| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
ClearBridge Value Strategy underperformed in Q4 2025 despite value outperforming growth, as healthcare declines offset technology and materials strength. The team's valuation discipline was challenged by the economy's unexpected resilience and market's rapid dismissal of volatility shocks from Chinese AI model DeepSeek and President Trump's Liberation Day. However, this crucible has sharpened positioning for 2026. Value spreads remain at historic extremes, trading in the cheapest 10% of history relative to growth, creating a probability gap with meaningful upside potential. The catalyst for value's escape will ironically come from AI adoption, as 2026 becomes the year AI must justify massive capital investment through broader economic diffusion. The portfolio holds faster-growth companies at lower valuations than the Russell 1000 Value Index, with 20% expected earnings growth versus high single digits for the benchmark, while trading at less than 15x forward earnings versus over 18x for the index. Positioning focuses on AI adoption in underpriced sectors, real assets for inflation protection, and companies generating strong free cash flow with solid balance sheets.
Value spreads at historic extremes create meaningful upside potential for valuation-driven investors as AI adoption broadens economic benefits beyond technology stocks, while the portfolio compounds higher growth at lower valuations than benchmarks.
The team believes 2026 forecasts suffer from recency bias with consensus expecting a slightly improved version of 2025. They see opportunities from valuation discipline in a market priced for narrow outcomes, particularly as AI adoption must justify massive capital investment through broader economic diffusion. The portfolio is positioned for multiple scenarios with faster-growth companies at lower valuations than the index.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 15 2026 | 2025 Q4 | 300750.SZ, ARGX, CELH, CHTR, CMA, CORT, FCX, FI, FITB, GPN, ICE, META, MTB, MU, NEM, OM, PYPL, SLGN, TLN, WBS | AI, financials, gold, healthcare, materials, semiconductors, technology, value |
FITB PYPL |
AI adoption is expected to broaden economic benefits in 2026, requiring justification of massive capital investment. The team sees opportunities in AI adoption across sectors… |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
GoldGold returned +65% in dollars in 2025, driven by broadening demand from central banks, professional and retail investors. Central banks now hold 24% of reserves in gold versus 23% in US Treasuries for the first time. Maintained 12% portfolio allocation throughout the year. |
Central Banks Reserves Diversification Demand | |
SemiconductorsRGA initiated a position in Lattice Semiconductor, viewing it as an under-appreciated AI winner with immediate gains and longer-term optionality. Lattice's focus on efficiency and advantages in low-power, small footprint FPGAs position it favorably for AI servers, particularly as the only Post-Quantum Cryptography secure chips on the market. |
FPGAs Security Efficiency AI Infrastructure Programmable | |
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 |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 15, 2026 | Fund Letters | Brian Angerame | FITB | Fifth Third Bancorp | Financials | Regional Banks | Bull | NASDAQ | banking, Digitization, Loan_Growth, M&A, ROE | Login |
| Jan 15, 2026 | Fund Letters | Brian Angerame | PYPL | PayPal Holdings, Inc. | Financials | Transaction & Payment Processing Services | Neutral | NASDAQ | Competition, ecommerce, growth, Margins, Payments | Login |
| TICKER | COMMENTARY |
|---|---|
| 300750.SZ | CATL alone commands 38% market share in global lithium-ion battery production |
| ARGX | Shares of argenx SE contributed to performance, rising 14.0% during the fourth quarter and finishing 2025 up 37.8%. Argenx is a leading biotechnology company best known for developing Vyvgart, the leading FcRn inhibitor for the treatment of autoimmune conditions. Sales of Vyvgart continue to progress well in Generalized Myasthenia Gravis (Generalized MG) while the Chronic Inflammatory Demyelinating Polyneuropathy (CIDP) launch is also off to a strong start. |
| CELH | One such idea that we bought in the last quarter is Celsius Holdings. We will refrain from a full writeup today, given Elliot recently presented at MOI Global's Best Ideas 2026 Conference. |
| CHTR | Weakest performers included Charter Communications (-24%) |
| CMA | During the quarter, long-time Fund holding Comerica became subject to activist shareholder pressure to maximize shareholder value through a sale process. Shortly thereafter, Comerica became the subject of a takeover offer by larger regional bank, Fifth Third Bancorp. To be very blunt, Comerica has not been a particularly well-run bank, in our view. However, it was quite a decent investment for the Fund, in no small part because we materially added to our position during the Spring 2023 regional banking crisis. The takeover transaction led to Comerica producing one of the Fund's larger contributions to performance during the quarter and we have since exited the investment. |
| CORT | Corcept Therapeutics is a biopharmaceutical company focused on developing drugs that modulate cortisol activity, with its flagship product Korlym approved for Cushing's syndrome and a growing pipeline in oncology and metabolic disorders. We feel Corcept is at an inflection point as it expands beyond its core indication, driven by promising Phase 3 data for relacorilant in adrenal cancer and other indications. However, during the quarter, the stock was pressured due to concerns about slower Korlym sales growth and uncertainty around timing of pipeline approvals. |
| FCX | Freeport McMoRan was able to recover the share price drawdown seen in September following a major mudflow event at their Grasberg mine, which resulted in a full suspension of production and a material cut to guidance. The share price finished 2025 at its high. |
| FI | Notable detractors from performance came from Fiserv (-43bps absolute and -39bps relative) |
| FITB | We continued to harvest gains by trimming Fifth Third (FITB) to 6% NAV. While we remain constructive on the sector's ability to steadily generate 10%+ earnings yield, valuations have expanded, and credit underwriting standards are gradually easing. |
| GPN | Global Payments shares fell as the company announced the acquisition of payment processing company Worldpay. Due to reduced conviction in the investment thesis, we sold our position earlier in the year. |
| ICE | Intercontinental Exchange (ICE) is a long-term holding and remains a top 10 position in the Fund. ICE's share price has been under pressure, largely due to AI-related concerns. The share price has already recovered 15% from recent lows. |
| META | On January 9, Meta Platforms unveiled a new agreement with Vistra—the largest generator of competitive electricity in the United States—as well as with TerraPower and Oklo. The announcement builds on Meta's agreement last year with Constellation Energy and positions the company to become one of the largest corporate purchasers of nuclear-generated electricity in the United States. |
| MTB | M&T has a low-cost deposit base and is overcapitalized, which should support a step-change in buybacks and dividends, in our opinion |
| MU | Core gains were led by investments in the Technology sector including Micron |
| NEM | Newmont delivered +18% performance over the quarter, contributing meaningfully to portfolio returns as gold gained another 12%, taking its 2025 gains to an extraordinary 64%. |
| OM | This was by far the biggest loser for the quarter, as the company missed earnings and experienced a massive sell-off that was, in our opinion, most likely compounded by significant tax-loss selling by some very large institutions that seemed to become price insensitive towards year-end. OM closed 2025 at $3.71/share and bottomed around $3.30/share in 4Q25, despite the fact it had $4.55 of net cash per share on the balance sheet and current assets less all liabilities was $7.11/share. We feel the company is on track to do about $125M in sales, of which a good portion consists of high-margin recurring revenue. For all these reasons, we substantially increased our position in OM during the third and fourth quarters, making it the largest position in our fund. Thankfully, the share price decline has reversed in early 2026 and the stock has now rebounded to $5.50/share as of Jan 15, 2026 following a positive earnings preannouncement. |
| PYPL | By looking at their Rnancials, FactSet, PayPal, Adobe, and Salesforce seem to be doing Rne. The market, however, is reading subdued revenue growth as a sign of increased competition on their core oSerings. These companies' outlooks look more di'cult than their past. |
| TLN | Our power basket performed well with Talen Energy doubling. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
