Idea Brunch with Jon Hartman and Jim Burke of Hartman Burke Capital Management
Welcome to Sunday’s Idea Brunch, your interview series with great off-the-beaten-path investors. We are very excited to interview Jon Hartman and Jim Burke!
Jon and Jim are currently the managing partners of Hartman Burke Capital Management, a New Jersey-based long-only global equity fund they co-founded in August 2024. Before launching Hartman Burke Capital, Jon and Jim worked as associate portfolio manager and senior analyst, respectively, on the Invesco-OppenheimerFunds’ Global Equity Team (Invesco acquired Oppenheimer Funds). In 2025, the Fund returned 27.13% compared to 17.72% for the S&P500 and 20.48% for their composite benchmark. Since inception, the Fund is up 34.72% net of fees compared to 26.06% for the S&P 500 and 26.7% for the composite benchmark.
Jon & Jim, thanks for doing Sunday’s Idea Brunch! Can you please tell readers a little more about your background and why you decided to launch Hartman Burke Capital Management?
Our friendship and passion for markets began twenty years ago at Seton Hall Prep in New Jersey. We partnered and won our high school’s stock-picking competition, which promptly spurred an interest in stock investing. During college, we launched an early version of Hartman Burke Capital Management, raising $75,000 of external capital. We closed the partnership to take roles at Morgan Stanley and Oppenheimer Funds, but restarting HBCM on a permanent basis has been our long-term goal ever since.
Jim started his career in high-yield credit research at Morgan Stanley in 2013 before joining J.H. Lane, a distressed hedge fund, in 2016 as the Fund’s first analyst prior to its launch. Jon started at Oppenheimer Funds as an intern on the Global Focus Fund in 2012 and joined as an analyst immediately following graduation. The Global Focus Fund grew from $80mn to $4bn over his tenure, with $3bn of institutional AUM. We just completed our 26th year of combined experience, and 2026 will mark our 21st year of combined Global Equity experience.
Jim joined Jon at Oppenheimer Funds in 2019, where we were two of the three investment professionals managing the Global Focus Fund. Those five years of close collaboration were invaluable: we defined areas of specialization, learned each other’s strengths and weaknesses, and matured as investors. We also benefited from working alongside award-winning fund managers across diverse strategies on one of the industry’s largest global equity teams. We are deeply grateful to our mentors who so graciously spent countless hours teaching and guiding us, while also giving us the latitude to ‘find the portfolio managers within ourselves.’
The Oppenheimer Global Team had a rigorous industry rotation training process for analysts. We specialized in one sector for 6–12 months to deeply understand its economics before pitching ideas. Throughout our combined tenure, we conducted thousands of management meetings and on-site visits worldwide. Engaging with CEOs and CFOs, across all industries, on their strategy, capital allocation priorities, and most pressing business challenges has profoundly shaped our process. This approach built our broad and durable knowledge base across all GICS sectors—essential for idea generation and pattern recognition.
From this foundation, we’ve crafted HBCM’s philosophy and process that draws from our own learnings, incorporates the principles of great investors, and is informed by thousands of company management meetings. With our mentors’ retirement, launching HBCM became the optimal way to preserve and evolve our strategy.
You’ve had a strong first year, outperforming the market, but as we know, investing is a long game. What do you see as HBCM’s sustainable edge or competitive advantage that will enable you to continue generating alpha over time?
The structural underperformance of most active managers is no secret, so we understood from the outset that HBCM had to be fundamentally different to win. It all starts with incentives, and we have been fully aligned with investors since Day One: HBCM is 100% founder-owned, and we have the majority of our personal capital invested alongside our investors. This ownership model ensures full discretion and autonomy, free from the constraints that often limit others in the industry. We spent over two years rigorously refining HBCM’s philosophy and process, and we designed our strategy around four durable advantages.
1. Truly Active and Concentrated
We manage a concentrated portfolio comprising only our highest-conviction ideas, constructed without regard to benchmark weights. Our top ten holdings represent 51.5% of AUM and share just 4% overlap with the S&P 500. We built HBCM to be a truly active strategy, which we define as having minimal overlap with the benchmark. Given historically high levels of market concentration, we believe it is harder than ever to run a truly active strategy, and therefore the opportunity for outperformance is the most favorable in our careers.
2. No Constraints
We are deliberately unconstrained by market cap, valuation, geography, growth, value, or any other style labels—because style boxes narrow the investable universe, limiting the potential for superior returns. This adaptability allows us to move early and decisively on high conviction opportunities, rather than being constrained on a compelling investment because it doesn’t fit within a formulaic style. In a globally competitive world where the sources of excess returns inevitably shift, rigid and static approaches are unlikely to outperform over the long term.
For example, civil aerospace is currently the Fund’s largest sub-sector overweight. Yet in 2019 at Oppenheimer Funds, we owned zero aerospace. Structural, multi-year tailwinds to the industry only emerged following COVID-induced distortions: the pandemic’s 66% plunge in air traffic triggered deep manufacturing cuts, resulting in five straight years of production below fleet replacement rates. This created a structural supply-demand mismatch, transforming the historically cyclical aerospace manufacturing industry into one with secular growth characteristics. We built a significant overweight amid substantial industry disruption, making Airbus (a French company) our largest holding at launch.
By minimizing constraints, we strive to capture evolving opportunities, such as international civil aerospace, that narrow strategies inevitably miss. This flexibility provides a structural edge we believe is essential to HBCM’s long-term outperformance.
3. Focus on Future Quality
Over long investment horizons, only forward-looking growth in free cash flow (FCF) per share and improvements in returns on invested capital (ROIC) reliably drive shareholder returns. Everything else is noise.
Yet the industry remains fixated on backward-looking quality metrics—such as trailing growth, margins, and ROIC - that systematically overrate companies currently overearning and trading at premium valuations, while underrating companies facing transitory, solvable issues. The industry does a poor job of forecasting future business quality.
To avoid this trap, we developed the Quality of Business Framework (QoBF). The QoBF helps guide our analytical process, which allows us to contextualize and compare businesses across industries, and is calibrated to the market’s long history of rewarding sustainable performance, regardless of short-term momentum. The QoBF decomposes the four critical variables that drive future FCF and ROIC:
(1) the durability of organic revenue growth,
(2) the trajectory of unit economics and capital efficiency,
(3) the nature of competitive advantages, and
(4) management’s alignment and capital allocation track record.
What makes the QoBF unique is its ability to identify underearning companies in which management teams have credible plans to unlock full earnings power through internal improvements, similar to a private equity approach. This provides the conviction to own differentiated, high-conviction positions – like Boeing, Disney, Illumina, and UPS, each of which fail traditional backward-looking quality screens. They do, however, score very well on our assessment of future quality.
We think Disney is a useful example. In 2018, Disney enjoyed industry-leading ~17% cash margins. As high-margin cable revenue declined, Disney aggressively ramped investments in its streaming service Disney+, resulting in ~$6bn of annualized peak segment losses. By 2022, the cocktail of declining revenues and unsustainable investment levels resulted in a ~1% cash margin, a cut of its longstanding dividend, and the ousting of its then CEO, Bob Chapek. The share price followed the business, declining 60% peak-to-trough. Many investors have sworn-off Disney as a low-quality company as a result.
The QoBF revealed that Disney’s earnings impairment stemmed from a “growth-at-all-costs” strategy under prior management, not structural impairment. Following management changes in late 2022, the company pivoted to financial discipline, generating $10bn in FCF in 2025 – a nearly 10x increase in three years. The quality of organic growth is also improving, as its cable networks continue to shrink as a portion of the overall business. Last, Disney has continued to invest in its fleet of cruise ships and theme parks, where it enjoys high returns on incremental capital – a hallmark of a high-quality business. These decisive actions solidified our confidence, allowing us to buy Disney at ~10x HBCM’s estimate of normalized earnings.
By focusing on underlying fundamentals, internal improvement opportunities, and management execution, the QoBF enables us to cast a wider net, avoid consensus ‘high quality’ companies priced to perfection, and build an unconventional yet disciplined portfolio of best ideas.
4. Nimble, Fully Internalized Process and Knowledge Base
HBCM is a nimble Fund by design. We built everything in-house – models, risk tools, portfolio management systems – allowing us to move from idea generation to rigorous due diligence to execution far faster than larger, siloed, or outsourced competitors. We believe our broad industry knowledge base, covering thousands of companies over nearly three decades, compounds this speed and conviction advantage. Larger funds often have investment committees that prioritize consensus, risk aversion, and institutional optics over decisive action, resulting in delayed decision-making that hinders the timely capture of market opportunities.
Boeing is a great example of HBCM’s agility. When we launched the Fund, Boeing was our smallest position given its fragile balance sheet and production quality issues. Shortly thereafter, its new CEO, Kelly Ortberg, made the difficult decision to raise $23bn of equity capital, giving the company ample runway to focus on fixing the quality of its manufacturing process. Despite the market’s initial negative response to material dilution, we viewed this capital raise as both a derisking event and tangible proof that new management would take a completely different approach to solving Boeing’s crisis. Immediately following the capital raise and the announcement of Boeing’s deliberate production ramp, we substantially increased our position, and it is a ~5% position today.
HBCM’s literature describes your style as “growth investors with a disciplined value orientation.” How do you balance high-growth opportunities with maintaining valuation discipline in your stock selection? Perhaps you could give an example of a company that you felt had strong growth prospects but that you only invested in once it reached an attractive price.
The Covid era (2020–2022) was a formative experience that directly shaped the way we manage money today. As senior analysts on a large global growth equity team, we were fortunate to cover, pitch, and own many of the era’s biggest winners - years before Covid. Many of these traditional growth stocks – like software, cloud, and ecommerce businesses - legitimately accelerated as shelter-in-place drove broad digital adoption. In 2021 share prices began to imply that these trends were permanent, and valuations detached from any reasonable fundamental outlook; yet most ‘quality growth’ funds failed to reduce exposure. The correlated reversal proved brutal: abrupt 50-90% declines in many market darlings erased careers of outperformance in 2022.
Those two years taught us, in the most visceral way possible, three enduring lessons. First, ignoring valuation in even the highest-quality, fastest-growing businesses can be fatal. Second, momentum and market correlations can turn a diversified basket of ‘unique’ single stocks into a highly correlated bet on market momentum. Third, bottom-up stock picking and top-down risk awareness are not mutually exclusive; they are essential complements. Although the 2021–2022 drawdown was painful, it crystallized our commitment to a process built around true all-weather portfolio construction and uncompromising single-stock price discipline.
HBCM intends to be an ‘all-weather’ Fund, rather than a boom-bust portfolio that only performs well in favorable market environments. The key lies in focusing on the portfolio’s behavior as a whole through disciplined, thoughtful portfolio construction. Our core growth holdings create business and market risk exposures, which we look to mitigate with select holdings that have defensive attributes. This portfolio insurance creates balance in the portfolio and gives us conviction to hold higher-growth, higher-valuation companies, because the aggregate portfolio has substantially less valuation risk than our highest-growth holdings.
We have developed an agnostic valuation methodology to enforce absolute price discipline on every holding: no company, no matter how exceptional, is immune from being trimmed or sold when its price outruns fundamental performance. Every position must justify its place with a compelling 3-5 year risk-adjusted expected return driven by value creation (FCF), not multiple expansion. Otherwise, we will wait on the sidelines until the valuation meets that condition.
Our company models translate directly into forward-return projections, and our proprietary portfolio return visualizer separates fundamental performance from valuation change. This framework keeps emotion out of the decision and is most valuable when markets are volatile.
Reddit is a textbook example. At the Fund’s launch in August 2024, we bought Reddit shares in the high $50s. By January 2025, the stock had quadrupled. Despite Reddit’s strong results, it became difficult to foresee a path to strong 3-year stock returns from $220 given its valuation expansion, so we dispassionately reduced our position. In early April amid the market sell-off, we were able to re-double our Reddit position in the low-$90s.
Even though Hartman Burke Capital is a relatively small fund, it seems that most of your investments are in large-cap stocks like Thermo Fisher, Airbus, and Netflix. Given the conventional wisdom that small-caps are the most mispriced, why have you decided to focus your investment research on larger rather than smaller companies?
Company size has no bearing on our research process, and the wide distribution of market capitalizations in the portfolio reflects that. Our largest and fourth largest positions have market caps below $20bn. Of our 35 holdings, eleven are sub-$50bn companies. Researching smaller, disruptive companies is extremely useful for large-cap research as market share gains tend to come at the expense of incumbents. Nothing gets us more excited than finding a ‘junior growth company.’
We believe in the conventional wisdom that small-caps are most mispriced; however, this holds true for individual companies, not a broad portfolio of small-caps. Over the past 3-, 5-, 10-, and 20-year vintages, large-caps portfolios have produced better portfolio returns, but the best single-stock returns tend to occur with small companies. Thus, rather than making a top-down bet, we are betting on the fundamentals of a select group of small companies.
Guardant Health is a great example: We bought a starter position in December 2024 at a ~$4bn market cap, having known the company since its IPO. We added selectively throughout 2025 as the company executed on the fastest-ever diagnostic launch to reach $100mn, raised its multi-year revenue outlook, and pulled forward its profitability targets. It is now a $13bn market cap company, a top 10 position for the Fund, and HBCM’s biggest $ contributor in 2025.
Larger companies often have defensible advantages that narrow the range of business outcomes relative to smaller companies. In general, smaller companies beget smaller position sizes in our portfolio, reflecting a wider range of outcomes. That said, we have no aversion to small cap companies growing into large positions when fundamentals fully warrant the ascent.
In your Q2 2025 letter, you noted that during the April market pullback (when trade war fears rattled stocks), you increased your stake in several high-conviction positions – effectively doubling down when many others were fearful. Can you walk us through your mindset in times of market volatility?
When market volatility rises, fear is the enemy. We view market downturns as the greatest opportunity to sow the seeds of future outperformance, but taking advantage requires decisive action. Confidence in swift action during these periods is derived from a deep understanding of the business, its economics, industry position, and the drivers of revenue growth. Conviction is built over years of due diligence. In April, we took advantage of the downturn by concentrating into our best ideas – our top 10 weighting increased from 41% to 51.5%. Most of these positions were in a 20-40% drawdown and had minimal direct tariff impact. Those actions we took in April have produced strong returns.