| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Templeton & Phillips capitalized on Q1 2026 market volatility driven by the U.S.-Israeli conflict with Iran and subsequent Strait of Hormuz closure affecting 20% of global oil supply. The managers view geopolitical disruptions as creating investment opportunities unavailable under calmer circumstances. They added to existing positions and initiated new holdings including Canadian National Railway, positioned to benefit from LNG supply shifts as Iran's attack on Qatar's facility destroyed 14% of Middle Eastern LNG capacity. The firm also purchased e.l.f. Beauty following a 34% selloff, attracted by its 6.2% free cash flow yield and positioning for trade-down consumer behavior in a K-shaped economy. Small-cap stocks present particular value with Russell 2000 and S&P 600 trading at 6.6x and 4.2x cash flow versus S&P 500 at 16.5x, representing one of the widest valuation gaps in 26 years. The managers maintain their disciplined approach of purchasing quality long-term fundamentals during periods of fear and volatility.
Market dislocations from geopolitical events create bargains for disciplined long-term investors focused on quality fundamentals at discounted valuations, particularly in overlooked small-cap stocks and companies positioned to benefit from structural supply chain shifts.
The managers expect continued market volatility driven by geopolitical factors but view this as creating opportunities for long-term investors. They anticipate persistent consumer cost pressures will favor budget-conscious spending habits and trade-down behavior. The LNG supply disruption is expected to provide multi-year tailwinds for North American producers, particularly those with strategic infrastructure positioning.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 21 2026 | 2026 Q1 | CNI, ELF | energy, geopolitics, LNG, oil, small caps, Trade Down, value, volatility |
CNI ELF |
Templeton & Phillips exploited Q1 geopolitical volatility to purchase quality companies at discounted valuations. Key additions include Canadian National Railway benefiting from LNG supply disruptions and e.l.f. Beauty positioned for consumer trade-down trends. Small-cap valuations present exceptional opportunities with Russell 2000 trading at historic discounts to large caps. |
| Oct 20 2025 | 2025 Q3 | AAPL, AMD, AMZN, AVGO, BB, BKS, GOOGL, IBM, META, MRVL, MSFT, NOK, NVDA | AI, Capex, credit, industrials, productivity, small caps, technology, value | - | Managers see AI capex boom creating dotcom-style bubble risks but remain positive on spillover opportunities. Their process targets small-cap industrials and energy firms trading at generational discounts, positioned to benefit from $7 trillion AI investment multiplier effects. Focus on strong balance sheets, operating leverage, and compelling valuations in companies enabling AI transformation rather than direct players. |
| Jul 22 2025 | 2025 Q2 | BN | Currency, Dollar, global, Hard assets, infrastructure, real estate, tariffs, volatility |
BN BN |
USD weakness reflects overvaluation correction from unsustainable fiscal policies. Managers favor hard assets like Brookfield Corporation for currency protection, benefiting from real estate's inflation hedges and AI data center growth. With massive capital deployment capacity, Brookfield is positioned for the global infrastructure capex cycle while offering downside protection in volatile markets. |
| Apr 18 2025 | 2025 Q1 | AMZN, BN.PA, FFH.TO, HDB, IBN, UMG.AS | Banking, Bargains, India, Quality, Selloffs, tariffs, value |
HDB IBN |
Templeton and Phillips capitalize on tariff-driven market selloffs to acquire quality companies at bargain prices. They added ICICI Bank alongside existing HDFC Bank position, viewing India's rapidly growing economy as reminiscent of early successful investments in Japan and South Korea. The strategy focuses on long-term value creation through purchasing high-quality firms during periods of market panic and uncertainty. |
| May 3 2024 | 2024 Q1 | AAPL, AMZN, BAH, CACI, GOOGL, META, MSFT, NVDA, PANW, TSLA | AI, Cloud, cybersecurity, defense, small caps, technology, value |
AMZN CACI |
Templeton & Phillips targets AI opportunities beyond big tech, holding Amazon as strategic AI leader and adding CACI International for cybersecurity exposure. Amazon trades at attractive 11.9x cash flow despite multiple growth engines, while CACI offers 41% discount to peers amid accelerating cyber threats. AI's early-stage industry impact creates quiet opportunities in undervalued small-caps. |
| May 1 2024 | 2023 Q4 | MSFT | China, dividends, inflation, international, Quality, small caps, value | - | Value-focused managers see 2022's market turmoil as creating fertile investment landscape. Portfolio concentrated in quality companies with strong balance sheets purchased during March 2020 panic. Now finding compelling opportunities in international equities and U.S. small caps at historic discounts to S&P 500. China reopening provides additional catalyst for consumer holdings. |
| Oct 25 2023 | 2023 Q3 | AMZN, BRK-A, FFH.TO, UNH | competition, healthcare, insurance, interest rates, uncertainty, value | AAPL|MSFT|NFLX|NVDA|UNH | Higher interest rates have restored normal competition between asset classes, creating opportunities for value investors. Tech and growth stocks cannot compete with Treasury yields, while value stocks offer bargains. The firm owns quality companies like UnitedHealth, Berkshire Hathaway, and Fairfax Financial that benefit from higher rates. Patient capital can earn attractive risk-free returns while waiting for opportunities. |
| Aug 2 2023 | 2022 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
GeopoliticsU.S.-Israeli conflict with Iran dominated Q1 markets, causing shipping halt through Strait of Hormuz affecting 20% of global crude oil supply. Geopolitical factors created market volatility but also investment opportunities during periods of fear and pessimism. |
Iran Strait of Hormuz Oil Volatility Supply Chain |
LNGIran's attack on Qatar's Ras Laffan facility destroyed 14% of Middle Eastern LNG supply, creating multi-year restoration timeline. This shifts production advantage to U.S. and Canadian suppliers, particularly benefiting Canadian National Railway's strategic positioning with Pacific port access. |
Natural Gas Canada Supply Chain Energy Infrastructure | |
Small CapsU.S. small-cap stocks trading at significant discounts versus fundamentals. Russell 2000 and S&P 600 trade at 6.6x and 4.2x cash flow respectively versus S&P 500 at 16.5x. This differential represents one of the widest gaps in 26 years outside the financial crisis. |
Russell 2000 Valuation Cash Flow Discount | |
Trade DownK-shaped economic environment where inflation and affordability concerns drive consumers toward lower-priced alternatives. This benefits companies like e.l.f. Beauty positioned toward lower-to-middle income consumers as higher price-point consumers trade down to more affordable options. |
Inflation Consumer Affordability Beauty Pricing | |
OilBrent Crude prices rose to $118 per barrel following Strait of Hormuz closure. Oil and gas energy stocks benefited from sudden price increases while other sectors faced potential margin pressure from rising input costs. |
Brent Crude Energy Commodities Supply Chain | |
| 2025 Q3 |
AIManagers see AI capex boom creating boom-bust cycle similar to dotcom era, with hyperscalers locked in arms race for AGI. Despite risks, AI investments driving economic growth through multiplier effects and productivity gains. |
Data Centers AGI Hyperscalers Productivity Capex |
Small CapsProcess directing toward attractive opportunities in out-of-favor small to mid-cap industrials and energy firms positioned to benefit from AI capex spillover effects. These firms offer operating leverage and trade at generational discounts. |
Operating Leverage Industrials Energy Valuations Spillover | |
Credit StressEmergence of cockroaches like First Brands bankruptcy catching private credit investors off guard. Managers view credit issues as potential benefit to their holdings with strong balance sheets seeking market share gains. |
Cockroaches Private Credit Balance Sheets Market Share | |
DividendsInternational multinationals offer strong dividend yields that would be sought in market downturn, providing potential downside protection while benefiting from AI adoption reducing costs. |
Yield Downside Protection International Multinationals | |
| 2025 Q2 |
DollarThe USD declined 12.0% in the first half of 2025, representing its worst six-month slide since 1973. The managers believe the dollar became overvalued due to relative US economic strength post-COVID, fueled by unsustainable budget deficits and liquidity. They view the decline as a correction from overvaluation but note the dollar's purchasing power has lost 94.2% over the past 100 years. |
Currency Reserve Currency Purchasing Power Overvaluation Debasement |
Commercial Real EstateThe managers highlight Brookfield Corporation as a hard asset holding focused on real estate investments. They emphasize real estate's advantages in unstable currency environments through rental escalation clauses and replacement value characteristics. Brookfield's portfolio includes office, retail, and hospitality properties, plus growth investments in AI data centers across multiple geographies. |
Hard Assets Inflation Hedge Rental Escalation Trophy Properties Global Scale | |
Data CentersBrookfield is investing in AI data center buildout across Europe with key projects in Sweden and France, as well as in the United States. The managers view this as part of increasing electricity demand driven by the digital economy and new AI technologies, representing a significant global capex cycle opportunity. |
AI Infrastructure Digital Economy Electricity Demand Global Capex Technology Investment | |
TariffsThe managers believe tariff impacts will play out over 2025 industry by industry and company by company. They favor owning companies with strong competitive positioning and pricing power as protection from tariffs. The April 2 tariff announcements triggered significant market volatility, creating opportunities to purchase quality companies at bargain prices. |
Trade Policy Pricing Power Market Volatility Competitive Positioning Policy Uncertainty | |
| 2025 Q1 |
Trade PolicyTrump administration's tariff strategy represents a negotiation tactic designed to generate government revenue and foster US reindustrialization. The approach creates intentional uncertainty through extreme opening positions, with actual goals lying much lower to allow both sides to claim victory. |
Tariffs Negotiations Reindustrialization Revenue Uncertainty |
IndiaIndia's economy reminds managers of early investments in Japan, South Korea, and China as they embraced capitalism. With GDP per capita of $2,698 growing at 6.5% annually, India is positioned to become the world's third-largest economy by 2027 and build the world's largest middle class. |
GDP Growth Middle Class Capitalism Modi Demographics | |
ValueMarket selloffs create precious opportunities to obtain bargains by accommodating sellers during periods of panic. The strategy focuses on locating high-quality companies at discounts to intrinsic value, defined by current share prices exceedingly low relative to probable earnings five to ten years in the future. |
Bargains Intrinsic Value Selloffs Long-term Quality | |
| 2024 Q1 |
AIGenerative AI is in early stages of impacting the broader economy beyond obvious tech players. Amazon takes a holistic approach to AI across cloud services, e-commerce, and operations. AI tools are being adopted for nefarious purposes including state-sponsored cyberattacks. |
Generative AI Cloud E-commerce Cybersecurity Technology |
CybersecurityAI-enabled cyberattacks are accelerating with phishing emails up 10-fold and ransomware attacks up 4-fold in recent years. Government cyber budgets are growing 32% over four years as governments remain the top target for attacks. |
Cyber Defense Government AI Threats National Security Defense Spending | |
CloudAWS leads cloud infrastructure with $91 billion revenue and breakthrough pay-per-use model. The platform provides turnkey AI computing solutions and could reach $200 billion revenue by decade end. |
AWS Infrastructure Computing AI Platform Technology | |
Small CapsMaterial discounts continue to exist in US small-cap equities. CACI International trades at 41% discount to large-cap peer despite faster earnings growth, representing attractive valuation opportunities. |
Valuation Discount Growth Opportunity US Equities | |
| 2023 Q4 |
ValueManagers focus on buying quality firms for less than intrinsic value, seeking companies with strong balance sheets and capital allocation practices. They systematically turned over two-thirds of portfolios in March 2020 when quality firms went on sale during market panic. |
Intrinsic Value Quality Balance Sheets Capital Allocation Discounts |
InflationRising inflation was the main culprit behind 2022 market turmoil. The Federal Reserve's acknowledgment that inflation was too high and not transitory led to interest rate increases that pulled the rug out from under speculators. |
Fed Policy Interest Rates Monetary Policy Speculation Asset Prices | |
Small CapsU.S. small-cap stocks show the widest discount relative to S&P 500 since 1998, creating attractive opportunities. Managers have been more stringent around credit quality but found holdings meeting standards for quality and shareholder-friendly capital allocation practices. |
Discount Credit Quality Mispricing Inefficiency Valuation | |
ChinaChina's reversal of zero-COVID policy should enable economic rebound in 2023. Chinese households accumulated significant savings during lockdowns, creating pent-up demand. Multinational consumer product holdings should benefit from renewed Chinese consumer demand. |
Reopening Consumer Demand Savings Economic Growth Consumption | |
DividendsFirms focused on increasing dividends year-over-year were out of favor in 2020-2021 but became more popular in current environment given Fed rate concerns and potential slowdown. Portfolio emphasizes companies with dividend growth capabilities. |
Dividend Growth Income Defensive Capital Allocation Shareholder Returns | |
| 2023 Q3 |
Interest RatesHigher interest rates create a luxurious backdrop for investment decision-making not seen in almost twenty years, providing real returns in risk-free assets and patience to do nothing. The rise from zero-bound rates has restored competition between asset classes for investor capital. |
Rates Treasury Competition Patience Real Returns |
ValueValue stocks show earnings yields above Treasury benchmarks and appear notably better positioned than growth stocks. The firm believes value investing will outperform after a decade of growth dominance during zero interest rate policies. |
Earnings Yield Valuation Competitive Bargains Graham | |
HealthcareUnitedHealth Group represents an attractive opportunity with 8.9% free cash flow yield, demographic tailwinds from aging population, and competitive advantages through technology and scale in healthcare payer and provider model. |
Demographics Aging Technology Scale OptumCare | |
InsuranceProperty and casualty insurance companies like Fairfax Financial and Berkshire Hathaway benefit materially from higher interest rates on their short-duration investment portfolios, with interest income increasing 4x-5x from rising T-bill rates. |
Float Short Duration Interest Income Premiums Reinsurance |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 21, 2026 | Fund Letters | Templeton & Phillips Capital Management | CNI | Canadian National Railway | Railroads | Railroads | Bull | New York Stock Exchange | Canada, energy, infrastructure, LNG, Monopoly, operating leverage, railroad, Share Buyback, Transportation | Login |
| Apr 21, 2026 | Fund Letters | Templeton & Phillips Capital Management | ELF | e.l.f. Beauty | Household & Personal Products | Personal Products | Bull | New York Stock Exchange | acquisition, Affordable, Beauty, Consumer Discretionary, Cosmetics, innovation, market share, retail, small-cap | Login |
| Jul 22, 2025 | Fund Letters | Templeton & Phillips Capital Management | BN | Brookfield Corporation | Real Estate | Real Estate Management & Development | Bull | NYSE | AI data centers, alternative assets, asset management, global diversification, Hard assets, inflation hedge, infrastructure, Insurance Float, Real Estate | Login |
| Jul 22, 2025 | Fund Letters | Lauren C. Templeton | BN | Brookfield Corporation | Financials | Multi-Sector Holdings | Bull | New York Stock Exchange | AI data centers, alternative assets, capital deployment, Electrification, Hard assets, inflation hedge, infrastructure, Real Estate | Login |
| Apr 18, 2025 | Fund Letters | Templeton & Phillips Capital Management | IBN | ICICI Bank Limited | Financials | Banks | Bull | NYSE | Capital markets, digital banking, Emerging markets, financial services, growth, Indian Banks, investment banking, Value | Login |
| Apr 18, 2025 | Fund Letters | Templeton & Phillips Capital Management | HDB | HDFC Bank Limited | Financials | Banks | Bull | NYSE | Credit, digital banking, Emerging markets, financial services, growth, Indian Banks, Value, wealth management | Login |
| Apr 18, 2024 | Fund Letters | Templeton & Phillips Capital Management | CACI | CACI International Inc. | Information Technology | IT Services | Bull | NYSE | AI threats, cybersecurity, Defense, Department of Defense, Government Contractor, NSA, small-cap, Technology Services, Value | Login |
| Apr 18, 2024 | Fund Letters | Templeton & Phillips Capital Management | AMZN | Amazon.com Inc. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | advertising, Artificial Intelligence, AWS, Cloud computing, e-commerce, generative AI, growth, technology, Value | Login |
| Oct 25, 2023 | Fund Letters | Templeton & Phillips Capital Management | AAPL|MSFT|NFLX|NVDA|UNH | UnitedHealth Group | Health Care | Health Care Plans | Bull | NYSE | Aging demographics, Data Analytics, Dividend Growth, Free Cash Flow, healthcare, Healthcare Payer, Healthcare Provider, home care, machine learning, OptumCare, Value | Login |
| TICKER | COMMENTARY |
|---|---|
| CNI | we purchased shares in Canadian National Railway (CNI), which we believe are too depressed in relation to its strategic positioning following the Iranian attack on Qatar's Ras Laffan LNG facility. CNI has a monopoly on both ports and their LNG terminals, while LNG transit time to Asia from the west coast of Canada is 10 days versus 20 days from the U.S. Gulf Coast. We see this structural advantage as a competitive edge for Canadian LNG exports given Asian consumers of LNG are likely to continue to diversify supplies away from the Persian Gulf. CNI carried the lowest valuation of the North American Class I rails since the preexisting market narrative has been that it needed a U.S. housing recovery to provide an earnings catalyst; a view that was damaged further by U.S. lumber tariffs. While the shares have begun to rise in the recent recovery, we believe its growth opportunity is long-term and could sustainably accelerate in the years to come as key energy firms are planning further LNG terminal expansions within these strategic LNG ports. current and future capex projections have materially declined, meaning that an uptick in volumes should lead to a significant rise in free cash flow (and earnings per share) given the inherent operating leverage to the business model, as well as an announced repurchase plan for 24 million CNI shares (4% of outstanding). |
| ELF | In the wake of its sharp selloff during March (-34%), we initiated a purchase in the cosmetic label e.l.f. Beauty, prompted by its exceedingly high free cash flow yield at 6.2%, coupled with the potential for mid-to-high teens annualized growth in free cash flow over the next several years. Considering these valuation and growth dynamics, we believe the selloff was too extreme, representing a discount not seen since the COVID panic of March 2020; perhaps reaching a point of maximum pessimism. We suspect the pessimism became too focused on the potential for demand destruction among some of its customer base (in light of rising fuel costs), given its strong positioning towards lower to middle income consumers, but in our view, it stands to gain share as higher price-point consumers trade-down to more affordable alternatives given its popularity and increasing shelf-space in Sephora, Target, Ulta, and other large-scale retail stores. the company's acquisition of rhode appears to be proceeding well and contributing to near-term growth. Currently, rhode is still only available in less than 20% of Sephora stores, leaving a significant opportunity in the remaining 80% of Sephora's 2,700 global stores (500 in the Americas). Longer-term, we favor e.l.f.'s ability to gain market share in the so-called K-shaped economic environment where inflation and affordability remain top of mind for many consumers. For instance, the company's average price point sits around $6.50-$7.50 compared with legacy mass brands at $9.50 and prestige brands at $30.00. The company's ability to innovate and gain market share in the cosmetic space is highlighted by its recent addition of a vitamin C serum that retails at $16.00 compared with prestige equivalents priced at $185.00. |
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