Key Takeaways
- • Lukasz Tomicki's LRT Capital has delivered 50.6% year-to-date returns through September 5, 2023, with minimal exposure to the "Magnificent Seven" stocks that have dominated broader market gains.
- • TriNet (up 72% YTD) and Williams-Sonoma (up 39% YTD) have been primary drivers of fund outperformance, demonstrating success in identifying undervalued opportunities outside mega-cap technology.
- • The fund currently holds its largest bets in RLI, NOC (Northrop Grumman), and EME, representing a concentrated positioning strategy for continued alpha generation.
- • LRT Capital maintains only a 0.73% position in Amazon, highlighting deliberate avoidance of concentration risk in the Magnificent Seven despite their market dominance.
- • The fund's performance underscores the divergence between mega-cap and broad-market equity performance, with the S&P 500 Equal-Weight Index up just 0.7% YTD versus the cap-weighted S&P 500's 14% gain.
Summary
Lukasz Tomicki's LRT Capital has achieved exceptional outperformance in 2023, posting year-to-date returns of 50.6% as of September 5—a result achieved almost entirely independent of the "Magnificent Seven" mega-cap technology stocks that have driven the broader market rally. While Apple, Amazon, Meta, Tesla, Alphabet, Microsoft, and Nvidia have individually gained between 37% and 221% this year and collectively accounted for the vast majority of S&P 500 index returns, Tomicki's fund has identified and capitalized on opportunities in overlooked segments of the market.
The disparity between mega-cap concentration and broader equity performance is stark. The S&P 500 Equal-Weight Index, which applies identical weighting to all 500 constituents regardless of market capitalization, has returned only 0.7% year-to-date compared to the cap-weighted index's 14% gain. This underperformance of the broader 493 companies outside the Magnificent Seven has created a fertile hunting ground for active managers seeking alpha generation outside the consensus technology narrative.
LRT Capital's core winners have included TriNet, which has surged 72% this year, and Williams-Sonoma, up 39%, demonstrating Tomicki's ability to identify secular growth and value opportunities in non-technology sectors. The fund maintains only a 0.73% position in Amazon, the sole Magnificent Seven holding, reflecting a deliberate underweight to mega-cap concentration risk while maintaining nominal exposure to the sector.
Looking forward, Tomicki has positioned LRT Capital's largest bets in RLI, NOC (Northrop Grumman), and EME, suggesting a continued focus on industrial, defense, and energy-adjacent opportunities. The fund's 50%+ returns highlight a viable alternative to passive mega-cap technology exposure and demonstrate that significant alpha remains available for disciplined stock-pickers willing to research beyond consensus holdings during periods of extreme market concentration.
The disparity between mega-cap concentration and broader equity performance is stark. The S&P 500 Equal-Weight Index, which applies identical weighting to all 500 constituents regardless of market capitalization, has returned only 0.7% year-to-date compared to the cap-weighted index's 14% gain. This underperformance of the broader 493 companies outside the Magnificent Seven has created a fertile hunting ground for active managers seeking alpha generation outside the consensus technology narrative.
LRT Capital's core winners have included TriNet, which has surged 72% this year, and Williams-Sonoma, up 39%, demonstrating Tomicki's ability to identify secular growth and value opportunities in non-technology sectors. The fund maintains only a 0.73% position in Amazon, the sole Magnificent Seven holding, reflecting a deliberate underweight to mega-cap concentration risk while maintaining nominal exposure to the sector.
Looking forward, Tomicki has positioned LRT Capital's largest bets in RLI, NOC (Northrop Grumman), and EME, suggesting a continued focus on industrial, defense, and energy-adjacent opportunities. The fund's 50%+ returns highlight a viable alternative to passive mega-cap technology exposure and demonstrate that significant alpha remains available for disciplined stock-pickers willing to research beyond consensus holdings during periods of extreme market concentration.
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