Argosy Investors Q1 2025 Letter

2025-06-02 06:00:00 ET

Summary

• I remain cautious on equities due to rising US deficits, higher interest costs, and potential fiscal headwinds impacting GDP and corporate earnings.
• Trimmed Trisura for portfolio management, citing concerns about underwriting quality and negative reserve development despite reasonable valuation.
• Initiated positions in Wayfair, Hovnanian, Celsius, and Femsa, each offering unique growth or value opportunities despite sector-specific headwinds.
• Overall, I advocate for a conservative investment approach, mindful of macroeconomic risks and the impact of higher rates on portfolio cash flows.

Dear Investors,

The investment landscape has changed significantly as the investing public takes stock of the seemingly-daily tariff announcements coming from the White House. Above all the market dislikes uncertainty, which makes the current resurgence from the lows in April a little bit surprising, since the impacts of tariffs have not begun to hit the economy. Jamie Dimon in a recent interview said as much, hinting that additional economic pain could potentially lay ahead. Since that interview, the White House has seemingly pivoted away from their focus on DOGE, a short-term pain that was intended to deliver a long-term fiscal gain. The concern is no longer some theoretical financial mumbo-jumbo. During a peacetime economy without a recession, we are consistently running the highest deficits in our nation's history outside of the post-WWII era and the Great Financial Crisis of 2008. We are loading up the balance on the credit card as a country at a staggering pace....

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