Market Insights

Digesting the Challenging Backdrop for Restaurant Fundamentals

We have a long history of investing in restaurants. And, while we are always discerning in our approach, we’ve become even more so recently.

We believe the combination of weak top-line growth, ongoing cost inflation, and weakening pricing power creates a difficult backdrop for near-term restaurant...

Without a Clear Victory Over Recession, Potential Pitfalls Remain

Between early 2022 and mid-2023, as the Federal Reserve aggressively raised interest rates in an effort to lower inflation, it caused significant uncertainty within stock and bond markets.  

Today, although the rate of inflation has subsided and the consensus appears to be that we have reached an...

A Surge in Weight-Loss Drugs Caused Investors to Lose Their Appetite for Food-Related Stocks in Q3

Much as artificial intelligence (AI) dominated headlines and investor mindshare earlier in the year, in the third quarter, the market became fixated on the impacts of GLP-1 drugs. These drugs (GLP is short for glucagon-like peptide) include Novo Nordisk's Ozempic and Wegovy, Eli Lilly's Mounjaro...

Unpacking the Implications: Rising Interest Rates and their Ripple Effects

The market seemed to grapple with a "higher for longer" interest rate environment in the third quarter. The benchmark 10-year Treasury rose significantly (from 3.81% to 4.57%), causing unease for investors, and contributing to the market’s decline during the period. Given the sharp rise in interest...

The Value Investor Toolbox: Private Market Valuation

Underneath the umbrella of value investing lies a variety of techniques that aim to identify mispriced assets. At Prospector, we heavily utilize two approaches in the value investor toolkit that we believe can add value in any market environment: private market valuation (PMV) and free cash flow...

Don’t Look to the Income Statement to Gauge Company Health

At Prospector, when we evaluate a company our first objective is to assess its downside risk. We do this by looking at the balance sheet first, followed by the cash flow statement, and finally the income statement. This is the inverse of how most equity analysts approach fundamental analysis and...

A Spotlight on Under-the-Radar Financials, Part 2

A question we’re often asked is how, given our consistent focus on the financial sector, we've historically been able to achieve differentiated returns during periods of acute stress in the banking system. There are several factors behind our track record, all of which are a product of our...

A Spotlight on Under-the-Radar Financials, Part 1

We are firm believers at Prospector that active management should not begin with a benchmark. Our bottom-up approach to portfolio construction and our focus on areas of the market where we possess competitive advantages generally produce stock and sector allocations in our portfolios that differ...

Achieving Outperformance with Lower Volatility

Prospector’s approach to equity investing has long been focused on the concept of upside participation and downside risk mitigation. As conservative investors, we eschew flashy names with brilliant growth prospects in favor of high quality, value-oriented stocks that can participate in rising...

Ending the Year with an Attitude of Gratitude

At Prospector Partners, we’re winding down the year with thoughts of appreciation, gratitude, and optimism. That’s not to say we were unfazed by the events that contributed to volatility in the markets this past year. However, in the 25 years since founding Prospector Partners, we’ve seen that the...