 leaves the portfolio well positioned to act as opportunities emerge. We continue to focus on businesses with durable free cash flow, pricing power, and the ability to benefit from productivity gains tied to automation and artificial intelligence.
Closing Thoughts
We believe we are still in the early stages of artificial intelligence being applied in ways that meaningfully improve how businesses operate and generate economic value. Companies that adapt efficiently, allocate capital rationally, and improve productivity through technology should be well positioned to compound value over time. With a portfolio built around quality, balance sheet strength, and disciplined risk control, Talguard enters 2026 well positioned.
Our edge comes from combining quality investing with disciplined risk control, allowing us to compound capital with lower volatility over time.
Thank you for your continued trust and partnership. I look forward to the year ahead.
Best,
Dan H. Chen
CEO
Talguard Investments LLC
531 Main Street, Suite 1165
El Segundo, CA 90245
Tel: (310) 923-2138
Email: dan@talguard.com
Disclaimer Statement:
This document and information herein represents the views of Talguard Investments LLC and is not to be considered investment advice. The information herein should not be considered a recommendation to purchase or sell any particular security or financial instrument. There can be no assurance that any securities discussed herein will remain in the Talguard Value Fund LP.
This document does not constitute an offer to sell or a solicitation to buy membership interests in the Talguard Value Fund LP. Past performance is not necessarily indicative of future results. All information provided herein is for informational purposes only.
Investment in the Fund will involve significant risks due to, among other things, the nature of the Fund’s Investments (as defined herein). Investment in the Fund is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks in an investment in the Fund. No assurance can be given that the Fund’s investment objectives will be achieved or that investors will receive a return of their capital.
In making an investment decision, prospective investors must rely on their own examination of the Fund and the terms of this offering, including the merits and risks involved. Prospective investors should not construe the contents of this letter as legal, tax, investment or accounting advice. Prospective investors are urged to consult with their own advisors with respect to legal, tax, regulatory, financial and accounting consequences of their investment in the Fund.
©2026 Talguard Investments LLC, all rights reserved.
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