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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, Claret Asset Management. This analysis is provided for institutional research purposes only and is not investment advice.
"Claret advocates patient, long-term equity ownership in high-ROE compounders like Couche-Tard, CGI, and Microsoft, leveraging tax-deferred capital gains. The AI infrastructure boom shows bubble characteristics despite being funded by profitable hyperscalers: $725B capex commitments risk exceeding cash flow, token prices collapsed 90%, and circular financing echoes telecom bubble dynamics."
Claret Asset Management advocates for long-term equity ownership in well-managed companies rather than attempting to time market corrections, emphasizing the compounding benefits of deferred capital gains taxes and reinvested profits. The manager highlights companies like Alimentation Couche-Tard (20%+ ROE), CGI (15%+ ROE), and Microsoft (25%+ ROE) as examples of superior long-term compounders. The letter extensively analyzes the AI infrastructure boom, drawing parallels to the dot-com bubble while noting a critical difference: today's buildout is funded by highly profitable companies generating massive free cash flow. However, the manager flags significant risks including $725B+ hyperscaler capex commitments potentially exceeding operating cash flow, 90% token price deflation since 2023, circular financing schemes reminiscent of the telecom bubble, and electricity supply constraints. The manager warns that while AI has transformational potential, the current enthusiasm exhibits classic bubble characteristics with unpredictable timing and winners. A moderate, selective approach is recommended rather than going all-in or staying entirely out, with emphasis on sober judgment over following market enthusiasm.
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