Hugo Angelo Lucien Manenti @hugomanenti95: "Dear all, September was a curious..."

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Dear all, September was a curious month. While real-time data showed strain (rising inflation, weaker confidence, job market softness), forward-looking data looks promising, largely thanks to favourable monetary and fiscal policies. Markets continued to hold up at the index level, driven by the most speculative names, while most stocks are correcting under the surface. 𝗜. 𝗠𝗮𝗰𝗿𝗼 & 𝗣𝗼𝗹𝗶𝗰𝘆 𝗧𝗵𝗲𝗺𝗲𝘀 🔹 Inflation and Price Pressures PCE data showed core inflation at +2.9% YoY, stable from last month. While the lack of a large increase post tariffs is a welcome sign, inflation remains too high for the Fed to lean more clearly dovish. 🔹 Labor Market & Confidence While job losses remain low, the lack of job creation is becoming a prominent issue. The unemployment rate remains low at 4.3%, but joblessness is rising fast among younger generations. Consumer credit is seeing initial signs of deterioration, especially among lower income and younger cohorts, illustrating the sharp and growing differences between higher income cohorts and the rest of the population. Unsurprisingly given the above, consumer confidence slipped again in September, dropping to 94.2 from 97.8 in August, as consumers grow more worried about job availability and inflation. 🔹 Trade & Tariff Developments Late September saw a fresh round of U.S. tariff announcements targeting semiconductors, pharmaceuticals and even furniture. There continues to be a clear and continued push to reshore critical inputs – and of course, a bit of Trump randomness (furniture?). Much still hinges on the Supreme Court, which is set to review the constitutionality of Trump’s tariffs in an expedited manner, after they were struck down by lower courts. 🔹 Summary Things remain pretty murky – while investment and consumption hold firm, the job market is showing signs of weakness, and lower income households are turning increasingly negative, as the job market weakens and inflation reduces their purchasing power. 𝗜𝗜. 𝗠𝗮𝗿𝗸𝗲𝘁 & 𝗣𝗼𝗿𝘁𝗳𝗼𝗹𝗶𝗼 𝗣𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 As of writing, the SPX is up 2.9% on the month, IJR up 0.1%, our portfolio down 2.0%. A negative months for us as investors once more pile in on the most speculative ends of the market – quantum, nuclear, AI, hopes and dreams. In that context, our value-oriented portfolio is not in favour... and yet, there is much to look forward to: • $IWG: after a strong selloff post earnings, the stock is bouncing back. New offices continue to open at pace, growth investments are paying off and should result in a strong 2026+. • $CNXC (Concentrix Corporation): while the stock is suffering after a miss on margins, the story is similar to IWG. Growth investments are hurting profits in the short term but they are attracting highly valuable customers and paving the way for future outperformance. The third straight quarter of revenue acceleration is proof of commercial momentum. At 4x earnings... incredible bargain. • $WCC (WESCO International Inc): 20% of the business is datacenters, growing at close to 50%. Plus another 20% in utilities – which bring power to said datacenters. While everything AI is in a bubble, WCC remains ignored… for how long? • $AMTM (Amentum Holdings Inc): has fingers in all the best pies – missiles, drones, nuclear, cyber defense, etc. All those sectors are on fire and yet AMTM remains ignored… for how long? • $XPOF (Xponential Fitness Inc): sold underperforming brands, settled claims and stabilised the business. Club Pilates is doing fine and if that holds, the stock should work well. In that context, I want to avoid responding emotionally and chasing the most recent bubble. I am confident that our picks will deliver results over the mid term, and remain patient and focused on fundamentals. I recently took profits in high-multiple winners (LITE, NXT, AGX, MP). Too early maybe, but valuation is now nonsensical to me. Nice wins anyway. I also trimmed or exited underperformers with weaker conviction (CROX, ATKR). Reallocated to similar themes (ATKR into WCC, VRT, POWL, CRWV which are clearer AI winners) and oil services – in particular offshore, which looks close to inflecting. 𝗖𝗼𝗻𝗰𝗹𝘂𝘀𝗶𝗼𝗻 September confirmed many of our core views: the U.S. economy is holding up and maybe more, inflation remains sticky, and policy remains supportive for nominal growth. Markets are still strong, even as valuation / positioning risks become harder to ignore. The Fed continues to send mixed messages, balancing dovish rhetoric with signs of concern about sticky price pressures. Meanwhile, Trump’s latest round of tariffs could prove yet again inflationary and test the Fed’s resolve in the coming months. That said, I remain optimistic. Our portfolio is well aligned with the current macro regime - anchored in reflation, industrial policy, and nominal GDP growth. While the market is currently failing to reflect that - too busy chasing the next pie in the sky - I think it is only a matter of time. As always, I welcome your questions and feedback. All the best, Hugo

4 Mentioned

CNXC

Concentrix Corporation

WCC

WESCO International Inc

AMTM

Amentum Holdings Inc

XPOF

Xponential Fitness Inc

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