Elm Ridge Capital Up 23% In Q1: Why Alts Have Their Faults

Elm Ridge Capital’s commentary for the first quarter ended March 31, 2026.

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“Graham and Dodd investors are people who place a very high value on having the last laugh. In exchange for the privilege, they have missed out on a lot of laughs in between.” – Michael Lewis, The New New Thing, 2000.

We had a good quarter and are now up more than 30% (v -4% for the S&P) since the megacaps peaked at the end of October. And while the Mideast War Excursion did provide our energy-related names with an added boost, we were already 16% to the good by the end of February, with our performance at that time about evenly split between energy and industrials (the latter led by LyondellBasell, Chemours, ArcBest and ArcelorMittal) .

As most of you know, or have endured, I’ve been in the predicting/pontificating business for a long time: enough to know better at that. This tendency has combined with a lifetime of trash talking1 (my hometown gave no quarter to the nice) produce a writing style implying a great deal more certainty than I could ever possess or believe is possible.2 Perhaps it was only fitting that I joined Sanford Bernstein in 1988, a year before Institutional Investor ran an article, “Sometimes Wrong, But Never in Doubt,” on the hits we suffered at the beginning of a very successful bet on beaten-down financial stocks.

The above is just a wordy preamble to some crowing that, while we’re nowhere near the point where we can claim victory, it looks as though our big picture prognostications from five or so years ago may finally come to pass. In fact, in contrast to Wall Street dogma (or bubbe meise as my mother would say),3 we did argue that: long rates were due for a big jump from their 1.5% plateau in mid-21;4 the love affair with private investments might end very badly; and excessive crowding in asset-light “compounders” would give way to a stampede for the exits and maybe toward our stuff as the horde flees its formerly comfortable surroundings.