| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Mondrian maintains a disciplined value-oriented approach across global equity markets following a strong 2025 where European stocks outperformed US markets for the fourth time since 2010. The firm sees compelling opportunities in non-US markets, which offer less concentration risk and broader stock-picking potential compared to AI-concentrated US markets. While European banks delivered exceptional 77% returns after rehabilitation from ultra-low rate purgatory, the firm maintains an underweight position given well-appreciated fundamentals and significant valuation re-rating. The AI investment boom continues with massive capital requirements, but debt-funded expansion adds systemic fragility given unproven economics. Currency appreciation is expected to support international returns, with major currencies still attractively valued against the dollar despite recent appreciation. The portfolio maintains overweight defensive positioning with returns driven by effective stock selection rather than sector allocation. Key risks include AI capex sustainability concerns and potential deterioration from current benign credit conditions. The firm focuses on identifying materially mis-priced securities with superior risk-adjusted return profiles through consistent application of disciplined valuation framework.
Non-US equity markets offer superior value opportunities with less concentration risk and broader stock-picking potential, while disciplined valuation-driven approach can identify mis-priced securities across global markets despite AI boom and financial sector strength.
The firm continues to see differentiated and compelling opportunities outside of the US, where valuations began at meaningfully lower levels. Non-US equity markets remain particularly attractive from a stock-picking perspective, offering less concentration risk and a broader opportunity set for valuation-driven investors. Currency appreciation is expected to further support long-term international returns.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 22 2026 | 2025 Q4 | 005930.KS, CAP.PA, GOOGL, MSFT, ORCL | AI, banks, Currency, Europe, financials, Global Equities, value | - | AI investment has accelerated with massive capital requirements for frontier model development. Hyperscalers fund build-out from free cash flow while AI startups strike extraordinary deals… |
| Sep 30 2025 | 2025 Q3 | OHAT LN, PEP | defensives, inflation, regulation, staples, Utilities | - | Defensives: Mondrian emphasizes a rotation into defensive sectors as cyclicals become overpriced relative to fundamentals. Scenario analysis shows improving risk-adjusted returns in defensives after years… |
| Jun 30 2025 | 2025 Q2 | 6201 JP | Debt, Governance, Japan, tariffs, volatility | - | Tariffs: The report opens with the shock of Trumps Liberation Day tariff regime, which triggered a 10%+ global selloff before partial reversals. Despite negotiations, effective… |
| Mar 31 2025 | 2025 Q1 | - | diversification, Europe, Fiscal, geopolitics, valuation | - | Europe: The letter argues Europes recent equity outperformance reflects a reassessment of excessive pessimism. Fiscal expansion in Germany, easing energy pressures, and potential Russia-Ukraine de-escalation… |
| Dec 31 2024 | 2024 Q4 | - | Concentration, Currency, Governance, Japan, valuation | - | Valuation: US equity valuations have expanded to a 60% premium over non-US markets. Mondrian argues that much of future return has been brought forward, increasing… |
| Sep 30 2024 | 2024 Q3 | - | Currency, Governance, Japan, Reform, valuation | - | Japan: Portfolios outperformed due to strong Japanese stock selection, with yen appreciation driving volatility. Mondrian stresses that Japan remains attractively valued with improving fundamentals and… |
| Jun 30 2024 | 2024 Q2 | - | AI, Concentration, Politics, risk, valuation | - | Politics: Elections in the UK and France produced stability but also reinforced political fragmentation. Markets reacted positively to the UKs pro-business Labour victory, while Frances… |
| Mar 31 2024 | 2024 Q1 | - | Concentration, liquidity, Passive, risk, valuation | - | Passive: The letter analyzes whether passive investing distorts markets, noting passive ownership of US equities may be closer to 40% when including internal indexing. Passive… |
| Dec 31 2023 | 2023 Q4 | - | Concentration, geopolitics, growth, risk, valuation | - | Growth: 2023 was dominated by the Magnificent Seven, with MSCI World Growth outperforming Value by over 25% (page 1). Returns became increasingly dependent on a… |
| Sep 30 2023 | 2023 Q3 | - | AI, Concentration, growth, risk, valuation | - | Growth: Despite macro uncertainty, global equities were lifted by strong US growth stocks, with the Magnificent 7 driving over 75% of US market strength (page… |
| Jun 30 2023 | 2023 Q2 | - | AI, Concentration, growth, risk, valuation | - | Growth: Equity markets were driven by strong macro data, optimism around soft landing, and rapid appreciation in high-growth names. The Magnificent 7 accounted for over… |
| Mar 31 2023 | 2023 Q1 | - | Banking, credit, liquidity, Recession, volatility |
META DELL 6758 JP 005930 KS 2330 TT |
Banking: The report outlines stresses in the US regional banking system driven by rapid deposit flight, losses in securities portfolios, and confidence shocks. Although Credit… |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
FinancialsEuropean banks have been rehabilitated after years in purgatory, with returns of 77% in 2025. Return on equity has normalized above 12% following exit from ultra-low rates, while capital positions have been rebuilt. However, supportive factors are well-appreciated by markets, reflected in significant valuation re-rating. |
Banks Return On Equity Interest Rates Capital Valuations | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q3 |
Staples |
|
UtilitiesThe utilities sector led returns in Q4 2025, with SSE delivering strong performance supported by its upgraded investment plan and improved visibility across regulated earnings and renewable infrastructure growth. The portfolio maintains an 8.9% allocation to utilities, representing a +5.3% overweight versus the benchmark. |
Regulated Utilities Renewable Infrastructure Investment Plan Earnings Visibility Infrastructure | |
| 2025 Q2 |
Debt |
|
JapanJapan offers tremendous value opportunities with one-third of companies trading below book value. Corporate governance reforms, record shareholder returns, and structural changes like unwinding cross-holdings are unlocking value. The investment opportunity is in early innings and could last several years. |
Corporate Governance Value Reforms Shareholder Returns Cross Holdings | |
Tariffs |
||
| 2025 Q1 |
EuropeThe firm is expanding European relationships and published research on European shareholder activism. They view Europe as an attractive alternative to expensive American markets and are building manager relationships in the region. |
Activism Shareholder Valuation Diversification Research |
| 2024 Q4 |
JapanJapan offers tremendous value opportunities with one-third of companies trading below book value. Corporate governance reforms, record shareholder returns, and structural changes like unwinding cross-holdings are unlocking value. The investment opportunity is in early innings and could last several years. |
Corporate Governance Value Reforms Shareholder Returns Cross Holdings |
| 2024 Q3 |
JapanJapan offers tremendous value opportunities with one-third of companies trading below book value. Corporate governance reforms, record shareholder returns, and structural changes like unwinding cross-holdings are unlocking value. The investment opportunity is in early innings and could last several years. |
Corporate Governance Value Reforms Shareholder Returns Cross Holdings |
| 2024 Q2 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
| 2024 Q1 |
BiotechBiotech companies rallied over 25% in the fourth quarter, driven by a series of high-profile biotech acquisitions by large pharma buyers. The managers generally avoid biotech stocks due to their highly binary nature, though they participate through investments in companies that sell products and services to biotech customers. |
Biotechnology Pharmaceuticals M&A Healthcare Binary Risk |
| 2023 Q4 |
MediaWarner Bros Discovery was the top contributor as multiple parties submitted acquisition offers, with Netflix acquiring the Streaming and Studios business while Global Networks spins to shareholders. Paramount Skydance made a $30 per share offer for the entire company, creating a bidding war that unlocked shareholder value. |
Streaming M&A Content Entertainment Bidding |
| 2023 Q3 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
| 2023 Q2 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
| 2023 Q1 |
BankingEuropean banking sector produced strong outperformance led by Bank of Ireland, Lloyds Banking Group, and CaixaBank. Sector returns supported by interest rate stabilization and yield curve steepening. The market is transitioning toward improving organic loan growth after fifteen years of stagnant credit activity. |
Regional Banks Money Center Banks European Banks |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jun 30, 2023 | Fund Letters | Aileen Gan | META | Meta Platforms, Inc. | Communication Services | Social Media & Advertising | Bull | NASDAQ | advertising, AI, Engagement, profitability, scale | Login |
| Jun 30, 2023 | Fund Letters | Aileen Gan | DELL | Dell Technologies Inc. | Information Technology | Hardware & IT Infrastructure | Bull | NYSE | AI, hyperscalers, infrastructure, Servers, valuation | Login |
| Jun 30, 2023 | Fund Letters | Aileen Gan | 6758 JP | Sony Group Corporation | Information Technology | Entertainment & Electronics | Bull | NYSE | AI, Content, Gaming, Image-sensors, Japan | Login |
| Jun 30, 2023 | Fund Letters | Aileen Gan | 005930 KS | Samsung Electronics Co., Ltd. | Information Technology | Semiconductors & Consumer Electronics | Bull | NYSE | AI, Cycle, Korea, Memory, semiconductors | Login |
| Jun 30, 2023 | Fund Letters | Aileen Gan | 2330 TT | Taiwan Semiconductor Manufacturing Company | Information Technology | Semiconductor Foundry | Bull | NYSE | AI, Foundry, Process-leadership, semiconductors, TSMC | Login |
| TICKER | COMMENTARY |
|---|---|
| 005930.KS | Selected technology-related companies held across several of our funds contributed for the quarter, particularly established franchises such as Samsung Electronics and Alphabet (Google). While the shares of both companies soared upward in price during the year, we believe they remain reasonably valued relative to their near-term growth prospects. |
| CAP.PA | Mondrian's disciplined, bottom-up valuation framework allows for selective exposure to AI-related opportunities while we maintain a focus on companies trading at compelling valuations, with limited balance sheet risk, such as Capgemini and Samsung outside the US and Microsoft and Alphabet within the US. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| ORCL | Investor enthusiasm for Oracle's stock in calendar year 2025 was initially driven by several multi-billion-dollar contracts it signed with leading AI companies, including OpenAI and Meta. However, in Q4 sentiment for ORCL's growth prospects shifted to skepticism, as investors began to scrutinize the return profile of the substantial capital investments required to support the approximately $500 billion of contracts signed by Oracle. Given the widening range of potential outcomes associated with Oracle's elevated capital needs, we reduced our position in ORCL during Q4. |
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