Uncertainty related to tariffs, AI, and the sustainability of federal spending are all creating significant investor unease and market volatility/weakness.  While there is much that is unique to the current environment, we do see many parallels to both the macroeconomic and market backdrop of exactly 25 years ago.  As we again enter uncertain times, we are optimistic that the combination of a valuation discipline and quality measures may again prove highly differentiating as was the case back then. VIEW/DOWNLOAD

A disconnect between prices and fundamentals is being driven mostly by just a handful of the largest stocks.  Given their enormous weight in the broad benchmarks, the overall market has become much more expensive and there looks to be considerable valuation risk for large U.S. stocks in aggregate as a consequence. VIEW/DOWNLOAD

Large cap U.S. stocks in aggregate look expensive.  This is primarily a function of current market leadership, where the 15 most expensive companies over $250 billion in market cap are collectively trading at a 72% premium to the rest of the market.  The situation appears similar to the one in March, 2000, when the overall market was even more expensive, but a set of opportunities below the surface provided good absolute returns, even as the TMT bubble collapsed. We take a harder look at the market now versus 2000 in our letter. VIEW/DOWNLOAD

The concentration within the S&P 500 is at historic levels. This has produced a divergent set of returns and valuations across the large cap market we have not seen in decades. While our U.S. FSV portfolio has underperformed in this environment, we are steadfast in the view that valuation matters and are optimistic given that our portfolio is at a record free cash flow yield premium to the market. The Small/Mid QV and International FSV strategies also continue to have attractive free cash flow yields while maintaining an eye on quality. VIEW/DOWNLOAD