Monthly Investor Letter
December 2025
Overview: The Turning Point
December 2025 will be remembered as the month where the disconnect between speculative AI infrastructure and “Industrial Reality” finally reached a breaking point. While the broader markets spent much of the year buoyed by momentum, our proprietary Eco-economics framework signaled a “November Reckoning”—a structural shift that informed our aggressive move toward the exits in high-valuation tech.
We closed 2025 with a clear mandate: protect the gains from the AI-infrastructure cycle and pivot toward the tangible fiscal drivers of 2026.
December Review: Managing the Tension
Throughout December, we observed a “formidable barrier” as the S&P 500 approached the 7,000 level. During this period, we focused on Weaponized Alpha—utilizing our short book to capitalize on the decoupling of valuations from fundamentals in the cloud sector.
The primary lesson of Q4 2025 was simple: You cannot build a digital frontier without a physical foundation.
As cloud infrastructure valuations became unsustainable, we began the “Great Rebalancing,” rotating capital into the “picks and shovels” of the industrial economy.
Current Positioning: Jan 2026 & “Industrial Reality”
As we enter the new year, we are positioning the portfolio to meet our 75% annual return target through three strategic pillars:
1. The “OBBBA” Tailwind (Long Book)
We are heavily positioned in industrial sectors that will be the primary beneficiaries of the One Big Beautiful Bill Act (OBBBA). This legislation is the cornerstone of our 2026 thesis; we expect this fiscal thrust to drive domestic GDP growth and favor “Industrial Reality” over speculative software.
2. The January Effect & Value Rotation
We anticipate a bullish rotation into beaten-down value stocks in early January. While the mega-cap tech names face exhaustion, we see significant alpha in the cyclical and industrial names that were ignored during the 2025 AI mania.
3. Hedging “Unreliable” Data
A critical component of our current stance is skepticism toward official US economic prints. We have stated internally that we “can’t trust the numbers anymore.” Consequently, our Jan 2026 positioning includes tactical shorts and recessionary hedges to protect against a “hard landing” that the current data may be masking.
Looking Ahead
Our strategy for Q1 is not just about participation, but about precision. We are exiting the “hope-based” trade of 2025 and entering the “reality-based” trade of 2026.
We invite you to review our strategy updates, where we do a deep dive into the specific tickers being added to the Long Book and the mechanics of our current short positions.
Thank you for your continued trust as we navigate this transition.