The BuySide Digest

• Recent price action has left the market as concentrated as it has ever been, and arguably even more concentrated than it appears, because the profits of many leading companies are tied to AI infrastructure spending. Valuation gaps between winners and losers have widened to historic extremes, while many high-quality businesses now trade at historically cheap multiples.
• In my view, today’s market offers as many opportunities and risks as I can remember. If you believe that earnings drive stock prices over the long term, then the trade in unprofitable companies should eventually reverse. It remains open to debate whether the AI trade will persist, but for now it largely represents a single bet on how much capital expenditure five companies will commit to building data centers.
• If you own the small-cap index, you are becoming increasingly exposed to both AI-related capital spending and unprofitable companies. In a historically concentrated market that is heavily levered to a single theme, I believe the value of an actively managed portfolio will become increasingly clear. That brings me to a business update for Headwaters Capital.

Giverny Capital Asset Management

• Financial markets delivered a relatively uneventful fourth quarter. Even the longest-ever U.S. federal government shutdown failed to shake market confidence. The S&P 500 stayed within a few percentage points of where it began the quarter. It ended with a small gain. Interest rates and credit spreads were similarly dormant. Both continue to imply a relatively optimistic outlook for the economy and corporate profits over the medium term.
• Although the U.S. labor market clearly weakened over the course of 2025, and lower-income households are increasingly struggling to make ends meet, the Atlanta Fed currently estimates U.S. economic growth for the fourth quarter will come in at a heady 3.7%. The Atlanta Fed expects healthy contributions from both household consumption and private non-residential fixed investment.
• The AI investment boom continues to be an important source of strength for the U.S. economy. Over the past few weeks, Big Tech companies have announced plans to spend more than $660 billion on capital expenditures in 2026, mostly for AI chips and data centers. That is up almost 80% over the already gargantuan amount those companies invested in 2025. The AI investment boom stimulates economic growth through both the direct impact of AI-related investments and the wealth effect of soaring values for public and private AI-related equities.

ACATIS Investment

• My theory, though I’ll admit it’s unproven, is that if, as it appears, we are in a bull market for African frontier equities, liquidity should, all else equal, improve. There will be more buyers and sellers taking a closer interest in frontier African equities and putting more money to work.
• There has also been a proliferation of new investment fund products in Tanzania, spawning new demand for equities. What’s missing is IPOs. We are hopeful that, as the bull market gathers steam and valuations climb, some privately held businesses, or government-owned enterprises, may be attracted to list.
• The message, I think, is that, yes, definitely, everyone should be concerned about currency depreciation when investing in Frontier African markets. But these are not the only currencies where big depreciations can happen. Look at the yen. It’s lost a whopping 31.5%, or 6.9% per annum, in the time we’ve been running the Fund.

Cove Street Capital

• First, I offer profound apologies to Joni and to her dark yacht-rock devotees under the sun, wherever they may sail. From the quote above, I have a guess about what they might think about artificial intelligence.
• Warren will stay on as chairman indefinitely, and he will be in the office daily. Slowing down at 95, particularly with reading, stepping away from day-to-day responsibilities must be bittersweet. I am sure Warren always believed he would go out in the proverbial pine box, just as Charlie did at age 99 in late November 2023, only 34 days shy of his 100th birthday.
• The active, value-oriented investor should have prospective advantages over the broad stock market at secular peaks and secular plateaus. That investor should also have advantages against capitalization-weighted stock indices trading at lofty valuations. The bursting of the late 1990s dot-com and communications bubble proved a terrific time to launch Semper Augustus.

Hayden Capital

• 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.

Troy Asset Management

• 2025 was a fantastic year for those invested in the public markets, with roaring equity performance and strong fixed-income returns across geographies and sectors. In China, 2025 was marked by on-again, off-again trade negotiations with the United States. Those negotiations included a face-to-face meeting between President Donald Trump and President Xi Jinping on the sidelines of the October APEC Summit in South Korea, which was the first such meeting since 2019.
• More broadly, 2025 challenged many traditional economic assumptions and models. The year was marked by elevated volatility driven by government policy, including tariffs and a federal shutdown.
• An anticipated inflation spike tied to the unexpected tariff regime never materialized. Instead, many companies heavily frontloaded inventories to mitigate the impact on corporate earnings, which contributed to sharp swings in quarter-over-quarter GDP growth projections.

Alpine Capital