Market Insights

Election 2024: Part 1 Parties, Policies, and Perspective

With less than three months before Election Day, the race for U.S. presidency is heating up.

Every election brings the potential for unknown outcomes and volatility. However, this cycle has already had more than its share—from a debate performance by President Biden widely viewed as so disastrous...

Pockets of Opportunity in Industrials

Updated version of original article from May 2023

At Prospector we evaluate all of our investments from the perspective of downside risk mitigation above all else. Across all industries, we target companies with strong, low-leverage balance sheets, dependable free cash flow generation,...

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...