Oliver Luxxe Assets Financial Insights and Commentary

First Quarter 2026 Quarterly Market Recap

Wed, 15 Apr 2026 19:41:59 GMT

“Those who have knowledge don’t predict. Those who predict don’t have knowledge.”

- Lao Tzu

The first quarter of 2026 proved to be a turbulent period for financial markets. What began as a muted but broadly resilient market environment was upended in late February by the launch of Operation “Epic Fury”. The resulting energy supply shock and repricing of Federal Reserve rate expectations both led to meaningful cross-asset volatility. Major U.S. equity indices finished the quarter mostly lower. Prior to the outbreak of conflict with Iran on February 28th, markets were broadly positive, as the Russell 2000 was up +6.20%, the S&P 500 had gained +0.67%, and the Nasdaq was down -1.33%. The subsequent escalation reversed those moves and weighed on returns through quarter-end, with the S&P 500 finishing down -4.63%, the Dow down -3.58%, and the Nasdaq declining -7.11%. The notable exception was the Small-Cap Russell 2000, which edged higher by +0.58%.

The Federal Reserve entered 2026 with a policy rate in the range of 3.50% to 3.75%, having cut rates a cumulative 175 basis points since September 2024. As recently as late February, bond markets were still pricing in more than 50 basis points of additional easing before year-end 2026. That expectation was reduced by quarter’s end, driven by a combination of potentially higher inflation, a geopolitically induced energy shock, and growing concern that the Fed’s hands were tied by competing pressures on its dual mandate.

The U.S. labor market spent 1Q26 in what the Stanford Institute for Economic Policy Research described as a “low-hire, low-fire equilibrium” . Layoffs remained historically low, and the unemployment rate held near the full-employment level economists generally associate with the natural rate (i.e., around 4.0% to 4.1%). However, gross hiring activity remained subdued, and payroll growth was narrowly concentrated in just a few sectors, leaving the headline numbers more fragile than their surface stability suggested.

The U.S. economy entered 2026 with sustained momentum, as Real GDP grew at a 4.4% annualized rate in Q3 2025 and an estimated 2.0% in 4Q25. The 4Q25 slowdown partly attributable to the government shutdown that disrupted federal activity in October. Full-year 2025 growth came in at approximately 2.0%, consistent with or slightly above long-run trend, a notably solid result given the cumulative headwinds from elevated interest rates and policy uncertainty. Business investment was another constructive driver of GDP growth, as AI-related capital expenditures accounted for a disproportionate share of non-residential investment in 2025. However, the return on investment (ROI) debate around these outlays has generated ongoing scrutiny from investors.

Outlook

Despite the volatility seen during the first quarter, the underlying U.S. economy remains on reasonably solid footing. Consumer spending has held up, GDP growth is tracking near potential, and the broader economic expansion shows few signs of rolling over. The resilience is notable given the cumulative weight of elevated interest rates and geopolitical uncertainty.

One encouraging development is the nascent recovery in the manufacturing sector. The US ISM Manufacturing Index has now inflected positively for three consecutive months. This is a streak that has historically signaled a broadening of economic activity beyond the consumer and services sectors. The labor market, while cooling at the margin, remains stable. Layoffs are not elevated, the unemployment rate is holding near full-employment levels, and wage growth continues to support household purchasing power. The hiring environment is cautious, but there is little in the current data to suggest a material deterioration is imminent.

Taken together, the economic backdrop for the remainder of 2026 is more constructive than recent market volatility might imply. The primary risk remains the duration and resolution of the Iran conflict and its inflationary effects. However, absent a significant further escalation, the foundation for a continued, modest expansion for the US economy appears intact. At Oliver Luxxe, our "Private Equity in the Public Marketplace" investment philosophy is driven by identifying businesses with durable balance sheets, consistent cash flow generation, and attractive opportunities to reinvest capital for long-term growth. Across our equity strategies, we view market volatility as an opportunity rather than a risk. Periods of uncertainty allow us to upgrade portfolio quality and add to high-conviction positions at more attractive valuations.

As always, please feel free to reach out to us if you have any questions. Thank you.

The Oliver Luxxe Assets Team

Matt Biedron, CFA , Interim CIO

Brad Jacobson, Managing Director

Drew Crawford, Jr., Director of Research

Eric Feigenwinter, Research Associate

Disclaimer:

Investments in securities entail risk and are not suitable for all investors. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction. All investment strategies have the potential for profit or loss; changes in investment strategies may materially alter the performance and results of a portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be suitable or profitable for a client’s investment portfolio.

This document may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the US market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to the success or lack of success of any particular investment strategy. All are subject to various factors, including, to general and local economic conditions, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of Oliver Luxxe or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.

The Oliver Luxxe Assets Team

Disclaimer:

Fourth Quarter 2025 Quarterly Market Recap & 2026 Outlook

Thu, 08 Jan 2026 16:07:51 GMT

The fourth quarter of 2025 capped off a resilient year for U.S. equities, with major indices posting positive returns amid moderating economic growth, persistent inflation pressures, and a cautious Federal Reserve. The S&P 500 advanced approximately 2.7% in Q4, contributing to a full-year gain of around 18%, driven largely by technology, AI, and communication services sectors. This represents the third consecutive year of double-digit gains.

Despite headwinds from policy uncertainty and a projected economic slowdown, markets climbed a "wall of worry," with investors rebalancing portfolios and corporate optimism supporting rallies. Key risks heading into 2026 include potential policy shifts, below-trend GDP growth, and inflation drifting above the Fed's target.

As we enter 2026, we believe the global economy should transition to a period of improved economic stability as the path of global trade become clearer. We believe the US equity market should experience measured progress amid a resilient yet evolving economic landscape. In 2026, US equity returns should be driven by fundamentals, particularly earnings growth, rather than further valuation multiple expansion, as current multiples are already above long-term averages. Importantly, corporate profit margins are set to improve in 2026, as companies benefit from operational efficiencies, AI productivity gains (albeit on low adoption rates), and moderating input costs. Additionally, financial conditions are expected to become easier than in early 2025 (see charts below).

Inflation is forecasted to continue its downward path in 2026, easing from elevated levels in 2025 toward the Federal Reserve's 2% target, though it may remain sticky due to wage pressures and tariff effects. The largest component of the US CPI Index: shelter, which comprises about 40% of the index and includes owners’ equivalent rent, is expected to decline in 2026 (see chart below).

This downward trajectory should allow the Federal Reserve to continue its gradual rate cuts, potentially bringing the target range towards 3.25% by mid-year, allowing for a more accommodative environment for risk assets. The US labor market is expected to weaken modestly in 2026, with unemployment rising and hiring slowing, reflecting a cooling from the tight conditions of prior years.

US economic growth is expected to remain solid in 2026, reflecting a resilient economy that avoids recession despite headwinds from tariffs and fiscal policy adjustments. Additionally, economic growth in 2026 is anticipated to broaden beyond the technology and AI-driven sectors, with increased contributions from cyclical areas such as manufacturing, materials, energy, and industrials, buoyed by infrastructure spending and easing monetary policy. This broadening should reduce market concentration risks (i.e., Information Technology) and support more diversified equity performance, including small and mid-cap cyclical sectors of the economy.

As 2026 unfolds, we remain focused on identifying businesses that are trading below their intrinsic value and offer compelling investment opportunities in the long run. At Oliver Luxxe, we believe our “Private Equity in the Public Marketplace” investment framework allows us to identify businesses that have strong balance sheets, sustainable cash flow generation and compelling reinvestment opportunities. We will seek to utilize market volatility and uncertainty to improve the quality of our clients’ portfolios over the next three to five years.

Disclaimer:

White Paper: The 80/20 Business System

Tue, 14 Oct 2025 16:23:23 GMT

White Paper: The 80/20 Business System

By Drew Crawford

Overview

The 80/20 principle, also known as the Pareto Principle, states that 80% of outcomes are often determined by just 20% of efforts or inputs. For a business, this principle is a powerful framework for optimizing resources, streamlining operations, and growing return on invested capital ( see our ROIC whitepaper ). The 80/20 Business System leverages this concept to help organizations identify high-impact activities, eliminate inefficiencies, and drive sustainable growth. This white paper explores the applications, benefits, and implementation strategies of the 80/20 principle across enterprises.

The 80/20 principle provides a framework where organizations can focus on what matters the most. By identifying the 20% of activities, customers, products, or processes that generate 80% of results, businesses can prioritize high-value opportunities and eliminate low-impact revenues. The 80/20 Business System is a strategic methodology that integrates the Pareto Principle into core business functions. This framework consists of three pillars: 1.) Identification, 2.) Optimization, and 3.) Iteration.

Benefits of the 80/20 Business System include increased efficiency (i.e., focusing on high-impact activities), higher profitability (prioritizing high-margin products or customers), improved decision-making, and scalability. The 80/20 end-goal and benchmarking tool for many businesses is to grow their return on invested capital (ROIC). Recall, ROIC is commonly defined as Net Operating Profit After Tax divided by Total Invested Capital. 80/20 should drive higher NOPAT via increased profitability, while reducing the amount of capital invested in non-core and low margin lines of business.

Examples

While many of the well-known companies that adopt 80/20 principles are Industrials, most businesses can apply this framework to optimize their efficiency. Below, we highlight companies within our Small-Cap strategy that have formally adopted the 80/20 Business System.

Gates Industrial Corporation plc (GTES). Gates is manufacturer of engineered power transmission and fluid power solutions. The company announced 80/20 during their March 2024 Investor Day, which is part of GTES’s strategy to enhance operational efficiency, improve gross margins, and optimize their manufacturing footprint. Gates believes there will be adj. EBITDA margin expansion from 2024 to 2026 due to 80/20-driven initiatives, irrespective of macroeconomic factors.

Flowserve Corporation (FLS). Flowserve is a manufacturer of flow control equipment & systems, and serves the oil & gas, chemical, industrial, power generation, and water management end-markets. FLS originally started its 80/20 process during 2024 in order to increase new product vitality, grow gross margins from 2024 to 2027, and to increase the mix of higher margin products. FLS is working to reduce low margin SKUs by -10% to -15%, while reinvesting in Research & Development (R&D) to grow more profitable revenue streams.

GTES and FLS share common themes in their 80/20 initiatives, including operational efficiency, high-margin segment focus, portfolio optimization, and consolidated margin expansion. Both leverage the 80/20 principle to streamline operations, reduce costs, and prioritize high-value products and customers, driving profitability in cyclical markets. GTES emphasizes automotive replacement and mobility segments, while Flowserve focuses on aftermarket services and energy transition. However, both of their approaches include enhancing efficiency and profitability through disciplined resource allocation (i.e., segmentation). At the end of the second quarter 2025, both management teams have reiterated their respective 80/20 financial impacts to long-term guidance.

Summary

The 80/20 Business System is a transformative approach to achieving “more with less.” By focusing on the most attractive parts of the organization, it can unlock significant efficiency, profitability, growth, and shareholder value. Implementing this system requires a strong management team and continuous iteration. Said differently, there is typically no formal ending to the 80/20 Business System, as it should become part of the company’s operating DNA. Businesses that embrace the 80/20 principle should be better positioned to perform well in a competitive, complex environment.

At Oliver Luxxe, we believe our “Private Equity in the Public Marketplace” investment framework allows us to identify businesses that have strong balance sheets, sustainable cash flow generation, and compelling reinvestment opportunities. We look for businesses and management teams that are constantly looking for ways to improve their operating efficiency by utilizing concepts like the 80/20 principle.

Disclaimer:

Second Quarter 2025 Quarterly Market Recap

Wed, 02 Jul 2025 15:23:51 GMT

Get Comfortable Being Uncomfortable

The second quarter of 2025 was a volatile period for global equity markets, reflecting significant uncertainty driven by the implementation of “Liberation Day” tariffs, mixed economic data, and weakening consumer sentiment. The S&P 500 ended the quarter with a modest positive YTD gain, recovering from the -18.9% decline from its February peak, triggered by the introduction of tariffs in April. Despite the market recovering from steep sell-offs, key economic data the Federal Reserve tracks have started to slow.

The US labor market has remained resilient, as April’s jobs report added 177,000 nonfarm payrolls, surpassing estimates of 150,000. The unemployment rate moved up to 4.2% from 4.1% in March and wage growth moderated to +3.8% Y/Y growth, aligning with the Federal Reserve’s target of stable inflation. The labor market data has shown that companies have cut back on hiring but are not laying off workers at a material rate. As illustrated below, the monthly Job Openings and Labor Turnover Survey (JOLTS) has shown openings slowing and it has become harder for unemployed workers to find a new job .

The US housing market exhibited signs of stabilization amid affordability challenges, with increased new and used home inventory levels. Median home prices have risen for 20 consecutive months, though the pace of growth has slowed compared to prior quarters. Mortgage rates remained elevated, which has also tempered consumer demand. Housing inventory has improved to a 4.4 month supply, the highest since the pandemic, providing buyers with more options. Affordability concerns and economic uncertainty for the second half of 2025 continue to drive a cautious housing market outlook.

Outlook:

Our recent 1Q 2025 Market Outlook was titled: Looking for Mispriced Opportunities in a Chaotic Market . Behavioral science reminds us that investors tend to be swayed by their short-term emotions during times of uncertainty, instead of relying on longer-term fundamental business and financial analysis. During periods of investor angst and worry, history has shown that attractive investment opportunities are often created due to valuation dislocations and market misperception. We were able to identify attractive opportunities across a variety of sectors and industries during the recent market turmoil that should add value to our clients’ portfolios in future periods. Importantly, we continue to see more attractive investment opportunities at present than earlier in the year, leading us to expand our watch list for potential equity strategy additions. At Oliver Luxxe, we remain focused on valuation and strong business models, with a long-term view that owning quality businesses with attractive reinvestment opportunities tend to create shareholder value.

Disclaimer:

First Quarter 2025 Quarterly Market Recap

Tue, 22 Apr 2025 14:49:34 GMT

Looking for Mispriced Opportunities in a Chaotic Market

The global equity markets have recently experienced a significant period of volatility, shaped by a mix of macroeconomic developments and policy shifts. The sell-off in the S&P 500 was driven mostly by tariff-related concerns, though it managed a partial recovery toward the end of the quarter. Concerns around economic growth intensified, fueled by softer economic data and uncertainty surrounding the broader “Trump 2.0” policy framework. Survey data reflected this caution, as the March Michigan Consumer Sentiment Index fell to its lowest since November 2022, with one-year inflation expectations rising to 5% and five-year expectations hitting a 32-year high of 4.1%. The March Consumer Confidence Index also dropped to its lowest since January 2021, with the expectation component reaching a 12-year low. Manufacturing PMI swung back into contraction, with cost pressure rising at the sharpest pace in 23 months.

All in, the S&P 500 declined -4.59% in 1Q25, which marked its weakest performance since 3Q22. The best-performing sectors were Energy (+9.30%), Healthcare (+6.08%) and Consumer Staples. Conversely, sectors that underperformed were Industrials (0.53%), Communication Services (-6.41%), and Technology (-12.79%).

High single-stock concentration levels in the S&P 500 Index, Deep Seek Artificial Intelligence developments, and elevated valuation multiples resulted in the Magnificent Seven stocks underperforming the broader market. In fact, the Magnificent Seven collectively fell into bear market territory, as the group declined -15% during 1Q25 and is now down -20% since the peak in December 2024.

Source: Goldman Sachs

Another overhang was the Federal Reserve’s Summary of Economic Projections (SEP) that lowered the median 2025 US GDP growth rate by -40 basis points to +1.7%, along with the median core PCE inflation forecast being revised upward by +30 basis points to +2.8%. On a more positive note, the US labor market remains healthy, as exhibited by the March Employment report, which cited an unemployment rate of 4.2%.

Outlook:

According to FactSet, Wall Street bottom-up S&P 500 EPS estimates for 1Q25 have declined by -3.8% since the start of the quarter, reflecting uncertainty from the impact of tariff policies and weakening consumer confidence. With the prospect of potential further downward earnings revisions, we believe owning businesses with undemanding valuations, strong pricing power, variable cost structures, cost removal initiatives, and high barriers to entry should perform well in a challenging macro-economic backdrop.

Looking ahead, global trade dynamics will remain a key factor influencing markets. Corporate earnings will offer insights into how businesses manage cost pressures and consumer demand (tarriff impacts). Macroeconomic indicators, including inflation trends and Federal Reserve policy, will also shape investor confidence.

Despite these issues, we remain focused on identifying businesses that are trading below their intrinsic value and offer compelling opportunities in the long run. At Oliver Luxxe, we believe our “Private Equity in the Public Marketplace” investment framework allows us to identify businesses that have strong balance sheets, sustainable cash flow generation, and compelling reinvestment opportunities. We are utilizing the current market volatility and uncertainty in an effort to improve the quality of our clients’ portfolios over the next three to five years.

Disclaimer:

White Paper: The Importance of Reinvestment Opportunities in Driving Intrinsic Value

Mon, 03 Mar 2025 19:48:46 GMT

White Paper: The Importance of Reinvestment Opportunities in Driving Intrinsic Value

Executive Summary

At Oliver Luxxe, we believe that the intrinsic value of an asset stems from its ability to generate sustainable cash flows over time, discounted at an appropriate required rate of return. Central to this valuation framework are three key drivers: return on invested capital (ROIC) , reinvestment opportunities , and the quality and sustainability of earnings . Through our proprietary quantitative screening process and rigorous fundamental analysis, we seek to identify companies with these characteristics. Our "Private Equity in the Public Marketplace" approach integrates detailed financial modeling and competitive positioning analysis to uncover businesses with compelling reinvestment opportunities. This white paper explores the critical role of reinvestment opportunities in value creation, the metrics that illuminate a firm’s capacity to reinvest effectively, and how sustainable free cash flow acts as a catalyst for long-term growth.

The Foundations of Intrinsic Value

We believe the value of any asset is fundamentally tied to the present value of its future cash flow, discounted by a rate that reflects the risk and opportunity cost of capital. For equity investors, this translates into a focus on three interconnected pillars:

Return on Invested Capital (ROIC): A measure of how efficiently a company allocates its capital to generate profits.
Reinvestment Opportunities: The ability of a firm to deploy excess cash into high-return projects, whether through organic growth or inorganic strategies like mergers and acquisitions (M&A).
Quality and Sustainability of Earnings: The reliability and resilience of a company’s earnings across economic cycles, providing the fuel for reinvestment.

While our proprietary quantitative analysis helps us to systematically identify companies exhibiting these traits, the cornerstone of our process at Oliver Luxxe is detailed fundamental due diligence. This includes constructing discounted cash flow (DCF) models, performing comparable company analyses, and evaluating a firm’s competitive moat. By adopting a “private equity” mindset within the public markets, we aim to uncover businesses that not only generate strong returns but also possess the capacity to reinvest those returns at above-market rates.

Reinvestment Opportunities: Organic and Inorganic Growth

Reinvestment opportunities define a company’s ability to compound value over time. These opportunities fall into two categories:

Organic Spending: Investments in existing operations, such as expanding production capacity, increasing R&D investments, enhancing product lines, or improving efficiency.
Inorganic Spending: Accretive M&A that strengthens market position, diversifies revenue streams, or unlocks synergies.

The success of reinvestment hinges on the availability of excess cash and management’s ability to deploy it at attractive rates of return. Consider a hypothetical example:

A company generates $10.00 in revenue and $5.00 in net income (a 50% net margin).
It converts 100% of its net income into free cash flow (FCF), yielding $5.00.
Management reinvests $2.50 (a 50% reinvestment rate) at a ROIC of 30%, well above its WACC of 10%.
This $2.50 grows to $3.00 in value, while the remaining $2.50 of FCF remains available for other uses, such as dividends, debt reduction, or further reinvestment.

This "flywheel" effect, where high ROIC compounds through disciplined reinvestment, distinguishes exceptional businesses from average ones. However, the flywheel only spins if earnings are both high-quality and sustainable.

The Oliver Luxxe Principles

Our "Private Equity in the Public Marketplace" philosophy sets us apart by blending the rigor of private equity analysis with the liquidity and diversity of public markets. We prioritize companies with:

High and sustainable ROIC relative to WACC.
Robust reinvestment opportunities that may signal above-market returns.
Durable earnings and free cash flow to fund those opportunities.

By combining quantitative analysis with deep fundamental research, we seek to uncover undervalued businesses poised for long-term value creation. Our financial models project cash flows over multi-year horizons, while our competitive analysis seeks to ensure that reinvestment opportunities are defensible against industry rivals.

Conclusion

We believe reinvestment opportunities are a critical yet often overlooked driver of intrinsic value. Companies that can generate high returns on invested capital and are able to reinvest those returns at attractive rates can compound wealth beyond their peers. At Oliver Luxxe, our disciplined process seeks to identify these opportunities, leveraging both data-driven insights and hands-on analysis. In a market where short-term noise often overshadows long-term fundamentals, our focus on sustainable cash flows and reinvestment potential positions us—and our investors—for long-term success.

Disclosures: All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be suitable or profitable for a client's investment portfolio. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

Disclaimer:

2025 Market Outlook

Thu, 30 Jan 2025 13:00:02 GMT

Is the Glass Still Half Full?

The S&P 500 rose 23% in 2024, following a 24% gain in 2023. As we enter 2025, we continue to expect solid economic growth, stronger US productivity, and favorable interest rate policies by global central banks. The US is expected to remain the global economic growth driver with expansion of the current business cycle, increased AI-related capital spending, solid employment growth, and prospects for increasing capital markets activities. Despite this favorable backdrop, there are a variety of factors that may affect US equity performance in 2025.

First, we believe much of the robust earnings growth in 2023 and 2024 has been reflected in equity valuations, especially in the fastest-growing AI-related stocks (see below). Over the last two years, higher interest rates combined with the AI capex boom were a key driver of outsized performance by a narrow group of stocks. However, we think these elevated valuation levels leave little margin for error. We think it also places a constraint on the upside for outsized equity gains in 2025.

Recall, in our 3Q 2024 Quarterly Newsletter, we stated:

Currently, the weight of the largest 10 stocks in the S&P 500 is about 37%, which is in the 97 ^th percentile since 1964 and well above the Tech Bubble. We believe this elevated level of extended concentration may begin to unwind in 2025 as investors recognize more attractive combinations of valuations+ earnings growth in the other non-Mag 7 stocks.

As we head into the earnings reporting season , Mag 7 earnings in aggregate are expected to increase +21.7% y/y in Q4 2024 , with Nvidia, Amazon, Google, and Meta as standouts, while Microsoft and Apple forecast to grow less than 10%. This compares to the +9.7% growth expected for the remaining 493 S&P 500 companies, which would mark the best growth since Q2 2022.

Importantly, as we enter 2025, Mag 7 stocks are expected to grow earnings by about 18% (further deceleration), while the remaining 493 S&P 500 companies are expected to grow earnings by about 11% (further acceleration), according to Goldman Sachs. Furthermore, the earnings growth “gap” is expected to narrow further in 2026.

Elevated valuation multiples, higher investor expectations, and decelerating forward earnings growth rates are typically not a healthy combination for outsized equity performance. These are the characteristics that we currently see in Mag 7 stocks.

We believe the narrative has clearly shifted from the “recession/soft landing” debate in 2024 to continued economic expansion in the US economy. In our 3Q 2024 Quarterly Newsletter, we stated, “ we are on the cusp of a new economic cycle .” As we wrap up the 4Q 2024 earnings reports from the large financial institutions, we are increasingly positive on the US economy for 2025. Credit, deposit, and loan growth trends remain positive. Troubled areas of the economy like commercial real estate appear to be slowly healing.

At Oliver Luxxe Assets, we seek to identify businesses with attractive return on invested capital and durable cash flow generation trading at undemanding valuations. Our ongoing analysis continues to support our strategy, and our conviction is reinforced as we see many opportunities in the cyclical areas of the US economy where profit margins are expanding from depressed levels and have low investor expectations. We believe this combination could drive attractive returns over the coming years.

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