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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Hoisington Investment Management 2025 Q3 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q3 2025 Letter Analysis

Hoisington Investment Management Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Hoisington Investment Management. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Digest Analysis

Quick Take

"Hoisington sees converging deflationary forces from declining global capacity utilization, AI automation reducing traditional factor demand, restrictive Fed policy draining dollar liquidity, and tariff-induced trade disruptions."

Executive Summary

Hoisington argues that declining capacity utilization across major economies, combined with AI's unique deflationary characteristics, Federal Reserve monetary restraint, and tariff-induced liquidity drains, will create persistent economic headwinds through 2025 and beyond. Unlike previous revolutionary innovations that increased demand for labor and capital, AI represents an evolutionary change that reduces demand across all factors of production while automating cognitive tasks and displacing traditional industries. The Federal Reserve maintains a restrictive stance with Real World Dollar Liquidity at post-COVID lows, while tariffs and retaliation create profit squeezes and reduce international capital flows. Gross Output data shows economic weakness masked by strong GDP figures, with industrial production stagnant and job growth concentrated in low-paying sectors. These converging forces create overcapacity, profit compression, and deflationary pressures that traditional monetary easing cannot offset. The firm maintains conviction in long-duration Treasury bonds despite widespread investor pessimism, viewing current conditions as supportive of continued disinflation and economic deceleration.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

85%

CautiousHigh

High Conviction (85%)

Very high conviction expressed through detailed economic analysis, specific data points, historical parallels, and explicit commitment to long-duration Treasury strategy despite widespread investor pessimism.

Growth Outlook

13%

BearishBullish

Bearish (13%)

The outlook is decidedly pessimistic with persistent economic headwinds expected through 2025 and beyond. The managers describe systemic overcapacity, deflationary forces, and weakening economic conditions masked by misleading GDP data.

Risk Appetite

20%

DefensiveAggressive

Defensive (20%)

The positioning is defensive with commitment to long-duration Treasury bonds, which represents a risk-off stance betting on continued economic weakness and disinflation rather than growth assets.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

The commitment to long-duration Treasury bonds suggests a defensive positioning away from risk assets. While not explicitly reducing exposure, the strategy represents capital preservation rather than aggressive deployment.

Forward Guidance

15%

CautiousExpansionary

Cautious (15%)

Forward guidance emphasizes persistent headwinds, insufficient monetary policy responses, and continued economic weakness. The managers expect deflationary pressures to persist despite rate cuts.

Language Signal

18%

BearishBullish

Bearish (18%)

Language consistently emphasizes downside risks, overcapacity, profit compression, deflationary pressures, and economic weakness. Terms like 'impede growth', 'idle plants', and 'liquidity draining' dominate the narrative.

Perceived Risk

80%

Low RiskElevated

Elevated Risk (80%)

High perceived systemic risk from multiple converging factors including overcapacity, AI disruption, monetary restraint, and trade policy impacts. The managers identify significant structural economic headwinds.

Opportunity Density

25%

ScarceAbundant

Scarce (25%)

Very limited opportunity set described, with focus primarily on Treasury bonds. The economic environment is characterized as broadly challenging with few attractive investment alternatives mentioned.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Long-term perspective with analysis extending through 2025 and beyond. The Treasury bond strategy implies patient capital deployment over extended periods to benefit from structural economic changes.