It’s June 3rd of 2026 as we write to you--the first-quarter earnings season is nearly complete. It's encouraging to see so many U.S. companies with positive financial results in the face of macroeconomic risks and uncertainties.

Still, we believe in the prudence of portfolio positioning that may include adjustments such as liquidity management and risk reduction depending on client objectives.

SO, WHERE SUITABLE:

✓ Increased emphasis on cash liquidity and flexibility to quickly meet client’s unique needs should circumstances arise
✓ Continued exposure to AI infrastructure and innovation themes
✓ Reduced investments subject to cyclical moves in demand and capital-intensive exposure
✓ Focused on companies with durable earnings and pricing power, in case things get squirrely 
✓ Positioned and conscious for elevated volatility from now thru at least November mid-term elections

BOTTOM LINE: We remain optimistic about innovation while emphasizing discipline, selectivity, and risk management.

Every cycle has its “rising stars” (and rising rockets).

In the late 1990s, it was internet IPOs. In 2021, it was speculative software, meme stocks, and SPACs. In 2026, private companies in the space and innovation sectors continue to attract significant attention from investors.

To be clear, we are enormous believers in innovation.

We believe the world is changing exponentially through artificial intelligence, automation, robotics, space infrastructure, digital assets, energy modernization, defense technology, healthcare innovation, and next-generation financial systems. We believe many of these themes will continue reshaping industries, markets, and daily life for years to come.

And we believe Elon Musk and SpaceX have already changed the trajectory of human progress.

But our strong belief in innovation exists within our time-tested discipline in portfolio management. That discipline does not yield to the enthusiasm generated by great innovation.  

THE DIFFERENCE BETWEEN ADMIRING AN ASSET & BUYING IT

One of the most dangerous periods in investing often occurs when great stories meet unlimited enthusiasm, abundant liquidity, and elevated expectations simultaneously.

Historically, major IPO waves have tended to emerge late in strong market cycles, precisely when investor appetite for growth and excitement is at its highest. That does not mean these companies fail. Many become transformational businesses. But it does mean expectations, valuations, and positioning can temporarily outrun reality.

So, we think investors should stay mindful that historical market cycles have included periods of heightened speculation following strong performance.

WHY? BECAUSE OF THE COMBINATION OF:

• Elevated equity valuations
• Persistent inflation pressures
• Rising long-term interest rates
• Expanding fiscal deficits
• Geopolitical instability
• Election-year policy uncertainty
• And a potentially massive pipeline of innovation-related IPOs

…creates an environment where risk management deserves equal billing alongside optimism.

In other words, our “windshield view” matters.

What matters is not only whether innovation wins over the next decade, but also how “capital flows,” “liquidity conditions,” “sentiment,” and “market structure” behave over the next six to twelve months as investors absorb an extraordinary amount of new issuance and speculation.

Those factors are reasons we approach the second half of 2026 with enthusiasm, but also with caution and selectivity.

EXPOSURE ALREADY EXISTS INSIDE CLIENT PORTFOLIOS

Ironically, some investors chasing the next big innovation story may now own less innovation exposure than diversified portfolios quietly built over the past several years.

Long before artificial intelligence became a daily headline and before institutional enthusiasm accelerated around themes like digital infrastructure, nuclear energy, automation, or modern financial networks, we were already studying and selectively incorporating many of these long-duration structural themes where appropriate.

Our approach has never been about chasing headlines and obvious narratives.

RATHER, OUR DISCIPLINED APPROACH IS ABOUT:

•    Identifying durable secular shifts early, ahead of the curve
•    Remaining diversified across multiple innovation pathways
•    Respecting valuation and liquidity conditions
•    And balancing long-term opportunity with short-term survivability

That means many of Glenwood’s client portfolios may have exposure to innovation-related themes like the below, depending on individual allocation and objectives:

•    AI infrastructure and semiconductor ecosystems
•    Digital payments and evolving financial systems
•    Energy modernization and power demand growth
•    Healthcare technology and medical innovation
•    Cloud computing and enterprise software
•    Advanced manufacturing and automation
•    Cybersecurity and defense-related technologies

Importantly, we believe innovation investing works best when paired with discipline.

Owning the future should not require abandoning risk management.

OUR PLAYBOOK FOR THE BACK HALF OF 2026

Our posture remains grounded in patience, preparation, flexibility, and customization rather than prediction.
Several themes continue shaping our positioning:

LIQUIDITY MATTERS:

For much of the last decade, investors were rewarded for staying fully invested at all times regardless of valuation or macro backdrop.

Today looks different.

We continue to emphasize sufficient liquidity that enables flexibility should volatility create attractive opportunities later this year.

Cash and cash equivalents are not simply idle capital in environments like this. Liquidity represents optionality.

REMAIN SELECTIVELY OFFENSIVE

We continue to be active followers of high-quality growth businesses with durable earnings power, particularly companies already generating solid results rather than speculative enthusiasm.

• We do recognize that investor enthusiasm and momentum in certain sectors is robust.

• Innovation and change is coming quickly--it often builds excitement.

• Earnings growth in certain sectors continues to be an important area of focus for financial markets.

So, despite the sometimes broad sweeping headline conclusions implied by recent market activity, we
believe more narrow selectivity of investment exposures could matter a lot throughout the rest of 2026. 

RISK MANAGEMENT IS NOT BEARISHNESS

We continue closely monitoring signals from the bond market, particularly long-term interest rates and funding/credit conditions.

Markets have begun wrestling with an increasingly difficult question: What happens if inflation proves more persistent than expected while government borrowing needs continue rising? How will new Federal Reserve Chair Warsh navigate his bold objectives for needed reforms while delicately approaching the demands and constraints on monetary policy? 

These dynamics are right in the face of markets--strong implications exist across stocks and bonds.

AS A RESULT, WE CONTINUE TO EMPHASIZE:

• Interest rate risk awareness
• Diversification
• Tax efficiency
• Hedged-equity approaches where appropriate (limited downside in exchange for limited upside)
• And thoughtful management of unique cash needs, risk profiles, and goals

Our objective is not to avoid volatility entirely. That is impossible.

Our objective is to avoid permanent impairment while maintaining exposure to long-term opportunities. 

PATIENCE IS PREPARATION

We accept that “games and seasons are constituted by seconds.”  These “seconds” come at investors day-by-day as waves of headlines, market drawdowns, volatility, political noise, and changing narratives.

These daily waves are precisely why patience and process matter.  Patience is not passivity.  Patience is preparation.

Patience allows preparation in advance of opportunities and the flexibility to adapt as markets evolve.

WE REMAIN OPTIMISTIC ABOUT THE FUTURE.

Discipline and the balance of risks and rewards will continue guiding our process as we navigate the remainder of 2026 and beyond. At the end of the day, a diversified, long-term portfolio may not generate the same excitement as a headline IPO, but history suggests it offers something much more valuable, in Glenwood's view: a disciplined path for building wealth over time.

Are we cheerleaders for the success of SpaceX?  You bet! 🚀