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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"PM Capital delivered 7.8% returns in Q1 2025 as European banks and industrials outperformed amid tariff-driven volatility. The fund benefits from Europe's accelerated infrastructure and defense spending while remaining cautious of elevated US valuations."
PM Capital's Global Companies Fund delivered 7.8% returns in Q1 2025 despite tariff-driven market volatility. The fund's European holdings, particularly banks and industrials, outperformed as increasing US protectionism accelerated Europe's infrastructure and defense spending plans. The European Bank Index gained 28% as investors recognized normalized interest rates and improving shareholder returns. Key contributors included ING Groep (+20%) and Siemens (+12%), both benefiting from European fiscal stimulus and infrastructure investment. Copper producers faced mixed results as tariff investigations created pricing spreads between US and global markets, with Freeport-McMoRan positioned to benefit from domestic production advantages. The fund exited JP Morgan after a decade-plus investment, citing full valuation recognition, and trimmed Shell near all-time highs. Consumer discretionary holdings faced headwinds from tariff impacts on sentiment and inflation expectations. Portfolio adjustments included closing NASDAQ shorts and increasing Challenger exposure. The managers maintain their disciplined value approach, favoring unloved European assets while remaining cautious of elevated US valuations amid ongoing policy uncertainty.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evidenced by concentrated 41-position portfolio with clear thesis per major holding. Managers provide specific position sizing (27% European banks, 17% copper), name individual stocks with detailed rationales, and make decisive moves like exiting decade-long JP Morgan position. Strong conviction in European bank thesis with specific catalysts identified.
Growth Outlook
The managers express caution about elevated valuations globally and ongoing tariff uncertainty, but see specific opportunities in undervalued European markets. They warn against record-high US valuations while highlighting improving fundamentals in Europe.
Risk Appetite
The fund maintains 96% net invested equities with selective positioning. They're adding to European exposures while trimming overvalued positions like Shell and exiting fully valued JP Morgan, indicating moderate risk appetite with disciplined capital allocation.
Capital Deployment
Moderate deployment activity with 96% net invested equities maintained. Portfolio shows rotation rather than major cash deployment - exiting JP Morgan and trimming Shell while adding to Challenger and maintaining European positions. No significant cash level changes mentioned, indicating selective rebalancing rather than major deployment shifts.
Forward Guidance
Managers plan to continue favoring unloved European banks based on attractive valuations while maintaining caution on US markets. They express commitment to their disciplined philosophy but acknowledge market uncertainty, suggesting selective deployment rather than aggressive action.
Language Signal
Language balances opportunity identification in Europe with risk warnings about tariffs, uncertainty, and elevated valuations. Terms like 'uncertainty,' 'correction,' and 'elevated valuations' slightly outweigh positive language about European opportunities and disciplined positioning.
Perceived Risk
Managers identify multiple specific risks including tariff uncertainty as primary market driver, elevated global valuations leaving little room for error, potential inflation impacts, and corporate capital expenditure pauses. Risk discussion is substantial and central to the letter's narrative.
Opportunity Density
Selective opportunities identified primarily in European banks and industrials benefiting from infrastructure spending. Managers note scarcity of genuine valuation anomalies in Australia but see specific value in European markets. Opportunity set described as requiring selectivity rather than broad abundance.
Time Horizon
Multi-year investment horizon evidenced by decade-plus JP Morgan holding and medium-term European bank thesis. Managers reference 28-year consistent philosophy and discuss catalysts playing out over medium term. Focus on fundamental value realization rather than near-term trading, though some catalyst dependency noted.
