| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
M&G's Q1 2026 outlook highlights market polarisation as the defining feature, with investors ricocheting between hype and hesitation in response to geopolitical and economic uncertainty. Quality stocks suffered their worst relative decline in developed markets in over two decades, creating opportunities for selective investors. The firm maintains neutral allocation between equities and fixed income, with preference for Asia and Europe over the US. In AI, they expect opportunities to broaden beyond enablers to beneficiaries and providers, while remaining selective about frothy valuations. The widest US Growth-Value gap in decades presents rebalancing opportunities as AI moves from builders to users. Key risks include concentration in US Growth stocks, geopolitical tensions, and AI valuation bubbles. Catalysts include expected Fed rate cuts, AI technology evolution, and corporate reforms in Japan. The team is taking advantage of quality stock de-rating across regions while managing government bond exposure tactically. Portfolio positioning emphasizes selectivity and diversification over broad macroeconomic bets in this low-visibility environment.
Markets have become increasingly polarised with investors ricocheting between hype and hesitation, creating opportunities for active managers willing to look through narratives and focus on fundamentals, particularly in quality stocks that have been unfairly de-rated and AI-related investments with genuine business models.
2026 is expected to be equally complex with equities and bonds sending conflicting signals driven by geopolitical tensions, Trump's pressure on the Fed, private credit concerns, and upcoming US mid-term elections. The team maintains an opportunistic mindset when sentiment seems exaggerated and short-term noise overshadows long-term fundamentals.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 15 2026 | 2025 Q4 | 000660.KS, 005930.KS, 0700.HK, 2308.TW, 2317.TW, BABA, BE, EXPN.L, GOOGL, LITE, LSEG.L, NVDA, REL.L, STX, TSM, WDC | AI, geopolitics, Polarisation, Quality, semiconductors, technology, value | - | AI remains a dominant theme with opportunities broadening beyond enablers to beneficiaries and providers. The team expects AI-related investment opportunities to encompass an increasing number… |
| 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 | |
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 | |
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 |
|---|---|
| 000660.KS | SK Hynix has solidified its leadership in high-bandwidth memory (HBM), emerging as the exclusive HBM supplier for Microsoft's in-house AI accelerator and securing roughly two-thirds of NVIDIA's anticipated HBM4 demand for its next-generation platforms at meaningfully higher price points and margins than prior generations. |
| 005930.KS | Selected technology-related companies held across several of our funds contributed for the quarter, particularly established franchises such as Samsung Electronics and Alphabet (Google). While the shares of both companies soared upward in price during the year, we believe they remain reasonably valued relative to their near-term growth prospects. |
| 0700.HK | Shinya also visited Shenzhen, where Star Magnolia Capital organized an educational visit for our families to Tencent's headquarters, alongside meetings with several promising early-stage companies. |
| BABA | our Asian investments performed strongly with Alibaba and Jardine Matheson up 63% |
| BE | Bloom Energy is a provider of solid oxide fuel cells that play a critical role in delivering clean, reliable, always on power at scale. AI data centers require an enormous amount of power and one of the key challenges to date has been the inability of power grids to supply the necessary electricity to meet the constant and growing demands from AI workloads. Bloom's Energy Server fuel cells help address this issue, generating cost-efficient, reliable power onsite, converting fuels like natural gas, biogas and hydrogen into electricity without combustion. During the quarter, the company announced better than expected results with added optimism from a $5B partnership with Brookfield as the preferred onsite power provider for the company's global AI factories. |
| EXPN.L | Experian's shares were -1% in 2025. 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. Experian is valued on a prospective 4.5% equity FCF yield. We have added to the Strategy's investments this year. |
| 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. |
| LITE | Lumentum is a leading supplier of lasers to the AI ecosystem. The stock rallied due to strong demand for its products in hyperscale and AI data centers, along with general apparent optimism surrounding AI infrastructure stocks. |
| 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. |
| NVDA | Capital spending from Google, Microsoft, Amazon, Meta, OpenAI, and more have led to Nvidia becoming the Rrst 5 trillion market cap company. |
| REL.L | fears around AI-driven disintermediation led to notable sell-offs in a number of UK quality 'darling' names such as RELX, Experian and the London Stock Exchange Group |
| STX | Some of our top performing closed positions: STX 53% |
| TSM | ASML, TSMC, and Arista Networks are key players in the AI build out supply chain. |
| WDC | The fund maintained an overweight position in technology hardware, storage & peripherals company Western Digital. Early in 2025, the company announced a strategic spin-off separating its flash division as SanDisk, while Western Digital focused primarily on the hard disk drive (HDD) market, allowing the company to be valued as a standalone HDD leader. The continued surge in AI infrastructure demand massively boosted the demand for high-capacity HDDs, and Western Digital benefited from an increase in purchase orders from major hyperscalers extending into 2026 and even 2027. |
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