Spyglass Fund Jumps 24.6% in Q2 as Procore Drags
Spyglass Capital’s growth fund rebounded in the second quarter to trounce benchmarks, but the continued selloff in software stocks like Procore Technologies underscores how multiple compression is penalizing solid earnings in favor of growth acceleration.
Spyglass Capital Management’s Growth Strategy fund returned 24.63% in the second quarter of 2026, reversing early-year volatility driven by easing geopolitical tensions and a rebound in technology shares. The gain significantly outpaced major benchmarks, including the Bloomberg 500 Index, which rose 15.61%, and the Bloomberg 2500 Growth Index, which gained 19.01%.
This sharp turnaround was fueled by a shifting macroeconomic environment. A US-Iran ceasefire and declining oil prices helped lift small-cap and growth stocks, with Technology, Industrials, and Financials acting as the primary drivers for the broader market.
Despite the robust quarterly performance, the Spyglass portfolio carries a slightly negative year-to-date return due to persistent multiple compression. This divergence exists even though 85% of the fund's holdings exceeded revenue estimates and the portfolio's aggregate earnings growth remains above 40%. The firm views this valuation gap as a clear market inefficiency.
Procore Technologies served as a primary example of this market friction, acting as a bottom contributor to the fund's Q2 performance. The cloud-based construction management firm beat consensus estimates for both revenue and earnings in its first quarter. However, the stock was swept up in a broader software sector selloff as investors demanded clearer proof of accelerating top-line growth.
Procore shares closed at $53.79 on July 30, giving the company an $8.12 billion market capitalization. While the stock has bounced 24.47% over the past month, it remains down 11.78% over the past 52 weeks, reflecting the intense scrutiny facing the sector.
Spyglass is betting on the company's long-term competitive advantages rather than the current market narrative. "As the new management team settles in, we continue to believe Procore's underlying momentum remains intact, supported by a widening data moat and an emerging AI monetization opportunity," the firm told investors.
The Procore situation illustrates a prevailing theme for mid-cap growth equities in 2026. Solid financial execution is routinely penalized if it lacks a compelling near-term acceleration narrative. For active managers like Spyglass, these valuation disconnects present opportunities to extract value, provided corporate fundamentals hold firm when market sentiment eventually shifts.
