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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Hoisington Investment Management 2025 Q2 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q2 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

"Tariff wars create temporary inflation but ultimately contract economic activity through retaliatory demand destruction. The Fed must aggressively accommodate to prevent a Kindleberger Spiral as foreign capital flows decline."

Executive Summary

Hoisington argues that tariff wars create first-round inflationary effects but ultimately lead to economic contraction through demand destruction and retaliatory measures. When countries impose tariffs, the initial price increases are temporary as foreign nations retaliate, shifting demand curves inward and reducing total revenues for export industries. This triggers what the firm calls a race to the bottom with compounding negative effects on global trade volumes. The key risk is a Kindleberger Spiral, where declining net foreign investment flows reduce liquidity in US markets unless the Federal Reserve provides accommodation. With over $31 trillion in foreign holdings of US securities at risk, the Fed must move quickly to lower rates despite near-term inflation pressures. The recently passed One Big Beautiful Bill Act provides minimal fiscal stimulus and worsens long-term debt dynamics. While tariffs may be necessary to address mercantilist trade practices that have hollowed out US industrial capacity, their contractionary effects require monetary offset. This environment favors long-term Treasury bond investments for patient capital.

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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 policy prescriptions for the Fed, and clear investment recommendations for Treasury bonds. The managers present a comprehensive theoretical framework with strong declarative statements about market dynamics.

Growth Outlook

20%

BearishBullish

Bearish (20%)

The managers express significant pessimism about the economic environment, warning of contractionary effects from tariff wars, potential Kindleberger Spiral, and coming contraction in global economic activity. They describe a race to the bottom scenario with compounding negative effects.

Risk Appetite

30%

DefensiveAggressive

Defensive (30%)

The positioning is defensive, favoring long-term Treasury bonds as a safe haven investment. The managers advocate for patient capital deployment in bonds rather than risk assets, reflecting a risk-off posture given the economic headwinds they anticipate.

Capital Deployment

35%

De-riskingDeploying

Net Neutral (35%)

Moderate defensive positioning implied through recommendation for Treasury bonds over risk assets. While not explicitly stating cash increases, the defensive posture and safe haven preference suggests reduced risk appetite and more conservative capital allocation.

Forward Guidance

25%

CautiousExpansionary

Cautious (25%)

Forward guidance is cautious and defensive, emphasizing the need for Fed accommodation and warning of contractionary forces. The managers see temporary inflation followed by more significant deflationary pressures, suggesting a defensive investment stance.

Language Signal

15%

BearishBullish

Bearish (15%)

Language is heavily weighted toward risk and downside terminology including race to the bottom, Kindleberger Spiral, contractionary effects, demand destruction, and economic contraction. Positive language is limited to Treasury bond attractiveness.

Perceived Risk

80%

Low RiskElevated

Elevated Risk (80%)

High perceived systemic risk with detailed discussion of Kindleberger Spiral, tariff war contractionary effects, debt overhang concerns, and potential for global economic contraction. Multiple macro risks identified with significant potential impact.

Opportunity Density

30%

ScarceAbundant

Scarce (30%)

Limited opportunity set identified, with Treasury bonds being the primary attractive investment mentioned. The managers see a challenging environment for most assets except for long-term government bonds, suggesting sparse opportunities outside of defensive positioning.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Long-term investment horizon emphasized through recommendation for long horizon investors in Treasury bonds and discussion of multi-year economic cycles. The analysis focuses on structural economic changes rather than short-term trading opportunities.