Dear Investor,

"The stock market is a device for transferring money from the impatient to the patient.”, Warren Buffett. In a compression cycle, this truth cuts deepest.

We are operating in a market that has split into two distinct worlds. In the first world, earnings growth is real, accelerating, and durable, but share prices are lagging or declining because investors are paying lower multiples on those earnings than they did 18 months ago. In the second world, prices are holding up or rising, but mostly because sentiment remains elevated and the underlying earnings story hasn’t yet been stress-tested by rates, cycle turns, or structural change. Our position as investors is clear: we want to be buyers in the first world and cautious spectators in the second. We are specifically hunting for high-quality, high-growth businesses, those capable of sustainably delivering 18% or more in earnings growth, whose valuations have been dragged down not by any failure in the business, but purely by the mathematics of a compression cycle.

When we find them, we step in. Why? because when compression eventually reverses, and it always does for companies with genuine earnings power, the investor who bought at the trough benefits from a dual tailwind: earnings growth compounding from below, and multiples expanding from above. The report below is a walk through the mechanics of multiple compression, examines live case studies from market examples and the broader market, exposes the value trap dangers that lurk beneath seemingly cheap valuations, and presents our investment playbook for capitalizing on the disconnect between price and intrinsic value, as seen in our Global Equity Special Fund (USD), Mutli-Asset Strategy Special Fund (USD), Global Shariah Equity Special Fund(USD), Africa Equity Special Fund (ZAR) funds.

Enjoy the read!

For more information about investing in the Arvocap Global Equity Special Fund, Arvocap Africa Equity Special Fund, Arvocap Global Sharia Equity Special Fund and the Arvocap Multi-Asset Strategy Special Fund, contact our client specialists’ team through the email clients@arvocap.com.

View the Report here

Warm Regards,

Arvocap Research