| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.9% | -3.7% | -3.7% |
Emerald's Focused Equity Strategy returned -3.57% gross in Q1 amid geopolitical volatility from Iran tensions. The core thesis remains compounding wealth through high-quality businesses bought below fair value. Defense and energy holdings performed well, with TotalEnergies and Shell contributing 1.2pp and 1.1pp respectively as oil prices surged 75% on Strait of Hormuz concerns. Lockheed Martin and BAE added 1.2pp and 0.7pp on increased defense spending. Software stocks detracted significantly in the SaaSapocalypse, with Microsoft, Constellation, Salesforce and ServiceNow down 23-32% despite strong fundamentals. The manager views this as opportunity, adding to software positions while taking defense profits. Key risks include prolonged Middle East disruption and private credit stress as major managers gated funds. The strategy maintains its long-term approach, focusing on businesses that can compound through various market cycles. Portfolio changes included initiating Tencent and exiting Applied Materials, Adobe and Service Corp while trimming positions where margin of safety diminished.
Compound wealth by selecting high-quality assets bought for less than they are worth — businesses with the ability to grow their earning power and return meaningful capital to shareholders for many years to come.
The manager maintains a long-term focus on compounding wealth through high-quality assets bought below fair value, emphasizing patience through periods of turbulence. They continue scouting for great businesses and will act decisively when Mr Market offers the right price.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 31 2026 | 2026 Q1 | 0700.HK, BAESY, CRM, CSU.TO, LMT, MSFT, NOW, SHEL, TTE | AI, defense, energy, Geopolitical, private credit, Quality, software, value | 0700.HK | Emerald's concentrated strategy returned -3.57% in Q1 as Iran tensions boosted energy and defense holdings while software stocks crashed in AI fears. The manager opportunistically added to quality software names trading below fair value, viewing the SaaSapocalypse as indiscriminate selling. Long-term thesis unchanged: compound wealth through high-quality businesses bought at attractive prices. |
| 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 | - | Emerald delivered 13.2% returns in 2025 led by AI-driven semiconductor winners Applied Materials and ASML. The manager initiated quality positions in Broadcom and Constellation Software while adding undervalued Swiss names. Despite frothy market conditions and tech concentration risks, they maintain disciplined focus on high-quality compounders with strong cash generation trading at attractive valuations in unloved sectors. |
| Sep 30 2025 | 2025 Q3 | 1211.HK, AHT.L, AMAT, AMZN, ASML, AVGO, BABA, BLK, CB, GOOGL, HTHT, ICE, LMT, LSEG.L, MDT, META, MSFT, NVDA, ORCL, SHEL, TMO | AI, Bubble, China, Cloud, infrastructure, semiconductors, technology, Valuations | - | Emerald delivered solid Q3 returns while maintaining disciplined value approach amid AI bubble conditions. Strong performance from Alibaba and Alphabet offset weakness in financial infrastructure names. Portfolio repositioning involved trimming overvalued positions and adding undervalued Chinese companies plus defensive names. Manager emphasizes capital preservation over speculation, expecting mean reversion to reward patient, disciplined investing approach. |
| Jun 30 2025 | 2025 Q2 | ALD.AX, ALL.AX, APZ.AX, BHP.AX, BSL.AX, CBA.AX, CHC.AX, CSL.AX, EBO.AX, GMG.AX, MQG.AX, NCK.AX, NWSA, RMD, SOL.AX | active management, Australia, banks, gold, Valuations, volatility | SOL.AX | Airlie underperformed in Q3 due to CSL and EBOS earnings disappointments while expensive ASX 200 valuations concern managers. Despite challenging conditions with 20.7x forward P/E driven by Big Four banks, they continue finding selective opportunities and view high volatility as advantageous for active management focused on intrinsic value. |
| Mar 31 2025 | 2025 Q1 | 300750.SZ, 6920.T, BABA, CLS, CRM, HAL, HIMS, ICE, ISRG, KGHM.WA, KRN.DE, KVUE, LRCX, PEP, TSM, UMC.PA, UNH, UPWK, VNA.DE, ZAL.DE | AI, Argentina, Germany, global, semiconductors, value | - | ACATIS posted strong September gains driven by AI infrastructure leaders including Lam Research, TSMC, and Lasertec. Added Salesforce and Celestica positions capitalizing on AI efficiency trends. Sees compelling opportunities in Argentina's radical economic reforms despite political risks. German digitalization initiatives provide modest optimism. Maintains focus on technology leaders with sustainable advantages while navigating global trade and political uncertainties. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
OilBrent crude rose 75% during the quarter approaching $120 a barrel due to Iran situation and potential Strait of Hormuz blockade removing 15 million barrels daily. Physical markets show stress with TotalEnergies trading Middle Eastern cargoes above $160. Higher oil prices should deliver windfall profits to energy companies. |
Brent Crude Iran Hormuz Energy |
DefenseDefense stocks performed well with ongoing depletion of ammunition and equipment across active theaters adding to order books. NATO allies increasing defense budgets under Trump pressure drives demand for defense systems. Business model now requires heavier investment and more risk than previously. |
NATO Ammunition Equipment Military Conflict | |
AIHyperscalers spending over $600 billion on capex in 2026, up 36% from 2025, benefiting semiconductor and infrastructure suppliers. Software stocks sold off in SaaSapocalypse as investors priced in AI disruption. AI transforming economics through improved ad targeting and enterprise workloads. |
Hyperscalers Capex SaaS Disruption Enterprise | |
Private CreditLeading asset managers including Blackstone, BlackRock and Blue Owl forced to gate funds facing heavy redemptions. Clients anxious about honest asset marking following high-profile bankruptcies of First Brands and Tricolor. At $2 trillion, not systemic but creates nervousness in interconnected system. |
Gating Redemptions Bankruptcies Marking Systemic | |
| 2025 Q4 |
AIArtificial intelligence enthusiasm supported large-cap growth companies and drove technology-led earnings growth. Much of today's technology-led earnings growth is supported by long-term capital investment in AI, energy, and infrastructure reflecting demographic pressures and labor scarcity. |
Artificial Intelligence Technology Investment Growth |
ValuationsEquity valuations remain elevated with the S&P 500 trading near 23x forward earnings, well above its long-term average of roughly 15.6x. Elevated valuations do not imply an imminent market downturn but tend to constrain longer-term returns and may increase market sensitivity to earnings disappointments. |
Valuations Earnings Risk Market | |
EarningsStrong corporate earnings, particularly within technology and communication services, drove market gains. Current valuation levels suggest returns will depend more on earnings durability and cash-flow generation than on further multiple expansion. |
Earnings Corporate Technology Growth | |
DollarA weaker U.S. dollar, down 9.4% in 2025, provided a notable tailwind for foreign assets and helped international equities meaningfully outperform U.S. markets for the first time in several years. |
Dollar Currency International Performance | |
RatesThe Federal Reserve cut rates by 25 basis points in December, bringing the policy rate to 3.5%-3.75%. The Fed cut rates three times in 2025 and currently expects one more cut in 2026, while markets are pricing in roughly two additional cuts. |
Federal Reserve Interest Rates Monetary Policy | |
| 2025 Q3 |
AIAI is driving massive infrastructure investments by cloud computing leaders and enterprises developing large language models. The scale of investments is staggering, with OpenAI committing $300 billion over five years for data center services. However, progress in monetizable end-use applications remains limited, creating a concerning gap between infrastructure spending and revenue-generating applications. |
Data Centers Cloud Infrastructure LLM |
ChinaThe regulatory environment has shifted dramatically since 2023, with Beijing moving from crackdown to active support. Chinese companies like Alibaba, BYD, and H World offer compelling value propositions with strong fundamentals and attractive valuations. The market has consolidated for many years while underlying businesses have developed their franchises and expanded profitability. |
Regulatory Valuations E-commerce Electric Vehicles Hotels | |
ValuationsThe S&P 500's price-to-earnings multiple has increased substantially and now ranks at the 93rd historical percentile. Valuations for AI-related stocks have become particularly stretched, creating a dangerous situation with little room for error where much of the anticipated value is already priced in. |
Multiples Risk Bubble Overvaluation | |
| 2025 Q2 |
GoldGold price outperformed S&P 500 by 30% year-to-date, only happening twice before in history during major market stress periods. Historical correlation between gold price and US real yields has broken down, coinciding with Russia-Ukraine war and Western nations freezing Russian central bank funds as central banks accelerate reserve diversification away from USD. |
Gold Reserve Diversification USD Central Banks Monetary Policy |
AustraliaS&P/ASX 200 continues to look expensive relative to history with forward P/E of 20.7x, much driven by Big Four banks. Despite elevated index valuations, attractive pockets of risk-reward remain with portfolio tilted accordingly. Extraordinary high volatility across ASX 200 during reporting season provides opportunities for active managers. |
ASX 200 Valuations Banks Volatility Active Management | |
| 2025 Q1 |
AIAI infrastructure driving strong performance in wafer equipment manufacturers and data center suppliers. Companies like Lam Research, TSMC, and Bloom Energy benefiting from AI expansion. Salesforce reducing workforce due to AI efficiency gains. |
Data Centers Semiconductors Infrastructure Automation Cloud |
SemiconductorsStrong performance from semiconductor equipment makers including Lam Research (+33.5%), Lasertec (+28.5%), and TSMC (+20.5%). TSMC maintaining technological leadership and pricing power in AI supply chain with capacity constraints justifying price increases. |
Semi Equipment Foundries Memory Chip Designers Manufacturing | |
ArgentinaRadical economic reforms under President Milei showing early success with inflation dropping from 300% to 30% and fiscal balance achieved. Investment opportunities emerging in banking, oil and gas sectors despite high political risk. |
Reform Inflation Banking Oil Political Risk | |
GermanyNew federal government implementing digital transformation measures including electronic vehicle registration, 24-hour company establishment, and regulatory simplification. Small but concrete steps toward modernization and efficiency. |
Digitalization Reform Regulation Efficiency Government |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31, 2026 | Fund Letters | Emerald Wealth Partners - Focused Equity Strategy | 0700.HK | Tencent Holdings Limited | Internet Content & Information | Interactive Media & Services | Bull | New York Stock Exchange | advertising technology, Artificial Intelligence, China, cloud services, Digital Ecosystem, e-commerce, Gaming, Mobile payments, social media, super app, Value, WeChat | Login |
| Sep 30, 2025 | Fund Letters | Emerald Wealth Partners - Focused Equity Strategy | SOL.AX | Washington H. Soul Pattinson | Financials | Asset Management & Custody Banks | Bull | ASX | Cash generative, Defensive portfolio, diversified holdings, investment company, long-term returns, Management Tenure, merger, net cash, outperformance, permanent capital | Login |
| TICKER | COMMENTARY |
|---|---|
| TTE | TotalEnergies contributed 1.2 pp to portfolio performance, with stock up 40.6%. Higher oil and gas prices should deliver windfall profits that more than offset any operational disruption in the Middle East — so long as the global economy avoids recession. Events like these serve as a reminder of how central these companies remain to the world's daily functioning. |
| SHEL | Shell contributed 1.1 pp to portfolio performance, with stock up 27.8%. Higher oil and gas prices should deliver windfall profits that more than offset any operational disruption in the Middle East — so long as the global economy avoids recession. Events like these serve as a reminder of how central these companies remain to the world's daily functioning. |
| LMT | Lockheed Martin added 1.2 percentage points to performance, with stock up 26%. Ongoing depletion of ammunition and equipment across active theatres will add to already well-furnished order books. We made our first purchase in October 2023, when it was an overlooked asset — critical to democratic societies, with decent returns on capital, strong cash generation and disciplined shareholder returns, yet priced as though none of that mattered. Conflict on European soil and President Trump's pressure on NATO allies to increase their defense budgets have since driven demand for the company's systems sharply higher. However, the rising stock price has reduced the margin of safety. The additional demand also comes with a twist: a business model that now requires heavier investment and more risk than Lockheed used to carry. We took some profit in both positions. |
| BAESY | BAE added 0.7 percentage points to performance, with stock up 26%. Ongoing depletion of ammunition and equipment across active theatres will add to already well-furnished order books. However, the rising stock price has reduced the margin of safety. The additional demand also comes with a twist: a business model that now requires heavier investment and more risk than previously. We took some profit in both positions. |
| MSFT | Microsoft detracted 1.5 pp from performance. None was spared by the software sell-off, with stock down between 23% and 32% in the quarter, despite revealing good revenue and profit growth in their latest results. We view that as an opportunity. Microsoft is not simply a vendor of code — they are woven into how large organizations manage customers, workflows, data, permissions and day-to-day operations. Replacing them is not like changing an app. It is more like reinventing how the whole enterprise functions. |
| CSU.TO | Constellation Software detracted 1.2 pp from performance. None was spared by the software sell-off, with stock down between 23% and 32% in the quarter, despite revealing good revenue and profit growth in their latest results. We view that as an opportunity. Constellation specializes in niche, mission-critical vertical software where deep domain knowledge is everything. In each of its hundreds of verticals, Constellation is typically the first port of call when customers seek to adopt new technology. The value of that distribution model and those relationships does not diminish as AI advances; if anything, it increases. Constellation is also, at its core, an acquisition vehicle — one that has compounded value over decades through an almost obsessive discipline around acquisition price. A market sell-off and tighter funding conditions mean more motivated sellers and less competition, giving Constellation more opportunity to redeploy its growing cash flows into deals that meet its above 20% return targets. At 13 times free cash flow, we are paying a low price for that compounding machine. |
| CRM | Salesforce detracted 0.9 pp from performance. None was spared by the software sell-off, with stock down between 23% and 32% in the quarter, despite revealing good revenue and profit growth in their latest results. We view that as an opportunity. Salesforce is not simply a vendor of code — they are woven into how large organizations manage customers, workflows, data, permissions and day-to-day operations. Replacing them is not like changing an app. It is more like reinventing how the whole enterprise functions. |
| NOW | ServiceNow detracted 0.6 pp from performance. None was spared by the software sell-off, with stock down between 23% and 32% in the quarter, despite revealing good revenue and profit growth in their latest results. We view that as an opportunity. ServiceNow is not simply a vendor of code — they are woven into how large organizations manage customers, workflows, data, permissions and day-to-day operations. Replacing them is not like changing an app. It is more like reinventing how the whole enterprise functions. |
| 0700.HK | We initiated a position in Tencent. The stock is down roughly 30% from its recent peak, back to the level at which it traded six years ago when the company was grossing a profit half of what it is now, and trades at about 14 times net earnings. Tencent is China's dominant digital ecosystem. Everything flows through WeChat — a super-app combining messaging, payments, content and commerce that functions more like a mobile operating system than a social platform. With 1.3 billion monthly users, any service built on WeChat inherits its user base instantly. The model is self-reinforcing: engagement generates transaction data, data improves ad targeting, better ads deepen merchant activity, strengthening WeChat Pay, which makes WeChat more central to daily life. Beyond its operating businesses, Tencent holds minority stakes across China's digital economy gaining distribution access and competitive intelligence without full operational ownership. We think Tencent's P&L does not fully reflect the company's true underlying earning power. First, advertising monetization remains structurally underexploited. WeChat's ad load is deliberately kept well below industry peers, and as closed-loop capabilities mature the runway for improvement is substantial. Second, the recent launch of Mini Shops represents an emerging e-commerce franchise of real scale, embedding transactional commerce natively within WeChat's social graph. Finally, we think AI is quietly transforming the economics of the core business: Hunyuan is already driving measurable lift in ad targeting and content recommendations, Tencent Cloud is scaling profitably on enterprise AI workloads, and agentic AI solutions embedded across WeChat's mini program ecosystem could unlock an entirely new monetization layer. |
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