FFM Fund Newsletter - Jun 2026

June 2026

Dear Friends, Dear Investors,

Two subjects dominated markets and our attention this month: artificial intelligence and the price of oil. Both saw significant developments.

But first, a quick word on private equity. As you know, we have always advised clients against overweighting this asset class: too much competition, excessive fees, and an opacity that masks the reality of valuations. Private equity firms then added private debt, compounding the risk. Partners Group, after having lectured its competitors on precisely this subject, was forced to announce a limitation of redemptions on its flagship fund, Partners Group Global Value Sicav, as too many investors decided to exit simultaneously. The stock reacted predictably poorly:

This illustrates a fundamental truth of markets: volatility can be hidden, never eliminated. We believe institutional investors — pension funds in particular — could remain stuck with underperforming private equity positions for some time yet.

Let us now turn to artificial intelligence. At the start of the year, we told you that AI was in a bubble based on capex numbers. Those numbers have only grown since. Alphabet raised USD 80 billion in equity in a single day — a smart move that sends a clear message to its competitors. Meta is rumoured to be doing the same. Hot on its heels, a wave of initial public offerings has emerged: SpaceX at around USD 80 billion for a total valuation of USD 1.8 trillion, followed by Anthropic and OpenAI. These companies are capitalising on a favourable market window and valuations that require heroic assumptions about their future. We would advise against participating.

About half of the S&P 500's market capitalisation is trading at 10 times revenues or above. The words of Scott McNealy, CEO of Sun Microsystems, spoken in 2002, resonate with troubling relevance today: “At 10 times revenues, with zero costs, zero expenses, no taxes and zero R&D, who would buy my stock? What were you thinking?” To us, this is a bubble. But as we keep saying, you need some exposure to it — the trickiest part remains knowing when it ends, because there will be no prisoners. This striking chart illustrates our point:

The Nasdaq Composite, since late 2022 (the launch of ChatGPT), has tracked the trajectory of 1994 (the launch of Netscape) almost perfectly. If past is prologue — and that is a big if — we have probably not yet reached the end of this cycle. That said, the major IPOs announced look more like 1999 than 1998, and a correction in tech may already be underway.

On the oil front, the situation has evolved materially. The Strait of Hormuz, closed for over one hundred days, is on the verge of reopening following an agreement between the United States and Iran. Markets moved quickly to anticipate this resolution: the price of oil has fallen noticeably in recent days, erasing much of the geopolitical risk premium that had built up since the start of the crisis.

This is, unambiguously, good news for the global economy and for financial markets. The removal of this major risk factor lifts a significant drag on growth and could give central banks additional room to manoeuvre. However, we should not expect an immediate and complete normalisation. First, because the reopening of a strategic strait does not mean that oil flows instantly return to their normal rhythm: logistical disruptions, shipping delays and inventory rebuilding take weeks, if not months. Second, because pump prices follow their own dynamic — refiners and distributors are notably slower to pass on crude price falls than price rises.

Finally, a legitimate question remains over the solidity and durability of the agreement. Iran used the strait as a negotiating lever with remarkable effectiveness. Nothing guarantees that this fragile balance will not crack again, whether due to disagreement over the terms of implementation or shifts in the US political context ahead of the November mid-term elections. We therefore remain attentive, optimistic about the direction of travel, but cautious about the pace of normalisation. As always, the key lies in stock selection, which is precisely what we continue to dedicate ourselves to with the same rigour and conviction, whatever the turbulence around us.

Best regards,

Your CaridaB Group Team