| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | 23.6% |
| 2025 |
|---|
| 23.6% |
QV Investors sees a fundamental shift in market leadership away from the concentrated dominance of US technology stocks toward international markets, commodities, and financials. While the S&P 500 achieved its third consecutive year of double-digit returns, major rotations occurred within markets. The AI narrative shifted from the Magnificent 7 to hardware providers, with memory chip companies like Micron and Samsung surging 240% and 120% respectively. Canadian and international markets outperformed the US, led by financials benefiting from positive interest rates and commodities driven by gold's 64% surge. The manager believes current high valuations and record concentration in US markets signal lower future returns and higher volatility ahead. Opportunities exist in defensive sectors trading at historically low multiples, European cyclicals, and smaller capitalization companies globally. The firm maintains conservative positioning in fixed income while selectively investing in undervalued equities like Dollar General and transportation companies. This environment should favor active management over passive indexing, particularly benefiting QV's risk-adjusted value approach as market dispersion increases.
Market leadership is shifting away from expensive US technology stocks toward undervalued international markets, commodities, and financials, creating opportunities for active value-oriented investors in a new regime of lower concentration and higher dispersion.
2026 may yet prove to be another record year given central bank rate cuts, fiscal stimulus, and expected earnings growth. However, the manager believes the market is moving away from monolithic concentration toward greater dispersion, favoring active over passive investment and benefiting QV's risk-adjusted approach.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 12 2026 | 2025 Q4 | 005930.KS, 0700.HK, BABA, CAT, CNI, DG, FTT.TO, GOOGL, MU, NVDA, TPZ.TO, UNP | AI, commodities, Dollar, financials, gold, international, Market Concentration, value |
005930 KS DG FTT CN TPZ CN |
AI narrative shifted from Magnificent 7 to hardware providers building data centers. Memory chip providers like Micron and Samsung surged 240% and 120% respectively. Industrial… |
| Oct 8 2025 | 2025 Q3 | - | Balance Sheet Strength, Forward P/E, Multiple Expansion, Rate Cuts, risk management | - | Valuation: Equity rallies in the U.S. and Canada have leaned heavily on multiple expansion, with the S&P 500 at ~22.8x forward P/E and the TSX… |
| Jul 9 2025 | 2025 Q2 | - | diversification, Margin Of Safety, risk, valuation, volatility | - | The letter centers on elevated equity valuations and the risk of lower future returns driven by multiple compression. Management argues that diversification outside the U.S.… |
| Jan 8 2025 | 2024 Q4 | - | - | - | - |
| Jul 10 2024 | 2024 Q2 | - | - | - | - |
| Jan 10 2024 | 2023 Q4 | - | - | - | - |
| Jul 7 2023 | 2023 Q2 | - | - | - | - |
| Apr 6 2023 | 2023 Q1 | - | - | - | - |
| Jan 6 2023 | 2022 Q4 | - | - | - | - |
| Oct 7 2022 | 2022 Q3 | - | - | - | - |
| Jul 8 2022 | 2022 Q2 | - | - | - | - |
| Apr 8 2022 | 2022 Q1 | - | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
CommoditiesBull market may be in early stages with most commodities 46% below nominal peaks and 73% below inflation-adjusted highs. Commodity-to-equity ratio near historic lows suggests capital starvation. Current cycle appears only one-third complete compared to historical precedent. |
Cycles Capital Valuation Equities | |
FinancialsEuropean banks have been rehabilitated after years in purgatory, with returns of 77% in 2025. Return on equity has normalized above 12% following exit from ultra-low rates, while capital positions have been rebuilt. However, supportive factors are well-appreciated by markets, reflected in significant valuation re-rating. |
Banks Return On Equity Interest Rates Capital Valuations | |
GoldGold returned +65% in dollars in 2025, driven by broadening demand from central banks, professional and retail investors. Central banks now hold 24% of reserves in gold versus 23% in US Treasuries for the first time. Maintained 12% portfolio allocation throughout the year. |
Central Banks Reserves Diversification Demand | |
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 |
Macro |
|
| 2025 Q2 |
ValuationAI-related companies continue to command premium valuations while other sectors remain reasonably priced. This valuation divide continues to guide investment activity, with the fund remaining wary of companies trading at exceedingly high valuations that imply exceptional multi-year earnings growth. |
Premium Divide Discipline Stretched Reasonable |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 12, 2026 | Fund Letters | Mathew Hermary | 005930 KS | Samsung Electronics Co., Ltd. | Information Technology | Semiconductors & Electronic Equipment | Bull | New York Stock Exchange | AI, Memory, rerating, semiconductors, valuation | Login |
| Jan 12, 2026 | Fund Letters | Mathew Hermary | DG | Dollar General Corporation | Consumer Staples | Discount Stores | Bull | New York Stock Exchange | Discountretail, Margins, recovery, turnaround, valuation | Login |
| Jan 12, 2026 | Fund Letters | Mathew Hermary | FTT CN | Finning International Inc. | Industrials | Trading Companies & Distributors | Bull | New York Stock Exchange | AI, CapEx, Cyclicality, Equipment, infrastructure, rerating, valuation | Login |
| Jan 12, 2026 | Fund Letters | Mathew Hermary | TPZ CN | Topaz Energy Corp. | Energy | Oil & Gas Royalties | Bull | New York Stock Exchange | cashflow, dividends, energy, Optionality, Production, royalties, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| 005930.KS | Top gainers included Samsung (+38% in U.S. dollar terms) |
| 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 | Alibaba was a detractor during the quarter after the company reported mixed fiscal Q2 results. While cloud revenue growth accelerated and margins remained stable, the core commerce business struggled with slowing growth and significant profit pressure, particularly in the quick commerce segment where heavy investment and intense competition led to a sharp decline in profitability. |
| 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. |
| CNI | Today, QV holdings such as Canadian National Railway and Union Pacific trade at reasonable valuations and near record discounts to the broader market. As shipment volumes improve over time alongside economic growth, the ability to leverage volume and pricing power over a fixed cost base provides both reasonable long-term growth potential in addition to continuing capital returns to shareholders. |
| DG | Dollar General, the discount store chain, performed well in the quarter, as it delivered results ahead of market expectations and raised its guidance for 2026. Key to the investment case is improving profitability, and clear evidence of improvement in this area drove the share price gains. Dollar General announced 30% year-over-year operating profit growth, alongside 5% revenue growth, while also investing in store renovations and reducing its debt levels. We believe that with Todd Vasos back in charge and a proven playbook to execute, it can deliver steady revenue growth and margin gains over the long term. |
| FTT.TO | Shares of global heavy equipment distributor Finning rose after reporting quarterly results that were well above expectations |
| 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. |
| MU | Core gains were led by investments in the Technology sector including Micron |
| NVDA | AI bellwether NVIDIA's very strong set of earnings in late November helped the AI theme re-assert its dominance when investors breathed a sigh of relief following the results. |
| TPZ.TO | The QV Canadian Small Cap Strategy recently purchased shares in Topaz Energy Corp., an energy royalty and infrastructure business, trading at an attractive 7% free cash flow yield using conservative assumptions which the team feels can grow organic production at a mid-single digit pace in coming years. |
| 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 | |||
