Managed Opportunities 2026 Second Quarter Review

July 2026

“The big money is not in the buying or selling, but in the waiting.” ~ Charlie Munger

It is remarkable how often our patience is tested as investors. Patience is not, however, an excuse for inaction or complacency. Our mandate remains straightforward - deliver the performance and service we demand for our own families to every client.

The second quarter proved to be something of a grind, perhaps not totally unexpected given the gangbuster results to kick off the year. Regardless, we are off to a strong start for 2026. We are excited about recent developments with key investments and the near-term catalysts developing across the portfolio.

Notably, a press release from Chevron and Microsoft caught our attention. The announcement centered on plans for Chevron to build a massive (2.75 gigawatt) power generation project to satisfy a 20-year contract to provide electricity to a Microsoft datacenter. It turns out, the 7,000+ acre project will partially be on Texas Pacific Land (TPL) property. More importantly, TPL announced they had secured the exclusive rights to provide water and related services to these projects. This is a similar arrangement from the announcement of the investment in Eric Schmidt backed Bolt Data and Energy in late 2025. We believe that water will be the ultimate chokepoint in the AI infrastructure buildout. The incremental earnings from water on these and other projects may drive the stock significantly upward.
A Texas judge ruled in favor of an amendment to the Trust document governing the Permian Basin Trust (PBT), allowing a majority vote to effect changes. This ruling paves the way for the Trust to restructure to a corporation, similar to TPL’s conversion in 2021. We are still reaping the seemingly never-ending rewards from that transaction.
Miami International Holdings (MIAX) also had a successful launch of futures contracts tied to a suite of new indexes from Bloomberg. New contracts take time to establish traction. If MIAX executes in the futures trading space as they have with options trading, the company has the potential to really accelerate its already impressive revenue and earnings growth.

These items may not make headlines on CNBC or the front page of The Wall Street Journal, but they are material developments that we are enthusiastic about and think you should be too. They increase earnings and cash flow, which, over time, we believe will ultimately drive higher stock prices.

As patient long-term investors, we are probably better off not being on the front page of the news. Rather, we rely on increased fundamentals and profits rather than flashy news stories to drive our multi-year compounding and wealth creation.

We opt for slow money vs. fast money

Over our thirty years, we have found it best to avoid the hype and fast, hot money. To illustrate, we had a flurry of inquiries in advance of the recent SpaceX IPO: “Are we participating?” “Do we have exposure?” “Can I get an allocation?” were among the common questions.

For the record, we are not involved in any capacity, nor have any insights into SpaceX. It simply falls well outside our circle of competence.

That said, after an initial surge, investors can now purchase as many shares as they like at a discount to the IPO price, and remarkably, the phone has stopped ringing.

Rather than fast money, we prefer slow money, a marathon not a sprint, allowing time and compounding to build wealth.

Evolving with Horizon Kinetics

It is hard to believe that it has been three months since Murray Stahl’s unexpected passing. From a personal standpoint, it is often unbelievable that he is no longer with us, and candidly, we really miss him and all his wisdom, guidance, humor, and overall support.

With that said, Murray’s partners and co-founders have been nothing short of extraordinary. They engaged with us immediately and are responsive and attentive. We are settling into a new routine, primarily with Steve Bregman, but we are also finding that Horizon has a deep bench of intelligent, thoughtful, and caring team members.

While Murray is missed, much like our investment portfolio, he left us and Horizon well positioned to thrive without him.

Housekeeping and Updates to Form ADV

We have updated our Form ADV, our disclosure document filed with the SEC, and provided updated copies of ADV Part 2 (Business Practices Disclosure) and ADV Part 3 (Customer Relationship Summary Disclosure) to your client portal. Following Murray’s passing, we reviewed to ensure that our disclosures remained timely and accurate. While no material changes were made, we did adjust commentary regarding allocation weightings and position sizing to reflect our willingness to establish larger positions at cost on our highest conviction investments. We also adjusted disclosures regarding investments in bitcoin and cryptocurrencies, as those assets have evolved significantly since our initial investments in 2016.

Future Prospects

It must be our nature. We remain vigilant to overall market risks, primarily valuations and debt and leverage levels. Political and geopolitical uncertainties also weigh on us, keeping abreast of information and disinformation is a challenge.

The real objective is separating wheat from the chafe or identifying noise and signal and ignoring the noise.

With a long-term approach, we have identified a set of what we believe are unique investments, in long-duration businesses that control many different scarce limited resources. The interesting aspect of this opportunity is the likely step function trajectory of future earnings.

When projects transition from construction phase to the operational phase, the demand for natural gas and water will go from zero to material almost immediately as projects are energized. The lack of current earnings, and the challenge of projecting future earnings where there is no precedent or comparison makes for an opportunity hiding in plain sight, for the patient investor!

We and our families are the largest investor group at Mad River. We are genuinely excited about the potential of our current investments and the broader opportunity set for our strategy.

Thank you for partnering with us. We welcome any questions and look forward to speaking with you soon.

Best regards,

Rick Silver & Josh Stewart

Important Disclosure on Model Performance: For the purpose of presenting historical performance information, we reference and present the performance of our Model. While limitations exist with models, we believe our Model offers a reasonable assessment of the typical performance of our historical investment selections for clients. Our Model is based on a taxable portfolio investing since the inception of the investment strategy in March 1999. The Model is presented net of all fees (adjusted to the highest annual fee charged to clients), brokerage expenses, and includes the reinvestment of dividends and interest. The Model generally reflects the performance of portfolios under management since the strategy’s inception in 1999. Client performance will deviate from the Model due to, among other reasons, the starting point of a client relationship; client guidelines, circumstances, and directives; the size of a portfolio and its relative costs; additions and withdrawals of funds; the timing and historical position sizing and concentration of investments; and the account type and its ability to participate in certain investments. During this period there were no strategies employed to obtain the results portrayed other than those implemented for clients pursuant to the Model and disclosed in our Form ADV. Please carefully review our Form ADV for further information. We encourage and strongly recommend that you discuss with us the application, correlation, and significance of the Model’s performance to our client’s historical returns.

Important Disclosure on Benchmark Comparison: The S&P Composite is regarded as a gauge of the US equity market. This index includes a representative sample of 500 leading companies in leading industries of the US economy. Although the S&P 500 focuses on the large-cap segment of the market, we believe it serves as a reasonable proxy for the US market. Nonetheless, the use of the S&P Composite as a comparison may not be appropriate for a variety of reasons including, but not limited to, Model and client account(s) being more concentrated; volatile; holding cash, fixed income investments, and/or option contracts; being short securities; or the average capitalization of companies comprising the Index not correlating with the capitalization of the companies comprising the Model.

Important General Investing Disclosure: Inherent in any investment is the potential for loss of capital, past performance is not indicative of future results, and the value of investments and the income derived from investments may increase or decrease. It is not our intention to state, indicate or imply that future investment results will be profitable or equal past results. The information presented is meant to form the basis of a discussion with us and is subject to further clarification and explanation during discussions with us. This information may not be duplicated, redistributed, or communicated to others without our consent. This is not an offer or solicitation to any person in any jurisdiction in which such an action is not authorized or to any person to whom it would be unlawful to make such an offer or solicitation. We do not provide tax or legal advice to our clients, and you are strongly urged to consult a tax or legal advisor regarding any potential investment strategy.

This communication may include opinions and forward-looking statements. All statements other than statements of historical fact are opinions and/or forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the beliefs and expectations discussed are reasonable, we can give no assurance that such beliefs and expectations will prove to be correct. All expressions of opinion are subject to change. You are cautioned not to place undue reliance on these forward-looking statements. Any dated information is published as of its date only. Dated and forward-looking statements speak only as of the date on which they are made. We undertake no obligation to update publicly or revise any dated or forward-looking statements. Investment process, strategies, philosophies, portfolio composition and allocations, security selection criteria and other parameters are current as of the date indicated and are subject to change without prior notice. 1/2026