FFM Fund Newsletter - May 2026

May 2026

Dear Friends, Dear Investors,

April brought a sharp and broad-based rally across equity markets, particularly in the US and in the technology sector. After the initial shock of March, investors appeared to take the Persian Gulf conflict in their stride, concluding that higher oil prices would not derail global growth — at least not in the short to medium term. History offers some support for that view, notably the period between 2010 and 2014, during which the global economy continued to expand despite elevated oil prices.

The rebound was also fuelled by strong corporate earnings. The hyperscalers continued to invest at a staggering pace in AI infrastructure: capital expenditure initially projected at USD 600 billion for 2026 has now been revised upward to approximately USD 750 billion, with 2027 projections approaching the symbolic USD 1 trillion milestone. At roughly 2.5% to 3% of US GDP, this level of spending has all the hallmarks of a bubble. Our approach remains unchanged: stay invested while gradually and patiently reducing exposure, fully aware that we will likely act too early.

This context only reinforces the guiding principle of our investment approach. Rather than trying to anticipate cycles or sector rotations, we focus on identifying companies whose internal mechanics do the work on their own. In concrete terms: firmly established market leaders, whose economic asset base grows between 12% and 15% per year, with operating margins generally above 50% and controlled leverage.

These qualities, taken together, define companies that do not need external capital to grow. They generate enough cash to fund their own expansion and — this is the decisive point — know how to put every euro of profit back to work at returns that very few players can match. Rather than paying a comfortable dividend, they prefer to reinject their profits into the machine. This patient discipline, unremarkable year by year, is precisely what ends up making the difference: over ten or fifteen years, the compounding effect becomes considerable.

In an environment where capital is being deployed at unprecedented scale — primarily in the AI sector — selectivity and discipline matter more than ever.

Best regards,

Your CaridaB Group Team