| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
| 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|
| 11.2% | 19.2% | -11.2% | 23.0% | 6.6% |
Fiduciary Management maintains their disciplined approach to quality investing amid a challenging market environment dominated by AI speculation and a junk rally favoring low-quality stocks. The firm highlights concerning market dynamics, including record valuations, massive AI capital spending that may not generate attractive returns, and underlying economic weakness masked by AI-driven growth. Despite their portfolios generating solid double-digit returns over the past three years, they have underperformed broader indices due to the market's current preference for speculative investments over quality businesses. FMI emphasizes their focus on companies with sustainable competitive advantages, strong balance sheets, and returns on invested capital above cost of capital. They present three investment examples: Hayward Holdings in pool equipment, Accenture in IT consulting positioned to benefit from AI adoption complexity, and Smiths Group undergoing portfolio transformation. The firm views current market conditions as historically anomalous and maintains confidence that their quality-focused approach will outperform over time, particularly when market conditions normalize and downside protection becomes paramount.
FMI maintains discipline in buying quality businesses with sustainable competitive advantages at reasonable valuations, despite current market preference for speculative AI-related investments and low-quality stocks.
FMI maintains a cautious but confident outlook, viewing the current market preference for low-quality stocks as a historical anomaly. They believe better days lie ahead for their quality-focused approach and continue to find attractive investment opportunities despite the challenging backdrop.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 11 2026 | 2025 Q4 | ACN, CAT, HAYW, JPM, MSFT, NVDA, SMIN.L, UNP | AI, Bubble, Capex, Quality, small caps, technology, value | - | AI has driven massive market concentration with 42 AI-related stocks representing 45% of S&P 500 market cap and accounting for 78% of returns since ChatGPT… |
| Oct 14 2025 | 2025 Q3 | BDX, OMF | Artificial Intelligence, Market Bubble, Mega Caps, risk management, valuation | OMF US | The letter warns that record-high valuations and narrow market breadth signal speculative excess, driven by AI and mega-cap tech concentration. It compares the current AI… |
| Jun 30 2025 | 2025 Q2 | NSIT | dislocations, earnings, Margin Of Safety, valuation, value |
NSIT MAS |
The letter underscores a valuation-driven approach that seeks to exploit temporary dislocations between price and intrinsic value. Management highlights that elevated market multiples and narrow… |
| Apr 14 2025 | 2025 Q1 | ALLE, FCFS | - | - | - |
| Dec 31 2024 | 2024 Q4 | ALLE, OMC | - | - | - |
| Sep 30 2024 | 2024 Q3 | ARMK, DG | - | - | - |
| Jun 30 2024 | 2024 Q2 | DGX, HSIC | - | - | - |
| Apr 15 2024 | 2024 Q1 | SCHW | - | - | - |
| Jan 14 2024 | 2023 Q4 | BJ, CARR | - | - | - |
| Oct 21 2023 | 2023 Q3 | SYY | - | - | - |
| Jun 30 2023 | 2023 Q2 | CDW, RHI | - | - | - |
| Mar 31 2023 | 2023 Q1 | AVY, FERG | - | - | - |
| Oct 25 2022 | 2022 Q3 | AVY, BLK, CMCSA, FERG | - | - | - |
| 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 |
QualityThe portfolio has shifted toward higher quality businesses with better profitability, lower leverage, and less volatile earnings. Quality stocks underperformed significantly in 2025, creating attractive entry points for value investors. The manager maintains price discipline while seeking quality companies trading at discounts to intrinsic value. |
Quality Profitability Leverage Earnings | |
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 | |
| 2025 Q3 |
Market Sentiment |
|
| 2025 Q2 |
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 14, 2025 | Fund Letters | Jonathan T. Bloom | OMF US | OneMain Holdings, Inc. | Financials | Consumer Finance | Bull | NYSE | buybacks, consumer finance, Credit, dividends, growth, Lending, resilience, valuation | Login |
| Jun 30, 2025 | Fund Letters | Jonathan T. Bloom | NSIT | Insight Enterprises Inc. | Information Technology | Electronics & Computer Distribution | Bull | NASDAQ | buybacks, cloud, IT services, Modernization, scale | Login |
| Jun 30, 2025 | Fund Letters | Jonathan T. Bloom | MAS | Masco Corp. | Industrials | Building Products & Equipment | Bull | NYSE | brands, Free Cash Flow, home improvement, Remodeling, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| ACN | Accenture is the world's leading IT consultant, with advantages stemming from their depth and breadth across products, geographies, and industries. Over the last four years, Accenture's valuation has roughly halved. They've faced headwinds in IT spending and suffered from the perception that they are an AI loser. We believe that AI will cause deflationary pressure in parts of their business, but that it will be more than offset by the work required for enterprises to adopt AI. This is recently evidenced by partnerships with OpenAI and Anthropic. |
| CAT | Construction + Mining at low mid-cycle levels; dealer destock largely complete. Non-Residential + manufacturing starts inflecting (manufacturing starts 5X trailing 12-month average in June). Pricing Re-Accelerating, inventories bottoming → classic machinery trough signals. De-Globalization + OBBB tailwinds (bonus depreciation = ~700bps spend tailwind). Five Prior Cycles = ~150% avg alpha vs. S&P 500® Index from trough to peak. |
| HAYW | Hayward Holdings is a leading global pool equipment manufacturer, primarily serving the residential pool market. North America accounts for 85% of sales and over 90% of profits. The company estimates that 80% of total sales come from their existing installed base of pools (50% repair and replacement), making the business relatively resilient to economic cycles. They have a solid balance sheet, strong management team, and reasonable valuation multiple, particularly given their depressed earnings. |
| JPM | JPMorgan (JPM) has identified 42 AI-related stocks in the S&P 500, which today represent 45% of the index's market cap. They estimate that these stocks have accounted for 78% of S&P 500 returns, 66% of earnings growth, and 71% of capital spending growth since ChatGPT launched in November 2022. As it relates to the impact on the U.S. economy, JPM estimates tech sector capital spending contributed 40%-45% of U.S. GDP growth through the first 9 months of the year, up from less than 5% during the same period in 2023. |
| 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. |
| NVDA | Capital spending from Google, Microsoft, Amazon, Meta, OpenAI, and more have led to Nvidia becoming the Rrst 5 trillion market cap company. |
| SMIN.L | Smiths is making tangible progress in its transition toward a more focused, higher-performing portfolio of industrial technology businesses. The pro forma company (John Crane and Flex-Tek) is positioned for structurally higher growth, margins, and returns than the legacy conglomerate. Their improved growth and profitability profile is complemented by a pristine balance sheet and substantial shareholder returns. While the shares have performed well recently, Smiths continues to trade at a modest valuation relative to its fundamental outlook and at a discount to its estimated break-up value. |
| UNP | Union Pacific, the largest freight rail operator in the western United States, has announced plans to merge with Norfolk Southern, one of its major eastern counterparts. If approved, the merger would create the first coast-to-coast rail network in the U.S. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
