Global Value [[{“value”:”
In 2025 Lyrical Global generated a 21.1% return, in line with the MSCI World Index and slightly ahead of the MSCI World Value Index. This was a satisfying result, especially considering we passed on two of the highest-returning areas of the market: mega cap tech stocks and large European banks. Fortunately, our bottom-up, fundamental stock selection made up for the absence. We matched the MSCI World Index’s return, mostly due to earnings growth in our portfolio. Our companies grew EPS 14.2%, in 2025, well ahead of the 9.6% of the MSCI World.
In the U.S., it was difficult to keep pace with a market propelled by AI enthusiasm and the mega-cap tech companies. The market leadership in the U.S. was so narrow that 70% of the S&P 500 constituents underperformed. Despite this challenging environment, our U.S. investments kept pace with the index return. We were able to do this, in part, by benefitting from several AI beneficiaries. In our global fund, five AI-related stocks rose by 72% and delivered eight percentage points, representing about 36% of our total return for the year. To be clear, these stocks were selected from amid the junk, with an average forward P/E of 10.2x at purchase. And despite the swift rise this year, the four AI-related stocks we continued to hold at year-end traded at only 16.0x P/E.
Outside the U.S., it was a different story, with strong returns for both the indices and our stocks. The MSCI EAFE delivered a 31.2% return, finally closing some of the valuation gap that had expanded for more than a decade between U.S. and non-U.S. stocks. Our non-U.S. stocks performed even better, returning 33.9%. Here too we faced a significant headwind from banks, which surged by 55% and accounted for 30% of total non-US stock return of the MSCI World. Even though these bank stocks are cheap, we avoid them because of their weak business structures and poor fundamentals, which has made them long-term underperformers.”}]]