Watt's Next

Opening Bell

Welcome! At Founder ETFs, we help RIAs close the Founder Gap hiding in their clients' portfolios.

Founder-Led S&P stocks outperformed non-founder-led: 3.1x from 1990 to 2014 and 2.1x from 2015 to 2024, according to Bain & Company.

Yet our research shows the 300 largest US equity ETFs (90% category AUM) own just 12.55% Founders. We built the Founders 100 ETF (100% Founders) to close that gap.

Michael and I aren't a faceless asset manager. When you call, email, or text, you get us.

We're your partners: sharing our fundamental research, our highest-conviction Founder ideas, and following our disciplined, 80%+ rules-based process designed to help remove emotional decision making during periods of fear and greed. As two of the largest $FFF shareholders, we plan to be fully invested alongside you for the next 30 years. Your success is our success.

This week the tape did something healthy. After a historic first half for a handful of mega-cap names, money began to rotate into small caps, financials, industrials, and energy. The Russell 2000 just posted its best first half since 1991. We welcome a broadening market; it is exactly the environment in which fundamentals decide winners.

The rotation also plays to a fact about FFF that surprises many advisors: while the Technology sector is more than 50% of the portfolio, FFF invests in 10 of the 11 GICS sectors, including Financials, Industrials, Materials, Real Estate, and Health Care. All five of those sectors have Founders reporting this week: Blackstone (BX) and Capital One (COF) in Financials, Waste Connections (WCN) and Comfort Systems (FIX) in Industrials, Steel Dynamics (STLD) in Materials, Essential Properties (EPRT) in Real Estate, and Viking Therapeutics (VKTX) in Health Care.

We don't chase rotations. FFF reconstitutes quarterly on fresh fundamental data following earnings season. Capital One reports Tuesday. We continue to watch our 100 Founders report one by one.

We are here to answer your questions. Welcome to Issue #10.

Michael & Lauren

Founder Spotlight

Richard Fairbank at Capital One (COF)

Co-Founder, Chairman & CEO · Capital One Financial (COF) · Reports Q2 Tuesday, July 21

Richard Fairbank co-founded Capital One in 1994 on a then-radical idea that a credit card business could be built on data, reportedly collecting more data on Americans than anyone outside the FBI, and experimentation. His "Information-Based Strategy" (IBS), which ran thousands of tests to price risk at the level of the individual customer, reinvented consumer lending and built one of the largest and most successful US credit card issuers. Three decades later, Capital One combines a scaled national card franchise, a low-cost digital bank, and, with the acquisition of Discover, a global network supporting durable earnings growth and a valuation re-rating we believe the market has yet to fully price.

We believe Capital One is well positioned to deliver durable double-digit EPS growth, supported by the Discover network integration, an improving consumer credit backdrop, a structural funding advantage, and aggressive capital return. Our $250 price target is based on a 10x P/E multiple on our 2027 adjusted EPS estimate of $25, implying ~20% upside.

With the acquisition of Discover, Capital One now owns something almost no other card issuer has: its own payments network. The core of the thesis is vertical integration. Owning the network will lower transaction costs, deepen merchant relationships, and capture economics that previously left the building. Under the Volcker Rule, Capital One is free to offer uncapped rewards on debit card spending routed over its own network, a product advantage no major competitor can easily replicate. We believe migrating volume from card networks onto Discover's rails will be a multi-year value driver.

The data advantage compounds it. Three decades of IBS underwriting gives Capital One a proprietary view of consumer risk that supports through-the-cycle pricing discipline. With inflation cooling and gas prices falling, the setup for the consumer, and therefore for credit costs, is improving at the margin, and reserve releases or simply stable charge-offs would flow directly to earnings.

The funding model is a quiet differentiator. Capital One built one of the largest digital banks in the country, giving it a national, branch-light deposit base that funds card receivables at attractive cost. Deposit funding plus network ownership moves the company closer to a closed-loop model, with more of every swipe retained in-house.

Integration is the swing factor and the opportunity. Bringing Discover onto Capital One's technology platform carries execution cost, but it also unlocks announced expense and network synergies, and every quarter of clean execution de-risks the earnings path toward our 2027 estimate.

Capital allocation provides an additional tailwind. The combined franchise generates substantial excess capital, and Fairbank has historically returned it aggressively; buybacks at the current valuation are meaningfully accretive to per-share earnings while preserving flexibility to invest in the network.

A Stat That Travels

1 Gigawatt

The AI race is now measured in gigawatts This is the power capacity of the mobile turbine fleet one Founder bought this week to feed his AI supercomputers, roughly the output of a mid-sized nuclear reactor, but on wheels. It is the clearest sign yet that the AI build-out has hit a power wall, where compute is gated by how many megawatts you can plug in. NVIDIA's newest AI factory in Japan is similarly quoted in terms of power at 140 megawatts. Though energy prices just fell -6%, cooling headline inflation to 3.5%, the AI economy is preparing to ramp its consumption of electricity to a scale never before seen. FFF owns the Founder-Led companies on both sides of that equation, the ones driving the demand and the ones supplying it. On the demand side sits: NVIDIA (NVDA), Founder Jensen Huang, at the center of nearly every AI build-out on earth; Dell (DELL), Founder Michael Dell, assembling the AI servers that fill the racks; Palantir (PLTR), Founder Alex Karp, and the neocloud operators CoreWeave (CRWV) and Nebius (NBIS), Founders Michael Intrator and Arkady Volozh, renting the compute. On the supply side sits: Bloom Energy (BE), Founder KR Sridhar, whose on-site fuel cells can power a data center without waiting on the grid; Vicor (VICR), Founder Patrizio Vinciarelli, whose power-delivery components sit between the wall and the processor; and Nextracker (NXT), Founder Dan Shugar, in utility-scale solar. New gas turbines quickly run into permitting, air-quality, and NIMBY concerns. Though xAI disputes the claim, environmental groups have filed a lawsuit against xAI's Colossus factory near Memphis claiming its turbines ran without the proper permits. The Founders who can navigate these limits will have an advantage.

3forC: Three Talking Points for Clients

This week your clients will ask about: 1) Power, 2) AI Infrastructure, and 3) Inflation & Earnings. Let's dive in:

1) Power

Power has become the scarcest AI input. This week Elon Musk personally acquired APR Energy, an operator of gas turbines on wheels, capable of generating more than one gigawatt of power, in a ~$1 billion deal to feed his xAI supercomputers. Our portfolio owns Founder-Led companies on both the supply and demand sides of the power equation.

2) AI Infrastructure

On July 16, Japan's government, its industrial leaders, and NVIDIA (NVDA), our largest holding, launched the world's first national AI infrastructure. The flagship is an NVIDIA "AI factory" built with partner Noetra, 27,500 next-generation Rubin GPUs delivering 140 megawatts of computing capacity, to power Japan's national push into AI infrastructure. While the order is modest for NVDA, strategically it signals that sovereign AI is becoming a category.

3) Inflation & Strong Earnings

Cooling inflation alongside strong corporate earnings is a constructive backdrop for growth equities. June CPI cooled to 3.5% year over year, below the 3.8% the Street expected, the first decline in five months, led by a -6% drop in energy prices. Deflation gives Fed Chair Kevin Warsh's room to consider a rate cut later this year. The banks, brokers, and BlackRock (BLK) opened earnings season with record results, also supportive of both Wall Street and Main Street.

Our commentary is what we believe, not what's guaranteed. Results, data, and policy can and will surprise.

Industry Insight

Conviction Through the Correction - AI Infrastructure

Excluding Dell (DELL), our AI infrastructure holdings, nearly 8% of the portfolio, fell sharply over the past month, with single-name declines of -24% to -44%. The magnitude of the selloff stands in sharp contrast to the strength of the fundamentals and our long-term conviction. Dell itself, a 6% position, is the exception, down just -3% over the same period.

Source: Founder ETFs. Weights and one-month price returns as of 7/17/26. Holdings and weights are subject to change and are not recommendations.

The stocks of the strongest secular winners rarely move higher in a straight line. During previous technology investment cycles, including the internet, smartphones, and cloud computing, industry leaders routinely experienced -30% to -50% corrections before ultimately reaching much higher valuations. Volatility is often the price investors pay to participate in long-duration growth trends, and some of the best opportunities emerge when expectations reset.

Following extraordinary gains, investors took profits amid concerns that hyperscalers may be overspending on AI infrastructure, returns on those investments could disappoint, and valuations had become stretched. The result has been a broad correction across the AI infrastructure ecosystem despite ongoing strong fundamentals.

Our five-year AI infrastructure thesis remains unchanged. AI demand continues to accelerate while the supply of compute capacity remains constrained, driving sustained investment across the AI stack. Echoing to the buildout of railroads and the electric grid, we believe annual US AI infrastructure investment will exceed $1 trillion by 2030, creating long-lived assets that generate cash flows for decades. Whether enterprises are training frontier models or deploying AI agents, AI requires massive investments in computing power, networking, optical components, power management, cooling, and electricity. Those foundational requirements have not changed.

None of this is a promise of a rebound. Corrections can deepen, expectations can keep resetting even when fundamentals hold, and past technology cycles are illustrative, not predictive. What we control is process: FFF reconstitutes quarterly on fresh fundamental data, and we size positions by rules, not by nerves. Key risks across these holdings include the pace of hyperscaler capital spending, customer concentration, execution and financing risk at earlier-stage operators, power and permitting constraints, and key-person risk (the risk a Founder leaves).

Portfolio Pulse

Founders in Their Own Words

Conviction Corner

RIA Q&A on FFF's Role in a Portfolio

Q. Why does it matter whether a CEO founded the company or was hired?

A. We believe it matters enormously, and the data backs us up. Bain & Company research found that Founder-Led companies within the S&P 500 outperformed non-founder-led companies 3.1x from 1990 to 2014 and 2.1x from 2015 to 2024. The intuition is straightforward: Founders think in decades, not quarters, with the vision, conviction, and grit to build from zero to one. Hired CEOs manage. Founders build what lasts.

This issue is a case study in becoming unstoppable: one Founder spending his own billion dollars on power turbines, another sparking the buildout of sovereign AI, and a third betting three decades of market-leading data on a payments network he now owns.

Past performance does not guarantee future results. See Disclosures for the Bain & Company methodology and important information.

Macro Minutes

U.S. Economic Releases · Week of July 20 - 25

What We're Watching

Our take. The cooler June CPI reading of 3.5% was a relief. While we expect AI to lowers prices long run through productivity gains, the near-term ongoing conflict with Iran and the medium-term acceleration in energy demand from the AI buildout will require more power that keeps the economy at risk of higher energy prices, inflation, and rate hikes.

Earnings Edge

FFF Holdings Reporting

Washington Wire

“It's one data point. There might be some that look at this morning's data and say, 'Oh, mission accomplished.' That is not my view.”

Fed Chair Kevin Warsh, House Financial Services Committee testimony, July 14, 2026

Our take. The June CPI print landed as Warsh sat before the House Financial Services Committee for his first testimony as Fed Chair, and he used the moment to temper expectations. He called high prices an "undue burden" on households and businesses and pledged a resolute commitment to price stability, while refusing to read one cool month as the job finished. That posture sets up the July 28-29 FOMC meeting. The energy-led disinflation we have described since Issue #5 gives the Fed room to consider cuts later this year, yet Warsh declined to signal any move, with the funds rate still in its 3.50% to 3.75% range. We expect political pressure for cuts to build with each cooling print. AI will be deflationary, raising productivity as it is fully integrated into the US economy in the coming years. A credible, independent Fed, responsive to near-term inflation and long-term deflation, is a critical element in America's ongoing success.