Leaven Partners Q1 2026 Commentary

Leaven Partners commentary for the first quarter ended March 31, 2026.

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Dear Partners,

In the first quarter of 2026, fund assets appreciated by 3.2%. Over the three-year period, the fund is up 73.3% compared to the S&P 500 return of 68.0%.

It was smooth sailing for us in the first two months of the year, but March was a different story. The effective blockade of the Strait of Hormuz drove fund performance in the wrong direction in March, with the fund declining 8.4% during the month. The Strait is one of the world’s most critical energy chokepoints – approximately 20% of global oil consumption and a significant share of global LNG trade pass through it annually. The overwhelming majority of that supply – roughly 80% – flows to Asian markets, meaning the physical supply shock is felt most acutely in Asia, even as the price shock reverberates globally. Japan is particularly exposed: the country sources approximately 95% of its oil imports from the Middle East, with around 70% passing the Strait directly. Unlike many of its neighbors, Japan entered this disruption with one of the world’s largest strategic petroleum reserves — approximately 9 months of total supply. However, the severity of the disruption prompted Japan to begin its largest-ever reserve release in March.4 Reserves provide a buffer, but they are not a permanent solution, and the uncertainty surrounding Japan’s near-term economic prospects remains considerable.