| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.6% | -8.3% | -8.3% |
Broadleaf's Growth Equity Portfolio declined 8.3% in Q1 2026 versus the S&P 500's 4.3% decline as markets grappled with three key headwinds. War in Iran created binary geopolitical risks affecting commodity markets and the Strait of Hormuz. Private credit market blowups raised systemic concerns, though experts view these as isolated credit cycle events rather than banking system threats. AI fatigue emerged among investors, particularly toward the Magnificent Seven, morphing into a Disruption Virus that decimated software valuations and stressed tech employment. Despite hyperscaler commitment to continued AI investment, investors question return adequacy while bidding up beneficiary sectors across energy, hardware, industrials, and financials. The manager notes the paradox of questioning hyperscaler spending while supporting spending beneficiaries. Given these binary paths and opposing market clues, the portfolio maintains a waiting strategy, lacking conviction to act on daily trade considerations. Historical analysis shows 25% of quarters experience declines, with 70% rebounding the following quarter, supporting patience during uncertain periods.
In an environment of binary risks including Iran war, private credit concerns, and AI fatigue, the manager adopts a patient waiting strategy while maintaining conviction that underlying fundamentals remain strong for technology spending beneficiaries and hyperscalers despite near-term uncertainty.
Manager adopts waiting strategy given binary market paths and lack of conviction. Expects continued rotational dynamics rather than outright cash raising. Believes fundamentals will remain strong for both AI spending beneficiaries and spenders.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 31 2026 | 2026 Q1 | - | AI, Credit Cycle, geopolitics, growth, large cap, private credit, technology | - | Broadleaf declined 8.3% in Q1 2026 amid Iran war, private credit blowups, and AI fatigue morphing into software sector disruption. Manager adopts waiting strategy given binary risks and lack of conviction despite daily trade considerations. Believes fundamentals remain strong for AI spending beneficiaries and hyperscalers long-term. |
| Jan 6 2026 | 2025 Q4 | NVDA, ORCL, PLTR | AI, Concentration, credit, growth, innovation, large cap, technology | - | Broadleaf posted solid 14.5% gains in 2025 despite Q4 weakness from AI bubble fears. The manager remains bullish on artificial intelligence as a generational technology still in early stages, maintaining concentrated growth positioning while acknowledging elevated risks and preparing for potential volatility in an increasingly capex-intensive economy. |
| Oct 6 2025 | 2025 Q3 | CI, COST, FE | AI, Fed policy, growth, inflation, large cap, rates | - | Broadleaf's Growth Equity Portfolio outperformed in Q3 2025 driven by AI and broad market strength. Rising inflation concerns since tariff announcements conflict with mixed employment signals, creating Fed policy uncertainty. The manager favors holding rates steady to preserve policy flexibility while maintaining focus on sustainable growth businesses rather than monetary policy speculation. |
| Jun 30 2025 | 2025 Q2 | PLTR | AI, growth, large cap, Patience, technology, volatility | - | Broadleaf delivered 21.3% in Q2 2025 during the Big Beautiful Bounce. The manager emphasizes AI and data organization themes, highlighting Palantir's ontology leadership. Despite market volatility and geopolitical uncertainty, patience remains the key investing virtue. The concentrated growth strategy focuses on large-cap positions while monitoring Economic, Innovation, and Credit cycles. |
| Mar 31 2025 | 2025 Q1 | - | consumer, earnings, Employment, growth, inflation, tariffs, uncertainty | - | Growth stocks suffered in Q1 2025's momentum unwind, but underlying fundamentals remain solid with strong earnings and stable employment. Policy-induced uncertainty from tariffs has reached crisis-level anxiety, yet the manager views this as temporary self-inflicted drama rather than structural economic weakness, maintaining long-term conviction despite elevated near-term risks. |
| Dec 31 2024 | 2024 Q4 | - | AI, Deregulation, growth, Politics, productivity, rates, tariffs, Valuations | - | Broadleaf delivered 31% returns in 2024 driven by AI innovation, Fed rate cuts, and political stability. The manager remains bullish for 2025, expecting strong earnings growth from AI productivity gains, lower inflation, and deregulation benefits. While watching for market melt-up risks, they believe current high valuations are justified by the bright fundamental outlook ahead. |
| Sep 30 2024 | 2024 Q3 | NVDA | AI, Cycles, growth, Housing, interest rates, semiconductors, technology | - | Broadleaf posted modest Q3 gains while maintaining long-term outperformance through concentrated growth investing. The manager sees opportunity in housing sector recovery driven by demographics and Fed easing, while managing AI exposure with discipline despite expected volatility. Three-cycle framework emphasizes economic normalization, credit easing, and innovation themes positioning for continued equity market leadership. |
| Jul 31 2024 | 2024 Q2 | AMZN, CSCO, MSFT, NVDA | AI, Concentration, growth, large cap, semiconductors, technology | - | Broadleaf delivered strong Q2 performance through concentrated exposure to AI and technology infrastructure plays. The fund draws parallels between today's AI boom and the dot-com era but sees better fundamentals this time. Despite macro headwinds, US tech offers the best growth opportunities in a scarce environment, with companies like Nvidia providing critical AI infrastructure. |
| Mar 31 2024 | 2024 Q1 | - | AI, growth, outlook, Philosophy, technology | - | Broadleaf delivered 15.5% Q1 returns through concentrated large cap growth investing. Manager sees AI as pivotal technology creating opportunities but warns of bubble risks. Maintains bullish outlook with earnings focus over Fed policy. Portfolio holds 25-35 positions targeting innovation and free cash flow generation while managing technological transition risks. |
| Jan 18 2024 | 2023 Q4 | MSFT, NVDA | Economy, Fed, innovation, Markets, rates, technology | - | Broadleaf Partners expects 2024 to bring continued economic expansion with potential Fed rate cuts, but believes innovation will drive market returns more than economic factors. AI transformed tech in 2023, and companies now face pricing pressure requiring innovation-driven growth. Political risks from the 2024 election and China's deflationary path pose key concerns. |
| Sep 30 2023 | 2023 Q3 | COST | AI, earnings, energy, Fed policy, growth, inflation, large cap | - | Broadleaf outperformed in Q3 with concentrated growth strategy focused on long-term earnings drivers over Fed policy. Manager bullish on AI productivity gains, reshoring trends, and energy transition creating unusual energy-technology leadership duo. Portfolio positioned for earnings-driven environment valuing free cash flow as credit cycle ends free money era. |
| Jun 30 2023 | 2023 Q2 | AAPL, AMZN, GOOGL, META, MSFT | AI, Cloud, growth, innovation, large cap, semiconductors, technology | - | Broadleaf Partners is betting big on AI as a transformative technology shift, concentrating in cloud giants Microsoft, Amazon, and Google plus semiconductor companies benefiting from massive AI CapEx spending. Manager sees AI providing both growth and defensive characteristics during economic uncertainty, positioning innovation cycle names to return to market leadership. |
| Mar 31 2023 | 2023 Q1 | - | Banking, diversification, growth, inflation, innovation, rates, technology | - | Broadleaf delivered solid Q1 returns while positioning for shifting growth leadership in an unusually uncertain environment. Manager emphasizes diversification over concentration given multiple plausible economic scenarios, expects persistent inflation and higher rates, and believes future growth areas will differ from recent patterns. Innovation and capital-intensive projects may drive solutions. |
| Dec 31 2022 | 2022 Q4 | - | diversification, earnings, Fed policy, growth, inflation, large cap, rates, Recession | - | Broadleaf declined 22.9% in 2022 due to Fed-driven multiple compression, not earnings weakness. Manager maintains high conviction in growth process and expects 2023 soft landing rather than recession. Portfolio diversified across sectors to capture opportunities in neglected economy areas while avoiding speculation in overfunded innovation sectors. |
| Sep 30 2022 | 2022 Q3 | - | diversification, Fed policy, growth, inflation, large cap, rates | - | Broadleaf outperformed in Q3 despite market turmoil, viewing Fed rate hikes as necessary medicine for inflation caused by years of excessive stimulus. The concentrated growth portfolio maintains sector diversification amid macro uncertainty, expecting broader market participation as geopolitical trends favor domestic themes. Strong long-term track record supports patient approach through current volatility. |
| Jun 30 2022 | 2022 Q2 | - | Concentration, energy, Fed policy, growth, inflation, large cap | - | Broadleaf's growth portfolio fell 20.3% in Q2 2022 amid broad market decline. Manager expects persistent inflation and higher rates to challenge growth stocks dependent on external financing. Strategy shifts toward companies with strong internal cash generation and dividend capacity. Maintains long-term growth conviction despite near-term headwinds from Fed policy and energy transition challenges. |
| Mar 31 2022 | 2022 Q1 | - | Buybacks, energy, growth, inflation, infrastructure, Onshoring, technology | - | Broadleaf sees fundamental regime shift from 40-year low inflation era to sustained inflationary environment favoring companies with pricing power over unprofitable growth. Energy replaces tech as market leader while massive onshoring and infrastructure spending positions economic cycle to drive returns. Portfolio positioned for potential Roaring Twenties-style boom as productivity unlocks from recent technological advances. |
| Dec 31 2021 | 2021 Q4 | AMZN, META, PTON, ZG, ZM | energy, financials, growth, inflation, Quality, technology, value | - | Broadleaf underperformed in 2021 as markets rotated from growth to value, with Energy and Financials leading gains. The manager is adapting with a barbell strategy combining quality profitable companies and selective innovation plays. They see opportunity in previously shunned sectors needed to build the renewable future, while remaining cautious on inflation and Fed policy. |
| Sep 30 2021 | 2021 Q3 | - | active management, Concentration, Economic Cycle, growth, innovation, large cap | - | Broadleaf Partners maintains conviction in active management despite recent underperformance, employing a barbell strategy of Economic and Innovation Cycle plays amid market leadership uncertainty. While acknowledging inflation and China risks, the manager expects long-term deflationary trends to persist through work-from-home productivity gains, positioning the concentrated growth portfolio for three to five year outperformance. |
| Jun 30 2021 | 2021 Q2 | F, NKE, SLB | Cycles, growth, innovation, large cap, Recovery, value | - | Broadleaf outperformed in Q2 as growth rebounded, but faces unprecedented uncertainty in market leadership amid inflation and rate volatility. While maintaining long-term conviction in Innovation Cycle companies, the manager is balancing exposure with Economic Cycle names until clarity emerges. Traditional companies embracing innovation trends like Nike's direct-to-consumer shift and Ford's EV pivot present opportunities. |
| Mar 31 2021 | 2021 Q1 | - | Cyclical, growth, innovation, Recovery, technology, value | - | Broadleaf maintains concentrated growth strategy despite cyclical rotation, believing long-term value accrues to innovators over cheap stocks. Expects 8-10% GDP growth in 2021 but anticipates return to pre-pandemic trends. Selectively added cyclical names with innovation characteristics while avoiding overexposure to unsustainable cyclicals. |
| Dec 31 2020 | 2020 Q4 | - | Fed policy, growth, innovation, rates, technology | - | Broadleaf delivered 42.3% returns in 2020 through concentrated growth investing focused on innovation, economic, and credit cycles. The Innovation Cycle is thriving post-pandemic, while ultra-low Fed rates create favorable conditions but risk inflating bubbles. Despite potential near-term consolidation, the path of least resistance for equities remains higher. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIAI fatigue emerged in Q1 2026 as investors grew exhausted with the space, particularly the Magnificent Seven. This morphed into a Disruption Virus decimating software sector valuations and stressing white collar tech employment. Hyperscalers continue aggressive investment despite investor concerns about adequate returns. |
Hyperscalers Software Disruption Technology Investment |
Private CreditHigher profile blowups in loans funded outside traditional banking caused concern from leaders like Jamie Dimon about systemic risks. Experts believe these are isolated events typical of credit cycles rather than systemic issues. Growing redemption requests reflect investor misunderstanding of liquidity value versus non-correlated returns. |
Credit Cycle Banking Liquidity Redemptions Systemic Risk | |
GeothermalWar in Iran emerged as a binary geopolitical risk affecting markets in Q1 2026. Opening the Strait of Hormuz is crucial to avoiding longer-term economic effects, particularly commodity inflation. Trump's willingness to change views and listen to markets provides uncertainty about conflict duration. |
Geopolitics Commodities Oil Inflation Binary Risk | |
| 2025 Q4 |
AIAI remains central to economic growth and portfolio positioning despite bubble concerns. Manager believes AI development is in infant stages requiring long-term investment, comparing it to the internet's transformative potential. Views current volatility as noise in a once-in-generation technology shift. |
Artificial Intelligence Data Centers Technology Innovation Productivity |
Capital MarketsFinancial sector led by banks has started outperforming for the first time in years. Debt markets both public and private are becoming more popular funding sources. Credit cycle contributing more significantly to economic growth as AI spending requires sustained capital investment. |
Banks Credit Debt Markets Financial Sector | |
Infrastructure SpendingMassive AI-related capex is driving economic growth across multiple sectors including industrials and financials. Manager sees this as necessary investment in America's future, contrasting with Wall Street's historical disdain for capital expenditure. Views capex as signal of opportunity from wealth creators like Larry Ellison. |
Capex Infrastructure Industrial Investment | |
| 2025 Q3 |
AIAI continues to be a main driver of portfolio performance and is accelerating globally. The AI boom is contributing to economic resilience and driving increased energy demand for new AI datacenters, which is reflected in elevated energy costs. |
Artificial Intelligence Data Centers Technology Growth Performance |
InflationInflation has been steadily increasing since tariff announcements in April and has not been below the Fed's 2% target since February 2021. Almost all measures of inflation are now running closer to 3% and trending upwards, with companies like Costco, Cigna, and First Energy noting elevated cost environments. |
Price Increases Cost Trends Monetary Policy Healthcare Costs Energy Costs | |
RatesThe Fed faces a challenging dual mandate of balancing employment with managing inflation. The manager debates arguments for and against further rate cuts, ultimately concluding they would adopt a wait-and-see posture to retain valuable dry powder for when the economy truly needs support. |
Federal Reserve Interest Rates Monetary Policy Employment Economic Policy | |
| 2025 Q2 |
AIThe manager discusses AI extensively, focusing on data organization challenges and the importance of human wisdom versus machine learning. Companies are struggling to organize their data for AI implementation, with Palantir highlighted as a leader in this space through their ontology process. The manager questions whether AI can develop human-like judgment and wisdom from experience. |
Data Palantir Ontology Machine Learning |
| 2025 Q1 |
EarningsQ4 2024 earnings were strong with 13% growth for large caps, beating expectations by 7%. 2025 guidance appears solid but conservative due to tariff uncertainty. Management teams are guiding prudently with expectations for a strong back half of the year. |
Guidance Expectations Growth |
InflationConsumer sentiment hit lowest levels since 2022 as consumers expect inflation to pick up again. Management teams indicated re-inflation fears may be justified with prices paid for goods beginning to trickle up. Latest data showed inflation trickling up month over month. |
Consumer Prices Re-inflation | |
Trade PolicyTariff uncertainty is creating significant business environment volatility. Companies are importing goods rapidly before tariff implementation, leading to negative Q1 GDP growth estimates. Economic policy uncertainty is near COVID and Great Recession levels due to tariffs and DOGE. |
Tariffs Uncertainty Policy | |
| 2024 Q4 |
AIInnovation and the prospect of productivity-enhancing AI technologies have driven valuations close to record highs. The manager believes AI could be a rather deflationary force that impacts future interest rate policy. Strong productivity gains driven by AI are expected to help support earnings growth in 2025. |
Productivity Innovation Deflation Technology |
RatesAfter a historically steep interest rate hiking cycle, the Fed finally began to lower interest rates this year. However, longer-term rates have risen as the Fed cuts short-term rates, causing the yield curve to steepen. The manager remains malleable on rate views given AI's potential deflationary impact. |
Fed Yield Curve Monetary Policy Borrowing Costs | |
Trade PolicyThe market has begun parsing winners and losers of proposed tariff policy and de-globalization. While tariffs may stoke inflation, the manager questions if they are more bark than bite, noting Chinese firms are already skirting tariffs through Mexico. Shifts will likely be gradual rather than an immediate unwind of globalism. |
Tariffs Globalization China Mexico Inflation | |
| 2024 Q3 |
AIAI remains one of the strongest growth themes despite quarterly volatility concerns for companies like Nvidia. The manager expects continued nail-biting quarters but recognizes AI's long-term potential if the new age of computing proves real. AI is viewed as a technology that levels the playing field for productivity across organizations of all sizes. |
Artificial Intelligence Data Centers Semiconductors Productivity Computing |
Semiconductor CycleThe semiconductor industry is identified as the primary beneficiary of AI spending but remains fundamentally cyclical. The manager acknowledges risks of peak earnings and expects continued volatility as the passage of time will likely not soothe investor fears about this cyclical business. |
Semiconductors Cyclical AI Spending Nvidia Peak Earnings | |
RatesInterest rate cuts have begun with the Fed successfully landing the plane without recession. Lower rates seem inevitable and could unleash capital from money market funds earning 5% into other assets. The manager sees this as reducing recession risk and potentially leading to a market melt-up scenario. |
Interest Rates Fed Policy Rate Cuts Monetary Policy Soft Landing | |
HomebuildersHousing activity could pick up after tough years, with the housing cycle feeling like it's in early stages of recovery. Demographic tailwinds including household formation, immigration, underbuilding, and aging in place provide strong support for homebuilders and the housing cohort. |
Housing Demographics Construction Recovery Tailwinds | |
| 2024 Q2 |
AIThe fund views AI as a trend worth investing in, comparing it to the dot-com boom. They see massive opportunities despite risks, noting that AI companies are driving the strongest earnings trends in an environment where growth is increasingly scarce. The fund believes AI will prove monetizable but acknowledges hiccups could create headaches for investors. |
Artificial Intelligence Machine Learning Data Centers GPUs Technology |
SemiconductorsNvidia is highlighted as the star of the AI boom with a stranglehold on the GPU market needed for training AI models. The fund draws parallels to Cisco during the dot-com era, noting that semiconductors represent the critical infrastructure for modern datacenters, similar to pickaxes during the gold rush. |
GPUs Chips Infrastructure Hardware Computing | |
Data CentersData centers are positioned as critical infrastructure for AI development, with companies investing heavily in datacenter buildouts. The fund notes that semiconductors, networking equipment, and energy solutions are essential for datacenter infrastructure, echoing the hardware investment needs of the early internet era. |
Infrastructure Cloud Computing Hardware Technology | |
| 2024 Q1 |
AIArtificial intelligence is gaining critical mass and reaching a pivotal point similar to the internet twenty-five years ago. The technology could result in massive changes to how society operates, driven by mimetic desire as seen in AI-related stock market themes. |
Artificial Intelligence Technology Innovation |
| 2023 Q4 |
AIArtificial intelligence rescued the entire tech sector in 2023, taking management teams by surprise. ChatGPT captured investor imagination and unleashed massive capital spending campaigns by companies like Microsoft on new data center architectures. The Innovation Cycle will likely have greater impact on returns than the Economic Cycle in 2024, as companies can no longer raise prices and innovation becomes more vital for market success. |
Data Centers Innovation Technology Capital Spending |
| 2023 Q3 |
AIManager views artificial intelligence as a key innovation cycle driver that should create topline opportunities for select companies and margin improvement for first movers. AI is positioned as a generational productivity step-function that could help the Fed achieve its goals. |
Artificial Intelligence Innovation Productivity Margins |
OnshoringEconomic cycle names are expected to benefit from reshoring efforts driven by heightened geopolitical concerns. This represents a structural shift requiring more labor-intensive capex than seen in decades. |
Reshoring Geopolitical Economic Cycle Capex | |
Energy TransitionManager expects disruptive forces to unlock new natural resource demands as key ingredients enabling transformations. Energy and technology shares are both expected to perform well over the longer term, an unusual leadership duo. |
Energy Technology Natural Resources Disruption | |
EarningsOver the long run, earnings and dividends drive the bulk of cumulative market returns, not interest rate changes. The manager envisions an earnings-driven growth environment that places higher value on clean accounting and free cash flow. |
Earnings Growth Free Cash Flow Long Term Returns | |
| 2023 Q2 |
AIManager views AI as potentially transformative, comparing it to the iPhone moment for mobile technology. Notes that while AI isn't new, ChatGPT represented a coming-to-Christ moment for value recognition. Expects early AI implementation through major cloud companies like Microsoft, Amazon, and Google, with massive CapEx spending driving growth in semiconductors and networking equipment. |
Machine Learning ChatGPT Language Models Cloud CapEx |
CloudManager identifies cloud companies as the primary beneficiaries of early AI implementation. Views Microsoft, Amazon, and Google as the key facilitators of AI technology deployment through their cloud infrastructure platforms. |
Infrastructure Microsoft Amazon Google AI Implementation | |
SemiconductorsManager sees semiconductor companies as direct beneficiaries of massive AI-related CapEx spending. Views this sector as having both growth potential and defensive characteristics that could insulate them from near-term economic uncertainty. |
Hardware CapEx AI Infrastructure Growth Defense | |
| 2023 Q1 |
InflationManager believes inflation is improving but mission not accomplished. Fed wants 2% but this may be unrealistic given geopolitical concerns and reversing globalization trend. Expects inflation won't pass as quickly as most hope, with rates remaining higher for longer. |
Inflation Fed Rates Globalization Geopolitical |
RatesManager expects interest rates will remain higher for longer. Views a pause in rate hikes as preferable to cuts, which usually signal economic hurricane. Believes monetary policy effective in restraining demand but less effective in resolving supply shortages. |
Interest Rates Fed Monetary Policy Economic Growth | |
Credit StressRecent bank failures including Silicon Valley Bank are viewed as additional restraint on economic growth but not enough to derail overall economy. Manager believes incidents will remain contained but acknowledges Lehman-like moments are always deniable until they become real. |
Bank Failures Silicon Valley Bank Credit Economic Growth | |
| 2022 Q4 |
InflationManager views inflation as a signal for where new productive capacity is needed, particularly in physical goods, real assets and manual labor areas that have been neglected. Sees inflation as natural outcome of pandemic disruptions and economic reopening. |
Inflation Supply Demand Capacity |
RatesFed rate hikes drove 2022 market decline through multiple compression rather than earnings weakness. Manager expects Fed to slow and pause hikes as inflation readings allow, but warns against premature pivot to rate cuts that could encourage speculation. |
Rates Fed Multiples Policy | |
EarningsEarnings remained strong throughout 2022 with forward estimates stable, suggesting market decline was purely valuation-driven. Companies successfully passed price increases to consumers, demonstrating earnings resilience despite macro headwinds. |
Earnings Growth Resilience Pricing | |
| 2022 Q3 |
RatesThe Fed is raising interest rates aggressively to combat inflation after years of keeping rates artificially low. The manager supports the Fed's resolve to bring down inflation through rate hikes, viewing this as necessary for long-term economic health despite short-term market pain. |
Interest Rates Fed Policy Monetary Policy Rate Hikes Inflation |
InflationInflation is described as the biggest threat to long-term economic prosperity. The manager believes excess monetary stimulus led to current inflation problems, similar to how forest fire suppression led to dangerous fuel buildup. They view the Fed's anti-inflation efforts as necessary despite market disruption. |
Price Stability Monetary Stimulus Economic Threat Fed Policy Long-term Risk | |
| 2022 Q2 |
InflationManager views inflation as persistent due to war effects, policy decisions that discourage new supply, and the challenge of transitioning to new energy sources while legislating the death of old ones. Inflation represents the new externality of current policy initiatives. |
Inflation Policy Energy Supply Externality |
Energy TransitionManager sees challenges in bridging the gap to new energy sources while simultaneously legislating the death of fossil fuels. Notes that few fiduciaries can invest in new capacity where there is intent to put them out of business over time. |
Energy Transition Fossil Fuels Policy Investment | |
RatesManager expects rates could continue increasing further than many expect as inflation may remain higher than recent decades. Fed put may be on pause while inflation remains high and employment healthy. |
Rates Fed Inflation Employment Policy | |
GrowthManager remains committed to growth investing but emphasizes growth at reasonable price approach. Notes that companies may need to rely on internally generated free cash flow and profits rather than external financing in this environment. |
Growth Valuation Cash Flow Profits Financing | |
DividendsManager believes the ability to pay dividends and buy back stock may become increasingly relevant in distinguishing the haves from the have nots as financing becomes more difficult. |
Dividends Buybacks Cash Financing Quality | |
| 2022 Q1 |
InflationManager sees inflation as a regime shift after 40 years of low inflation, driven by supply constraints and tight labor markets. Fed targeting 1.7 job openings per seeker ratio back to one-to-one through rate hikes. Inflationary environments can sustain for years, favoring companies with pricing power in supply-constrained environments. |
Inflation Fed Supply Pricing Power Rates |
OnshoringCompanies moving supply chains from lowest cost to most resilient, accelerated by pandemic and Ukraine war. Intel's $20B semiconductor plant in Columbus cited as example. Manager believes this trend will sustain as companies prioritize resilience over cost efficiency. |
Supply Chain Manufacturing Resilience Semiconductors | |
BuybacksCompanies returning cash to shareholders through tax-favored share buybacks have held up better than peers. Growth companies increasingly authorizing larger buybacks to support stocks in volatile times, moving beyond traditional value company dividend approach. |
Share Buybacks Cash Return Growth Companies | |
Infrastructure SpendingMassive capex planned across industries in US heartland. Housing market tight with millennials forming families demanding more homes. Environmental future requires massive infrastructure investments in commodities, earth moving equipment, and energy. |
Capex Housing Infrastructure Commodities | |
EnergyEnergy sector has led market gains while technology lagged, representing a shift from the traditional FAANG playbook. Manager notes energy as previously beleaguered sector now outperforming, indicating regime change in market leadership. |
Energy Sector Rotation Market Leadership | |
| 2021 Q4 |
EnergyEnergy sector set the pace for market gains in 2021 after being shunned by growth managers for years. Manager believes energy infrastructure will be needed to build the renewable future, and that relying completely on renewables before they are reliable enough may set innovation back. |
Oil Energy Transition Infrastructure |
FinancialsFinancials led market gains in 2021 alongside Energy and Real Estate. Manager notes that all investment in the future will require significant capital, and most loans will not be made in Bitcoin, suggesting traditional banking remains essential. |
Banks Capital Markets Credit | |
ValueManager believes value-bent sectors can exhibit strong growth characteristics and sees potential for both growth and value styles to do well simultaneously. Emphasizes shifting toward lower duration, highly profitable names given inflation and Fed taper concerns. |
Quality Dividends Earnings | |
InflationInflation continues to run hot and is a key concern driving portfolio positioning toward lower duration assets. Manager notes that with Fed taper concerns, a dollar today is worth more than a dollar tomorrow. |
Rates Liquidity Volatility | |
| 2021 Q3 |
InflationManager discusses the Fed's view that inflation would be transitory, but notes market concerns about wage pressures and supply chain shocks making inflation longer lasting. References economist Ed Yardeni's view of 70% chance of Roaring Twenties environment versus 30% chance of 1970s style stagflation. |
Inflation Stagflation Supply Chain Wages Fed Policy |
ChinaManager expresses concern about China's crackdown on tech entrepreneurs and the Evergrande situation, suggesting these may be evidence of unseen problems. Notes that weaning from China dependence may require massive new capex cycle but could prove bumpy. |
China Tech Crackdown Evergrande Geopolitical Risk | |
| 2021 Q2 |
Energy TransitionTraditional companies are pivoting to embrace energy transition trends, with examples like Schlumberger rebranding as an energy services company rather than just oil services. Ford is joining the EV craze as internal combustion engine manufacturers adapt to the future. |
Electric Vehicles Energy Services EV |
E-commerceInnovation has become critical for organizational survival, with companies like Nike going direct to consumer and relying less on traditional wholesale channels. This represents a fundamental shift in how companies reach customers. |
Direct to Consumer Retail Digital | |
SPACsThe manager is encouraged to see speculative areas like the SPAC craze take a breather in recent months. While funding new ventures is positive, the breadth of funding often leads to unsustainable venture formation and asset bubbles that must consolidate. |
Speculation Bubbles Consolidation | |
CryptoCrypto is mentioned alongside SPACs and meme stocks as speculative areas that have taken a breather. The manager views the froth coming off the boil as encouraging, similar to the broadening from growth to value stocks. |
Speculation Volatility Froth | |
| 2021 Q1 |
GrowthManager maintains focus on secular growth companies despite recent cyclical rotation. Believes long-term value accrues to innovators rather than cheap stocks. Portfolio holds concentrated growth positions with emphasis on innovation characteristics. |
Growth Innovation Technology |
ValueManager acknowledges recent value outperformance but remains skeptical of sustainability. Notes many value rallies over past decade have faded against technological change. Prefers mature growth companies as better value opportunities. |
Value Cyclical Cheap | |
| 2020 Q4 |
InnovationThe Innovation Cycle is thriving as individuals, companies and nations take advantage of the recent crisis to retool for a better future. Normal will look different than before, with potential elimination of traditional tools like cash, office space, and cars. |
Innovation Technology Disruption |
RatesThe Fed will keep rates lower for even longer hoping to encourage sustainably higher inflation. With interest rates remaining lower for longer, baby bubbles forming in some market areas could become far more extreme. |
Interest Rates Federal Reserve Monetary Policy |
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