Market Musings
2025 in Review, Portfolio Update, Themes for 2026 and Beyond
2025 in Review
2025 was a stark reminder of just how much volatility in both directions Trump brings to the stock market. Rather than side with the things that President Trump wants, we are largely positioned contrary to his political objectives given we own many commodity products that are essential to remain cheap and get cheaper to achieve the sort of inflation figures and interest rate environment that Trump and his administration are targeting.
While the commodity prices themselves were muted or declining, our performance for 2025 was better than what one would assume by just looking at the chart for the underlying commodity. Part of the reason for this is we own services businesses that do not have as much of the direct exposure to the underlying commodity itself.
The other part that I think has been largely missed by the markets is stocks servicing commodity businesses or even the stocks most geared toward the commodity price movement have held up because of industry consolidation and cleaner balance sheet dynamics.
One example we continue to point to is the ultra-deep water drillers. All of these businesses have recapitalized or are in the process of doing so since the last downturn in COVID and as a result the cash generative ability of the businesses has improved. Utilization rates for UDWs in 2025 were not particularly good yet day rates for the space broadly held up whereas in cycles past utilization disappointments would have resulted in $50-$100K reduction in day rate.
This extends beyond drilling services firms and into many of the cyclical/commodity related businesses we own. Before we dive into those dynamics lets just quickly walk through some of our headline commodity prices for the year along with a brief note.
Oil
