Andrew Hill Investment Advisors recently released its third-quarter 2026 investor letter. A copy of the letter can be downloaded here.
The fund navigated a mixed third-quarter investment environment in which rising oil prices, higher interest rates, and persistent inflation created headwinds for equities and bonds, although strong corporate earnings and continued AI investment helped support the broader stock market. The letter does not disclose an aggregate third-quarter return for client portfolios, but the S&P 500 gained 3.54% through September 22, while the Bloomberg U.S. Aggregate Bond Index declined 2.8%; meanwhile, oil prices rose sharply, and the Federal Reserve increased the federal funds rate to 3.75%-4.00%, its first rate hike in more than three years. Performance across client accounts benefited from exposure to software, AI hardware, and selected strategic investments, while losses in other areas and the sharp rise in bond yields offset some gains; the average equal-weight basket of AI stocks returned 13.0% during the quarter versus an 8.3% decline for the traditional-economy basket. Looking ahead, Andrew Hill expects the AI investment cycle to continue but remains cautious about the broader equity market because of rising rates, inflation, geopolitical risks, tight consumer spending, election uncertainty, and the possibility that the pace of AI capital spending could slow as additional computing capacity comes online; the firm therefore favors earnings-focused investing, higher cash balances, and gradually increasing fixed-income exposure, particularly as high-grade corporate bonds offer yields above 6%. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its third-quarter 2026 investor letter, Andrew Hill Investment Fund highlighted stocks like Arista Networks, Inc. (NYSE:ANET). Arista Networks, Inc. (NYSE:ANET) provides high-performance networking equipment and is positioned to benefit from continued AI infrastructure investment and hyperscale cloud spending. The one-month return of Arista Networks, Inc. (NYSE:ANET) was 13.34% while its shares traded between $114.52 and $217.32 over the last 52 weeks. On October 7, 2026, Arista Networks, Inc. (NYSE:ANET) stock closed at approximately $215.83 per share, with a market capitalization of about $272.87 billion.
Andrew Hill Investment Fund stated the following regarding Arista Networks, Inc. (NYSE:ANET) in its Q3 2026 investor letter:
“Arista Networks, Inc. (NYSE:ANET) has become one of our preferred ways to gain exposure to the continued buildout of artificial intelligence infrastructure. While Nvidia often receives the most attention, AI systems also require increasingly sophisticated networking equipment to move massive amounts of data between chips, servers, and data centers. Arista’s high-performance networking solutions have positioned the company as a key beneficiary of the growing capital spending by cloud providers and hyperscale customers. Unlike many AI-related investments, Arista combines this attractive growth opportunity with strong profitability, a debt-free balance sheet, and substantial free cash flow generation (Click Here To Read the Letter In Detail).”
