My portfolio management framework is rather simple and flexible:
Themes → Picks → Risks → Hedges → Speculation
In preparation for this year, we started our portfolio pivot in Sept 2025 as we laid out our 8-step SWAT Sleep-Well-And-Tight investing process. We have been successfully employing this approach (i.e. prep 12-18 months in advance) for several years now with market-leading returns which are posted here.
It was important to plan for both right tail opportunities and left tail risks. Therefore, we discussed the positive secular, macro, fiscal and monetary catalysts that could propel markets higher and the major risks that could negatively impact markets in 2026.
Given the broader macro landscape, we then listed the strongest investing themes and sectors that we liked for 2026. Subsequently, we started allocating our cash towards those opportunities. Of course, AI was on that shortlist, however we identified specific AI sub-sectors that would dominate this year along with a few other themes that almost no one was talking about…while they chased the latest fin-twit fad. e.g. We bought stocks like ALAB and BE in the $30s and $40s and MRVL in the $70s and rode them higher for some lip-smacking multi-bagger gains.
We also mapped out what is likely to happen in each of the next 4-5 quarters starting in Q4 2025. We published how we planned to position our portfolio to maximize our returns in each of these 3-month time periods.
As part of this rolling quarterly exercise, about a month ago, I laid out my Beachman plan for Q2 and Q3. We have been actively working on those to-dos. Nothing has changed in our market forecast and action plan - we are heads down in our analysis…finding new stocks we want to own and putting in place our hedging strategy.
Every earnings cycle, we get new business performance information on stocks that we own. It allows us to also find new companies that meet our high bar for fundamental strength, growth potential and attractive valuation. We are almost done with the Q1 earnings cycle and we recently added 3 new stocks to our portfolio…one of them we will discuss below. Additionally, I have a short list of 11 other stocks that I am actively researching for possible adds to the S.W.A.T. portfolio.
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Table of contents
How I am setting up my portfolio for the summer - Part 1
New position - An FCF monster with multiple AI tailwinds
Conclusion
How I am setting up my portfolio for the summer - Part 1
Recent market turmoil has further underscored the need to consider hedges in our portfolio. Hedging is protection against being wrong at the wrong time. Right now, heading into summer 2026, the market feels tight. Valuations aren’t cheap and most macro data coming in is “fine,” which sounds good until you realize it just keeps the Fed stuck. No clean GDP growth pivot, no clear economic slowdown…just enough uncertainty to keep things jumpy and unsure. In that kind of setup, your portfolio is basically long everything going right: liquidity stays decent, multiples hold, nothing breaks. That’s a fragile state to maintain without portfolio protection.
Summer doesn’t help. Trading volume drops off, desks thin out, and price moves get weird. You’ll see stocks swing on nothing…or on something small that gets treated like a big deal. Correlations creep higher too. Stuff that’s supposed to diversify your investments just doesn’t. It all leans the same way when pressure hits. That’s where hedging actually earns its keep. Not because you nailed the direction, but because it keeps a bad tape from turning into a forced sell. You stay in control instead of reacting to it.
There’s also a crowding issue that’s hard to ignore. A lot of capital is sitting in the same trades…high growth, AI names, neoclouds, semis. It has worked for about 8-9 weeks, so nobody wants to move. In fact, with three large IPOs due to hit the market in weeks, folks are doubling down…even taking out loans to BTFD! But when positioning gets so one-sided like that, exits aren’t orderly. If something shifts or breaks in a sudden unforeseen direction…rates, earnings, whatever…it unwinds fast. A hedge lets you sit through that chaos without flinching. You don’t have to dump your best names just because the market gets messy.
And the biggest benefit is how it changes your behavior. When you know you’ve got downside protection, you think clearer. You’re not watching every tick wondering if this is the one that breaks you. You can actually look for new opportunities when things get dislocated, which is usually when they show up. Without a hedge, you’re managing stress. With one, you’re making decisions. That’s a big difference, especially in a market that’s not giving out easy returns.
This helps you sleep well at night…this is the S.W.A.T. way…
Today is Part 1 of several posts in which I will share how I am deciding what to hedge and how to do it.
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