| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 13.7% | 2.1% | 13.2% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 13.2% | 7.5% | 24.2% | -25.7% | 27.5% | 34.9% |
Emerald's Focused Equity Strategy returned 13.2% net in 2025, driven by semiconductor leaders Applied Materials and ASML which benefited from massive AI infrastructure investment. The year began with Trump's tariff announcements triggering market corrections, but companies adapted through supply chain flexibility. AI dominated markets with record data center investments from OpenAI and Meta, driving semiconductor demand. The manager initiated positions in Broadcom for custom chip capabilities and Constellation Software as software valuations compressed. They also added Swiss quality names like DSM-Firmenich, Sika, and Straumann at multi-year valuation lows. While exiting overvalued positions in Alphabet and BlackRock, the strategy maintains focus on high-quality compounders with strong free cash flow generation and pricing power. Despite elevated market optimism and frothy valuations concentrated in tech stocks, the manager sees opportunities in unloved sectors and geographies, particularly China where regulatory overhang has lifted. The strategy emphasizes disciplined capital allocation toward businesses trading below intrinsic value with sustainable competitive advantages.
Focus on high-quality compounders with strong competitive moats trading at attractive valuations, particularly those generating strong free cash flow with high returns on invested capital that can compound value over time.
The manager expects continued market optimism driven by potential Fed rate cuts and AI infrastructure investment, but warns of elevated risk levels and lower long-term returns due to frothy market dynamics and high valuations concentrated in tech stocks.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 14 2026 | 2025 Q4 | 1179.HK, 8035.T, AHT.L, AMAT, AMZN, ASML, AVGO, BLK, CB, CSU.TO, DE, DEO, GOOGL, LMT, LSEG.L, MSFT, NOW, ORCL, SHEL, TMO | AI, China, Quality, semiconductors, technology, Trade Policy, value | - | AI dominated 2025 with massive data center investment announcements including OpenAI's $300 billion commitment and Meta's five-gigawatt Hyperion data center. The manager sees AI driving… |
| Sep 30 2025 | 2025 Q3 | - | - | - | - |
| Jun 30 2025 | 2025 Q2 | - | - | - | - |
| Mar 31 2025 | 2025 Q1 | - | - | - | - |
| 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 |
ChinaChina's economic rebalancing appears to be moving forward. Market liquidity, anti-involution and a measured consumer policy are likely to drive a sustained market performance in 4Q. Fiscal support and ongoing reforms in China is supportive of a stronger currency. |
Growth Policy Currency | |
SemiconductorsMACOM Technology Solutions rose nearly +40% as the company experienced broad-based demand, similar to many semiconductor companies in 2025. The team exited Astera Labs following industry conference presentations that suggested emerging competitive risks and concerns over single customer concentration, while initiating a position in Credo Technology for AI-connectivity exposure. |
Demand Competition Connectivity Customer Concentration | |
Trade PolicyTrade policy dominated 2025 with surprise tariffs on Canada, Mexico and China igniting inflation fears and fracturing the post-WWII trade order. The administration threatened sweeping 125% tariffs in April, the highest U.S. tariff rates since 1935, before stepping back to bilateral deals. This policy uncertainty drove demand for tangible assets as hedges. |
Tariffs Trade War Bilateral Inflation Policy | |
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 |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| 8035.T | Tokyo Electron did well in the quarter as related semiconductor production equipment companies also did well. |
| AHT.L | After receiving multiple requests, I'm doing my best to convince Alan Pirie, CEO of our offshore rental business Ashtead Tech, to join us this year. Alan is a powerhouse of a CEO, and I hope to report back with some good news on his attendance. |
| AMAT | AMAT was a top contributor in 4Q25 as semiconductor equipment stocks rallied on improving wafer-fab spending visibility. Management noted during its quarterly call that orders tied to AI-related capacity—particularly advanced logic and high-bandwidth memory—were tracking ahead of plan, leading to mid-teens growth in semiconductor systems revenue. Strength in services and spares also continued, with installed base revenues growing at a high single-digit rate. |
| AMZN | This quarter, we took profits in our hyperscaler portfolio companies (Amazon and Google) and increased our position in NVIDIA. |
| ASML | ASML, TSMC, and Arista Networks are key players in the AI build out supply chain. |
| AVGO | During the quarter, we initiated a below-average weight position in leading semiconductor and infrastructure software company Broadcom. Broadcom's ongoing transformation from a provider of custom ASICs to a full rack-scale solutions vendor, including scale-up networking, marks a significant improvement in its strategic positioning compared to earlier in the year. This strategic evolution has been validated by recent product launches, such as the Scale-up Ethernet solution, and committed orders from major customers like Anthropic. |
| BLK | We exited our positions in Alphabet, BlackRock and Tokyo Electron as their stock prices had reached levels in excess of their intrinsic value. |
| CB | Chubb is one of our core property & casualty insurance holdings. It is well-diversified across products and geographies. The company has consistently generated returns on equity comfortably ahead of the industry owing to a combination of running advantaged lines of business with a disciplined underwriting and operating culture. Pricing trends in the insurance markets have generally been strong in recent years, and consequently Chubb has been earning returns on tangible equity in the low 20s. While competitive forces may in time push that back toward a normalized level a few points lower, Chubb we believe would still be valued at 10–11x earnings looking out a few years. |
| CSU.TO | Broad pressure on the stocks of software companies enabled us to initiate a position in Constellation Software. This is a unique business we had on our radar for a long time but were never able to purchase due to its high valuation. At its core, the company is a permanent capital vehicle designed to acquire 'vertical market software' (VMS) businesses and hold them indefinitely. |
| DE | Deere treaded water as the market wanted AI momentum and not our names. |
| DEO | Examples include Tidewater, Valaris, Constellation Brands, Diageo and Trex. We have discussed TDW and VAL previously, as well as STZ and DEO here. |
| 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. |
| LMT | We also made a name swap within our defence and security sub-theme, funding the initiation of Lockheed Martin through the sale of Kongsberg Gruppen. We preferred Lockheed as a more direct play on defence, with meaningful exposure to missiles, air defence and space, supported by a large order backlog that provides strong long-term visibility. |
| LSEG.L | LSEG's shares were -20%. They are therefore illustrative of companies that have held back the Strategy's returns this year. Consistent with much of the rest of the portfolio, operating results remain solid. The company will almost certainly report double-digit growth in earnings for 2025, and the company has met or exceeded investors' expectations for the year. The challenges have not so much been financial but hypothetical – focussed on AI's potential to change competitive dynamics in their industry. LSEG is at 6.1% FCF yield. We have added to the Strategy's investments this year. |
| 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. |
| NOW | In the case of ServiceNow, the stock weakened following reports of a potential large acquisition while the company has also been challenged by bearish sentiment across the software as a service or SAAS segment. |
| 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. |
| SHEL | Global oil & gas producer and distributor |
| TMO | Thermo Fisher Scientific was a strong contributor with 8.69% ending weight and 1.47% contribution. |
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