Happy Friday!
In this week’s letters,
– Broyhill Asset Management on AI Investments;
– Van Der Mandele Arar Fund on Economy, Trump and Gold;
– Troy Asset Management on AI Valuation;
– Elevator pitches for MRK; ET; AMRZ
Quarter in progress: 789 fund letters of Q4 are live on our database!
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Q4 2025 INVESTOR LETTER SUMMARIES
- The surge in AI-driven infrastructure is a powerful force on par with the greatest capital investment cycles in history. Previous cycles, such as the build-out of railroads in the 1800s, electricity in the 1920s, and the late 1990ssurge in telecommunications infrastructure, required heavy investment to retool the economy for a new era.
- While it’s difficult to gauge where we stand in the current cycle, historical comparisons can provide some perspective and a dose of humility. It would seem the clock is ticking on this cycle. The boom, now entering its fourth year, is already mature and inline with historical buildouts, which typically peaked over a 4-6-year period (chart below).
- Meanwhile, consensus is that continued investments by hyperscalers will keep asset prices propped up, with consultants like McKinsey estimating global investment approaching $7 trillion by 2030.
- Donald Trump has selected Kevin Warsh to be the new Federal Reserve Chair. While he has a history of being an inflation hawk, it is also true that he was only hawkish when the U.S. president was a Democrat. Moreover, he has clearly expressed that he wants to lower interest rates significantly at the earliest convenient time, even as the Federal Reserve Board is keeping rates stable.
- I am inclined to repeat my commentary from two months ago. Trump will not get off stage voluntarily, just as he did not get off stage voluntarily on January 6, 2021. Either he finds a way to genuinely or disingenuously get re-elected, or he tries to cancel the elections or their results.
- Here, I am most contrarian. While an occupation of Greenland would have put a wrench in my optimism, the fact is that Trump backed down on this. For now, this removes a previously perceived risk from the table, which makes the change in outlook a net positive.
- Because we are holding such a substantial portion of our assets in gold miners, it makes sense to comment on what we think about the current price of gold.
- Sustained demand for gold, despite higher prices, is less surprising when one considers the damage being wrought on the alternatives. Diversification away from the incumbent reserve currency began over a quarter of a century ago, when U.S. dollars peaked as a share of global foreign exchange reserves in 1999.
- During the quarter, we attended an AI and technology conference in Arizona. Several people we met who are involved in the data center buildout confirmed two things. First, supply constraints are curtailing the pace at which infrastructure is currently being built. Second, as soon as compute capacity comes online, it is being used. This differs from the peak of the dot-com bubble, when “dark” fiber cables were being laid down, meaning they were installed well ahead of any need for utilization.
- The problem, however, lies in the economics. Valuations are elevated, and the most extreme pockets of excess appear in private markets. The latest proposed funding round for OpenAI reportedly values the company at $830 billion. That implied value is comparable to that of JPMorgan.
Q4 2025 TICKER TREEMAP
This quarter’s treemap of mentioned tickers (by Count)
ELEVATOR PITCHES BY FUNDS
Merck & Co. Inc. (by Antipodes Global)
- The company was boosted by positive clinical news, including FDA approval for a combined treatment with Astellas/Seagen’s Padcev, supporting continued Keytruda revenue growth ahead of its U.S. patent expiry in 2028.
- Positive mid-stage data for heart drug Winrevair further fuelled investor optimism, with Merck planning to advance the drug into Phase 3 development.
- Sentiment was also supported by the announcement of a US$700 million funding agreement with Blackstone Life Sciences to support development of sac-TMT, an experimental antibody-drug. These developments reinforced confidence in Merck’s pipeline depth and long-term growth prospects.
Energy Transfer (by Alpha Wealth Funds)
- Energy Transfer is a toll collector on America’s energy highways, earning money on volume rather than commodity prices. The partnership owns and operates over 105,000 miles of pipelines and significant storage capacity.
- Recent insider buying by Chairman Kelcy Warren, totaling over 4 million shares, reinforces conviction. ET is receiving inquiries from power plants and more than 70 prospective data centers seeking natural gas connectivity.
- With regulated, inflation-protected contracts and an approximately 8% yield, ET offers steady income and optionality tied to the AI-driven power demand surge.
Amrize (by Unison Asset Management)
- Amrize’s moat is process knowledge and long-term client relationships rather than technology leadership. It lives inside customer operations where replacement risk is more political than technical.
- Following the spin-off from Holcim, Amrize shares have lagged despite high-quality assets. U.S. housing softness masked underlying earnings power. We increased our stake in Amrize, supported by strong insider buying led by CEO Jan Jenisch, who purchased over 1.25 million shares on the open market. We believe Amrize offers significant upside as U.S. construction normalizes and management applies focused portfolio discipline.
HIGHLIGHT OF THIS WEEK
MEDIA APPEARANCES BY BSDs
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- Josh Kushner is the founder and Managing Partner of Thrive Capital. We cover the stories behind Thrive’s defining investments in Stripe and OpenAI, how a culture of entrepreneurship allows Thrive to stay small while making concentrated bets, and the family history and famous artists that have shaped his worldview.
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- As per reporting from Business Insider, the Greenlight Capital founder feels that gold could effectively replace U.S. Treasurys as the world’s primary reserve asset, or move so far that the proximity becomes virtually impossible to brush off.
- Einhorn lays out the argument that central banks aren’t treating gold as a dusty diversification tool and have been increasing their holdings at a healthy pace.
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- (In contrast to the bullish view expressed yesterday on the Fin TV show – see SLINK’s confident consumer outlook on @cnbc), we remain cautious on the consumer.
- This week we put on a three way pairs trade – long $AMZN/Short $COST $WMT.
This morning $WMT delivered weak guidance (I expect the shares to fall).
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