Dear Fellow Shareholders:
As the scare over AI replacing software abated, our software stocks performed well and two of them were the biggest contributors to the fund this quarter: Microsoft’s (MSFT) stock jumped 38% and added 1.6% to performance, while SAP (SAP) also added 1.6%. Ross (ROST) was the other main contributor, adding 0.6%. For the first time in the company’s history, Ross hired an outsider CEO, who has boosted sales through marketing initiatives, something the off-price retail industry has not historically done much of.
Higher interest rates further pushed back the housing recovery, causing two of our housing-related stocks to be the biggest hits to performance. Eagle Materials (EXP) took 1.0% off performance and Dream Finders Homes (DFH) took off 0.9%.
Similar to last quarter, we lagged the broader market as some of the secondary and tertiary beneficiaries of the AI boom (think low-end computer hardware, HVAC equipment) continued their hot streak. While we believe the core AI companies will continue to reap significant value, we are more skeptical of the marginal companies that have been swept up in the boom.
Total Returns as of September 30, 2026
(a) 1 Year, 3 Years, 5 Years, 10 Years, and Since Inception returns include change in share prices and, in each case, include reinvestment of any dividends and capital gains distributions. The inception date of the Bretton Fund was September 30, 2010.
(b) The S&P 500® Index is a broad-based stock market index based on the market capitalizations of 500 leading companies publicly traded in the US stock market, as determined by Standard & Poor’s, and captures approximately 80% coverage of available market capitalization.
Performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. You may obtain performance data current to the most recent month-end at Fund Details – Bretton Fund or by calling 800.231.2901.
All returns include change in share prices, reinvestment of any dividends, and capital gains distributions. The index shown is a broad-based, unmanaged index commonly used to measure performance of US stocks. The index does not incur expenses and is not available for investment. The fund’s expense ratio is 1.35%.
Portfolio as of September 30, 2026
*Cash represents cash equivalents less liabilities in excess of other assets.
Mobility GlobalAt the beginning of July, S&P Global spun off its automotive business into a separate company, Mobility Global.
As a reminder, S&P Global is a data and analytics company. Its main products are ratings of fixed-income debt, which are purchased by issuers to ensure that their debt instruments meet buyer requirements, and equity market indexes, which are purchased by fund sponsors who want to offer products that match well-known indexes. Longtime investors may recall that in 2022 S&P Global acquired IHS Markit, which owned a collection of niche data businesses—everything from credit default swap pricing to shipping identification numbers.
The merger took longer to close than we might have hoped, as did the process of integrating the businesses and looking for synergies, and the deal looks too expensive in hindsight. Management eventually decided that the auto ecosystem had relatively little overlap with the other, more capital markets–focused businesses, and chose to spin it off Polk, automotive Mastermind, and Carfax left to form Mobility.
Beyond the publicized reasons, S&P Global management surely noticed that the automotive ecosystem in the US is somewhat stagnant. New light vehicle sales hit a seasonally adjusted rate of 16 million vehicles in late 1998, when the US had about 275 million people. The seasonally adjusted rate in September 2026 was also 16 million, even though we are closing in on 350 million people. And this is without any material impact from autonomous vehicles: in a world of Waymos, will Americans need to buy as many cars as we have in the past?
Mobility is deeply embedded in the existing mode of car buying. Essentially every car manufacturer uses a Mobility product to communicate with its dealer network: which vehicles are selling, what we are anticipating in the coming months, how production should be allocated among models and trim lines, etc. Every car dealership tracks customer behavior with a Mobility product: who owns which vehicle identification number (VIN), what is the mileage on the VIN, its service and accident history, when is the customer expected to trade, the estimated market clearing price for any given VIN.
So long as the ecosystem continues in its current form, Mobility makes money and further entrenches its moat: each day it has more proprietary records and is more valuable to its customers and more difficult to replicate. But this ecosystem might be closer to its end than its beginning.
Right now, Mobility is quite inexpensive, at around 12 times cash earnings per share, and growing strongly. Spinoffs tend to be underpriced, and this may yet turn out to be an example. However, it is a very small position for us and, without greater confidence in the evolution of the market, we will likely redeploy the capital in the medium term.
As always, thank you for investing.
Stephen Dodson, Portfolio Manager
Raphael de Balmann, Portfolio Manager
Original Post
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
