| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
The first quarter of 2026 was dominated by Operation Epic Fury, the joint US-Israeli military campaign against Iran launched February 28, which effectively closed the Strait of Hormuz and drove WTI crude oil up 77% for the quarter. This geopolitical shock accelerated an already underway rotation from expensive growth stocks to value stocks, with value outperforming growth in all three months. The S&P 500 declined 4.3% while energy stocks surged over 37%, led by ExxonMobil's 42% gain, while technology stocks like Microsoft fell 23%. The conflict pushed inflation to 3.3% and forced the Fed to hold rates steady at 3.50%-3.75%, with market expectations shifting from multiple rate cuts to just one for the year. Despite the uncertainty, Biondo views the rotation toward value as healthy and overdue, noting that corporate earnings remain solid and the inflation challenge is concentrated in energy rather than wages. The firm made portfolio adjustments during the quarter, with growth strategies underperforming while dividend strategies held up well.
The Iran conflict has fundamentally reset markets, driving energy prices sharply higher while accelerating a healthy rotation from overvalued growth stocks to value stocks, creating both challenges and opportunities in an uncertain environment.
The manager expects continued uncertainty driven by the Iran conflict duration and outcome. They anticipate Q1 GDP data and Fed meetings will be key catalysts. Corporate earnings will test company resilience to higher energy costs. Despite challenges, they see reasons for measured confidence including the healthy rotation to value stocks and solid corporate earnings.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 28 2026 | 2026 Q1 | - | energy, Fed policy, Geopolitical, inflation, Iran, Market Rotation, oil, value | - | Iran conflict drove oil up 77% and accelerated rotation from growth to value stocks. S&P 500 fell 4.3% while energy surged 37%. Fed held rates steady as inflation hit 3.3%. Biondo views value rotation as healthy correction despite geopolitical uncertainty. Growth strategies underperformed while dividend strategies outperformed during the quarter. |
| Jan 22 2026 | 2025 Q4 | - | AI, earnings, growth, inflation, rates, technology, Trade Policy, volatility | - | US markets delivered strong 2025 returns led by technology despite early volatility from inflation and trade concerns. Fed cut rates three times while maintaining restrictive stance. Corporate fundamentals stayed healthy with robust AI-driven investment. 2026 outlook hinges on persistent inflation pressures, labor market divergence, and earnings growth needed to justify higher valuations amid continued selectivity requirements. |
| Oct 24 2025 | 2025 Q3 | - | Capital markets, Economic Policy, Federal Reserve, Market Commentary, rates, tariffs, Trade Policy, volatility | - | Markets demonstrated exceptional resilience in Q3 2025, with the S&P 500 gaining 8.1% despite government shutdown and trade tensions. Fed rate cuts and broad sector participation supported the rally, while capital markets activity rebounded. However, escalating US-China trade disputes and prolonged shutdown risks require disciplined positioning and sector diversification going forward. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
OilWTI crude oil surged 77% during the quarter due to the Iran conflict and closure of the Strait of Hormuz. Brent crude rose from $61 to $118 per barrel, its largest inflation-adjusted quarterly increase since 1988. Energy stocks dominated Q1 with the S&P 500 energy sector surging over 37%. |
WTI Brent Strait of Hormuz Energy Stocks Iran |
ValueValue stocks outperformed growth throughout Q1, gaining about 1.3% while growth stocks declined over 8%. The shift toward value and away from overpriced growth stocks was viewed as a healthy and overdue correction. Value beat growth in each of the three months consistently. |
Value Stocks Growth Stocks Rotation Outperformance | |
InflationInflation rose to 3.3% over the past twelve months, with gasoline accounting for nearly three-quarters of the monthly gain. The Fed's preferred inflation measure was revised up to 2.7% for year-end 2026. The inflation challenge remains concentrated in energy rather than built into wages or services. |
CPI Fed Energy Costs Wages | |
RatesThe Fed held rates steady at 3.50%-3.75% with market expectations shifting from two to three cuts to just one cut for the year. Longer-term Treasury yields rose over the quarter with the whole curve moving sharply higher. Powell's term expires May 23, 2026 with Kevin Warsh as leading successor. |
Federal Reserve Treasury Yields Rate Cuts Powell | |
IranOperation Epic Fury launched February 28 as joint US-Israeli military campaign against Iran, targeting military facilities and nuclear sites. The conflict effectively closed the Strait of Hormuz and reset the investment landscape. The near-term outlook hinges on how long the conflict lasts and how it ends. |
Geopolitical Risk Military Campaign Middle East Conflict | |
| 2025 Q4 |
AIPershing Square views AI as a major driver of market performance and structural growth, particularly benefiting megacap technology companies. The firm has positioned in AI beneficiaries like Alphabet, Amazon, and Meta, seeing AI integration as a key catalyst for these businesses. They believe AI-driven earnings growth justifies higher market multiples for leading technology companies. |
Artificial Intelligence Technology Cloud Data Centers Machine Learning |
MegacapsThe firm has significantly increased exposure to high-quality, higher-growth megacap companies, believing they offer structurally superior growth at reasonable valuations. Pershing Square argues these companies have sustainable competitive moats and deserve higher multiples given their growth profiles compared to the broader market. |
Large Cap Technology Growth Market Leaders Quality | |
BuybacksPSH has repurchased 74 million shares representing 29.7% of initial shares outstanding at an average discount to NAV of 29%. Share buybacks contributed 1.2% to 2025 performance and remain a key strategy for addressing the discount to NAV. |
Share Repurchases Capital Allocation NAV Discount Shareholder Returns | |
DividendsPSH revised its dividend policy in Q2 2022 whereby dividends now increase with NAV. The quarterly dividend has increased 84% from $0.10 per share in 2019 to $0.1837 per share currently, representing a key component of total shareholder returns. |
Dividend Policy Income Shareholder Returns Capital Allocation | |
| 2025 Q3 |
RatesThe Federal Reserve cut rates by 25 basis points in September, marking a formal shift toward easier monetary policy. Updated projections suggest two or more additional cuts before year-end, with the 10-year Treasury yield moving up toward 4.1% and the 2-year yield near 3.5%. |
Federal Reserve Rate cuts Monetary policy Treasury yields Borrowing costs |
Trade PolicyThe US has threatened to impose 100% tariffs on Chinese imports beginning November 1, while China has expanded controls on rare-earth exports. These developments push trade narrative from latent risk to active front-runner in macro uncertainty, highlighting the importance of supply chain flexibility. |
Tariffs China trade Rare earths Supply chains Trade tensions | |
Capital MarketsConfidence has been gradually returning to deal-making, with companies pursuing mergers and acquisitions after a quiet start to the year. IPOs picked up in technology, healthcare, and clean energy, while credit markets showed improvement with companies issuing new bonds at more favorable rates. |
M&A IPOs Credit markets Bond issuance Deal making | |
VolatilityDaily swings in both equities and bonds have grown sharper as investors react to changing expectations around monetary policy, trade tensions, and fiscal uncertainty. Rather than viewing this as instability, it reflects markets adjusting to a new phase of the cycle. |
Market volatility Daily swings Policy uncertainty Market cycles Turbulence |
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