End of the year...again
As regular readers of the Pathfinder Investment Outlook know, our writing follows the calendar of quarterly earnings reports. “Earnings season” is an important part of our investment process, as we can check-in on the progress of the companies that we own, as well as management’s expectations for the future of their organizations. While the data continues to look strong, an “AI Bubble” narrative has found its way into the financial press, and this has led to some market volatility. Readers will recognize the aggregate sales data for North American companies noted in Figure 1. We have mentioned before that we prefer to review aggregate sales data, as it is harder to manipulate than earnings. For a large group of companies, we feel this is a better way to take the temperature of how the North American economy is performing. We also focus on “all listed companies” in North America, rather than a widely used index, like the S&P 5oo for example. We find the large global companies in those types of indices can skew the results from time to time (i.e. the Mag 7 in the current environment) and this could cause us to draw incorrect conclusions from the data as we are trying to assess: the health of “Main Street”.
- So far, 94.0% of firms have reported, and the results continue to be broadly positive with only Energy posting negative sales growth. This quarter is paradoxically the strongest quarter that we have seen for the aggregate in memory, with a total of 7.8% year-on-year, quarterly growth.
- Technology, Financials and Health Care have had double digit sales growth rates with Technology companies growing just under 15%. These are very impressive number for major segments of the economy.
“This means that” our anecdotal management commentary noted in previous issues of the Outlook indicating that the consumer remains bifurcated has not been confirmed with this data, which is surprisingly, extremely good.
This is our last week of the Investment Outlook series for 2025. We will spend the rest of the year analyzing, evaluating, and writing for our Annual Reviews and Outlooks, which we will begin publishing on January 9, 2026. The reports will run through mid-February, so please watch for those.
Happy New Year and Best of the Holiday Season to you and your family from the entire Pathfinder Team.
National Instrument 31-103 requires registered firms to disclose information that a reasonable investor would expect to know, including any material conflicts with the firm or its representatives. Doug Johnson and/or Pathfinder Asset Management Limited are an insider of companies periodically mentioned in this report. Please visit www.paml.ca for full disclosures.
Changes in Leverage. We are increasing the asset ceiling to 2.0 times the market value of equity for Pathfinder International Fund and Pathfinder Conviction Fund to be consistent with Pathfinder Partners’ Fund and Pathfinder Resource Fund.
For more information, please follow the links above to review the fund term sheets.
*All returns are time weighted and net of investment management fees. Returns from the Pathfinder Partners’ Fund and Partners’ Real Return Plus Fund are presented based on the masters series of each fund. The Pathfinder Core: Equity Portfolio and The Pathfinder Core: High Income Portfolio are live accounts. These are actual accounts owned by the Pathfinder Chairman (Equity) and client (High Income) which contain no legacy positions, cash flows or other Pathfinder investment mandates or products. Monthly inception dates for each fund and portfolio are as follows: Pathfinder Core: Equity Portfolio (January 2011), Pathfinder Core: High Income Portfolio (October 2012) Partners’ Fund (April 2011), Partners’ Real Return Plus Fund (April, 2013), and Partners’ Core Plus Fund (November 2014).
Pathfinder Asset Management Limited (PAML) and its affiliates may collectively beneficially own in excess of 10% of one or more classes of the issued and outstanding equity securities mentioned in this newsletter. This publication is intended only to convey information. It is not to be construed as an investment guide or as an offer or solicitation of an offer to buy or sell any of the securities mentioned in it. The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable and that the procedures used to summarize and analyze such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor PAML can make any warranty as to the accuracy or completeness of information, analysis or views contained in this publication or their usefulness or suitability in any particular circumstance. You should not undertake any investment or portfolio assessment or other transaction on the basis of this publication, but should first consult your portfolio manager, who can assess all relevant particulars of any proposed investment or transaction. PAML and the author accept no liability of any kind whatsoever or any damages or losses incurred by you as a result of reliance upon or use of this publication.