McIntyre Partnerships concluded the first half of 2026 with a relatively flat performance, recording approximately 0% gross returns and a -1% net return, significantly trailing its benchmark, the Russell 2000 Value, which posted a 23% increase. Despite this short-term volatility, the firm maintains a strong belief in its investment strategy, particularly in its highly concentrated portfolio positions. Key drivers for future performance are anticipated from strategic corporate actions, including a potential divestiture for QuidelOrtho Corporation (QDEL), favorable legal developments for Sotera Health Company (SHC), and the ongoing asset divestment strategy of Star Holdings (STHO). These factors are expected to unlock substantial value and facilitate capital returns to investors in the coming periods. Looking ahead, the firm intends to reopen its fund for new investments in the first half of 2027, with priority given to existing limited partners.
The portfolio's current structure is heavily weighted towards a few select companies, reflecting a high-conviction approach. This concentration, while contributing to market comparison challenges, is viewed as a strategic advantage for capitalizing on significant opportunities. The firm's long-term track record, with impressive gross and net returns since inception, underscores its belief in this focused investment philosophy. The emphasis on companies undergoing special situations or exhibiting strong catalytic potential is a cornerstone of McIntyre Partnerships' strategy, aiming to generate substantial returns over the economic cycle.
Mid-Year Financial Performance and Strategic Outlook
McIntyre Partnerships concluded the second quarter of 2026 with its investment returns hovering around even, showing approximately 0% gross and -1% net, which notably lagged the Russell 2000 Value's 23% gain. Despite this recent performance, the firm's long-term track record remains robust, boasting around 10% gross and 8% net annual returns over the past five years, and 16% gross and 12% net since inception, both exceeding the benchmark. The portfolio's significant concentration, particularly in QDEL, makes direct market comparisons less relevant for evaluating its current state. The second quarter, however, saw a widespread recovery across most holdings, a stark contrast to the previous quarter. This broad rally, alongside specific positive corporate developments, bolstered the portfolio's overall health, though QDEL remains an outlier. The firm's conviction in its concentrated portfolio, especially in the potential of QDEL, STHO, and SHC, remains high, with expectations for multi-bagger returns driven by upcoming catalysts.
The firm's balance sheet at quarter-end showed exposures of 116% long, 26% short, leading to a 90% net position. The top five holdings—QDEL, STHO, SHC, MDRX, and SWIM—constitute a substantial 88% of total assets, highlighting the high-conviction nature of the portfolio. This strategic concentration is underpinned by the belief that a deep understanding and significant weighting in a few, thoroughly researched opportunities will yield superior risk-adjusted returns. The decision to retain a substantial investment in QDEL, despite its recent underperformance, stems from the firm's belief in its transformative potential over the coming years. Similarly, strategic positions in STHO and SHC are expected to capitalize on their respective catalysts, such as asset divestments and favorable legal outcomes, contributing significantly to future capital appreciation and returns for investors.
Key Portfolio Holdings: Catalysts and Value Drivers
QuidelOrtho Corporation (QDEL) is poised for a significant transformation, with rumors suggesting the sale of its Point of Care business for approximately $1.5 billion. This divestiture, effectively undoing the 2022 merger, would substantially reduce QDEL's leverage to about 2.5x and refocus the company on its stable legacy Ortho business. The consistent performance of the Ortho segment, coupled with the anticipated resolution of Chinese regulatory issues, is expected to drive high single-digit EBITDA growth. This strategic move, along with improving cash flow generation, is projected to re-rate QDEL's valuation to a peer-comparable 11-15x EV/EBITDA, potentially reaching $100 per share based on 2029 EBITDA estimates, or even leading to a private equity acquisition, signaling a major value unlock for the stock.
Sotera Health Company (SHC) has demonstrated strong operational and legal progress. Positive Q1 results, particularly the return to high single-digit organic growth in its Sterigenics segment, signal a robust recovery from previous destocking challenges. Critically, SHC's legal landscape improved with a Georgia judge dismissing five lawsuits, indicating a likely rejection of the remaining 450 cases. This reduces estimated legal liabilities to potentially below $50 million, far less than the worst-case $180 million scenario. The recent exit of private equity owners, removing a significant overhang of predictable block trades, is expected to allow SHC shares to re-rate closer to peers. With an estimated 2028 EPS of $1.30, an in-line valuation with medical device companies could see its stock price double, achieving a 25x P/E multiple. Star Holdings (STHO) has also made substantial strides in unwinding its legacy holdings, with shares appreciating significantly. The company's current Net Asset Value (NAV) is estimated at $24.50, representing a 160% premium over its trading price. Positive developments at SAFE, STHO's significant holding, including a return to high origination volumes and a share buyback program, along with a portfolio sale at a favorable cap rate, suggest a narrowing valuation gap. STHO's proactive divestment of assets, such as the Surfhouse JV, has improved cash flows, and with only a few land parcels and two hotels remaining, the company is moving towards a net cash position. These factors are paving the way for substantial capital returns, potentially beginning as early as Fall 2026, which would significantly benefit shareholders and help close the substantial NAV discount.
