The Mood Rhymes
Today is SpaceX’s IPO day and after today, both OpenAI (the maker of ChatGPT) and Anthropic (the maker of Claude) are also expected to IPO with reported $1 trillion dollar valuations. The chart below only shows until 2025. Today’s IPO alone is over $80bn in proceeds, with 2 more similar-sized IPOs slated for the back half of the year which will likely make 2026 by far the biggest IPO year in history. AI is bringing significant technology change and animal spirits are unmistakable. While AI has the potential to transform several industries, today’s mood rhymes with another era — the technology boom of the late 1990s.
We are not dismissing AI. The internet did, in fact, change the world. But the path from a transformative technology to durable shareholder returns is rarely a straight line, and it is almost never obvious in advance.
Consider the telecom and fibre-optic companies of that period. The thesis was correct — data traffic would explode — and yet much of the industry overbuilt capacity, financed it with debt, and ultimately destroyed enormous amounts of capital. The technology was real; the businesses, in many cases, were not. We note a recent Bloomberg article referencing today’s datacenter financing, with its special purpose vehicles and chip-supplier guarantees, with that history firmly in mind.
The truth is that the eventual winners are difficult to identify at the peak of enthusiasm. In 2000, few investors would have confidently named Amazon and Google as the defining franchises of the next twenty-five years, and many of the most celebrated names of that moment no longer exist. We suspect the same will prove true here. A meaningful share of today’s business models are unproven, and some that look like the next great franchise may, on closer inspection, turn out to resemble the telecoms.
This is not a call to sit on the sidelines. It is a reminder of why we remain disciplined — focused on valuation, on business quality, and on what we can reasonably underwrite. Our North American portfolio has exposure to the AI theme with leaders in the GPUs powering AI like NVIDIA and companies with proven cash flows poised to benefit like Alphabet. But we otherwise remain cautious and disciplined in this exuberant environment.
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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).
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