With the latest movements of the central banks in the spotlight and this persistence of inflation risks, do you prefer companies with high pricing power, defensive sectors, or are you taking advantage of more cyclical sectors with recovery potential?
Clearly We look for companies with pricing power.
Our investment process in Santalucía Quality Actions It is very defined. We look for companies in concentrated industries that are leading their markets and that’s where we have companies with pricing power. They don’t necessarily have to be defensive companies at all. Our portfolioin fact, grows at 10% We have companies that are growing quite a bit.
And as for cyclical industriesthe truth is that we do not invest in purely cyclical industries because that is exactly where we do not find companies with pricing power. Because they sell products or offer services that are absolutely undifferentiated, which does not allow them to have any leverage over pricing.
From Santalucía AM you have mentioned that you do not observe “any hint of a bubble” in the large technology companies and that you maintain a long-term “quality” investment vision. With this in mind, what criteria are you using to determine the optimal size of exposure to these tech giants versus other equity segments?
Of the magnificent calls, which often change, the magnificent ones used to be some, now they are others, the number also changes. We are invested in 5. We have Apple, Nvidia, Microsoft, Alphabet and we have Amazon.
Do we see that there are bubbles in these companies? Not at all. And the criteria that we apply to invest in this type of company are exactly the same that we apply in any other value niche, in any other segment. We are invested in life sciences, in companies that make machinery for the development and manufacturing of medicines. And the metrics, the investment process What we follow to invest in one and the other is exactly the same. It is a process that has a qualitative part, a quantitative part.
In the qualitative part we look for dominant companies, global that lead their industries with a clear growth trend. The quantitative part I would say there are two legs. On the one hand there are the company fundamentalstheir operating margins, gross margin, the profitability on the capital they obtain, etc. And then there is the second leg which is the valuation.
When we put all this data, all this analysis into our investment process, we came to the conclusion that clearly our companies, those magnificent ones, there is no bubble at all. In fact, we believe that They have a lot of capacity to create value for its shareholders in the long term.
In the current context with geopolitical tensions, possible recessions, the impact of China, and different interest rates in the US and Europe, how do you take this into account in your global equity management? Are you choosing to cut geographic exposure to certain markets or are you looking for counter-current opportunities?
As to geographic exposure, We do not manage by geography because our companies in the Santalucía Quality Acciones fund are fully global companies, so we don’t care where the company is domiciled, they sell all over the world.
To give a glimpse of how we are positionedapproximately something more than 65% of the portfolio is invested in the United States, 30% in Europe and we have a position in Japan which specifically is Nintendorecently implemented.
As for sailing against the current, it is something that does not define us as a style. There are other investment styles that do seek those contrary options, going against the market. In the end what we see is that when you go against the current what you want is to look for a whirlpool that propels you strongly in a short period of time. These sprints do not define us as investors, we want companies that compound steadily over time at high rates and for that we need, using the simile of the current of a river, large flows that allow us to navigate at high speeds, that is, growing at high rates, as I said, our portfolio grows at 10%.
So, We do not look for ideas against the current, but rather we look for very solid companies that navigate, that grow at high rates.
What are your forecasts for the end of the year and the beginning of next year?
We are practically in November, so make forecasts from now to the end of the year It is practically impossible.
What is clear is that 2025 is going to be a good year for the stock market. In 2026 we will have seen that 2025 is a good year for the stock market and we will probably realize that what has been discounted in 2025 has to do with the relaxation of geopolitical tensions, we have seen that some problems, some tensions have been resolved throughout the year. We have also gained visibility in terms of fiscal policies and monetary policies, everything that Germany has already begun to implement, with its modification of fiscal policies that it already announced at the beginning of the year, in monetary policy we have the paths marked. With which, We will realize in 2026 that all those uncertainties that have been relaxed are the reason why stocks have risen this year.
So, in 2026that uncertainties or that risks we see? More risks associated with company growth valuations. It is true that a lot of investment is being concentrated in artificial intelligence, it is what is driving the American GDP, the American consumer is also very happy because the valuations of their companies and their investments are doing very well. So, well, there we see certain focuses that invite caution, that will probably be the focus of volatility in 2026.