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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"PM Capital delivered strong Q1 returns driven by European banks and industrials benefiting from accelerated infrastructure spending amid US tariff policies. The fund maintains disciplined value positioning, favoring undervalued European assets while avoiding overvalued US technology."
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, performed exceptionally well as US protectionist policies accelerated Europe's infrastructure and defense spending decisions. European banks rose 28% as investors recognized the benefits of normalizing interest rates and economic growth. The fund's copper producers faced headwinds from second-order tariff effects despite benefiting from Comex pricing premiums. Consumer discretionary holdings were impacted by tariff uncertainty and potential inflation concerns. Key portfolio moves included exiting JP Morgan after a decade-plus investment due to valuation premiums, closing NASDAQ shorts following market correction, and trimming Shell near all-time highs. The managers maintain their disciplined value approach, favoring unloved European assets while avoiding overvalued US technology stocks. They expect continued market volatility but remain positioned for European infrastructure spending and banking sector normalization.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The fund demonstrates high conviction through concentrated positioning (41 total positions), specific thesis explanations for major holdings, and willingness to make significant moves like exiting decade-long JP Morgan position. Named positions with clear rationale and sizing discussions indicate strong conviction in investment decisions.
Growth Outlook
The managers express caution about elevated equity valuations leaving little room for error and ongoing tariff-driven uncertainty, but also see selective opportunities in European markets that were previously overlooked.
Risk Appetite
The fund maintains 96% net invested equities with selective positioning in European banks and industrials, showing moderate risk appetite despite market uncertainty. They are selectively adding to positions like Challenger while trimming others.
Capital Deployment
The fund shows minimal net deployment activity with 96% net invested equities. Portfolio moves were primarily rotational - exiting JP Morgan and trimming Shell while adding to Challenger and closing shorts. No significant cash level changes indicated.
Forward Guidance
The managers indicate they will continue their disciplined approach and expect to benefit from European infrastructure spending, but acknowledge ongoing market volatility and uncertainty around tariff impacts.
Language Signal
Language is balanced with risk terms like 'uncertainty,' 'volatility,' and 'elevated valuations' offset by opportunity language around European banks being 'overlooked' and 'attractive valuations.'
Perceived Risk
The managers identify multiple specific risks including tariff uncertainty, elevated valuations, second-order effects on consumer sentiment and corporate capex, and commodity pricing pressures. They explicitly state valuations leave 'little room for error' and discuss various market headwinds in detail.
Opportunity Density
The managers see selective opportunities, particularly in European banks and industrials, but emphasize the scarcity of genuine valuation anomalies in Australia and elevated valuations globally. They describe a mixed opportunity set requiring selectivity.
Time Horizon
The fund demonstrates a multi-year investment horizon, holding JP Morgan for over a decade before exiting, maintaining positions through short-term volatility, and focusing on medium-term themes like European infrastructure spending. The 7+ year suggested investment timeframe reinforces this long-term approach.
