2026 Value Investing Macro Commentary
"So when you're looking at those foreign things like that, that's all momentum. If the US crashes, that will crash even worse. And the yield 1% 2% is ridiculous in both cases. So focus on value is my message for 2026."
The speaker criticizes momentum-based foreign investments amid potential US market crashes and emphasizes a focus on value investments that promise returns above 10%. This commentary reflects a long-term, conservative investment approach for 2026, underscoring the importance of stable, high-quality yield over low-yield momentum plays.
Macro Commentary: Small Caps' Potential as Margin Spreads Widen
"One more. Um I like small caps going into 2026. There I said it. Can't help it. Man, Matt has a chart case last week. Remember, Matt has a chart showing that the profit margins for the S&P 100 versus the S&P 600. The spread is basically at an all-time high with 15.7% for the S&P 100 and just 5.9 for the S&P 600, while the S&P 600 margins peaked 3-4 years ago."
The speaker expresses a bullish macro view on small cap stocks heading into 2026, highlighting an all-time high margin spread between large cap (S&P 100) and small cap (S&P 600) companies. The widening spread, along with historical data on profit margins, supports the notion that small caps may deliver attractive performance going forward.
CAP undervalued amid regulatory easing in Argentina
"Yeah, so Malay has been very good for CAP, which was to be expected. He formerly was the chief economist for Corporation America, which is the parent company of the airport company. So deregulation was near and dear to him since taking office. He's broken up Argentina to state-run airline, as ridiculous as that sounds, in the year 2025. But he broke that up. He's let foreign airlines come in to compete. He's let the budget airlines pretty much operate however they want without restriction. So you have far more local competition, lower prices, so you get more more flights obviously. And then just yeah, more broadly, anything that attracts more foreign capital and particularly more foreign investors coming through to visit the region. Good for air traffic, good for cargo. Cargo business is up a lot now that kind of more going on with the economy."
The speaker explains that regulatory reforms under Malay have significantly benefited CAP. By breaking up the state-run airline and easing restrictions for foreign and budget carriers, the environment now supports increased competition, lower fares, and a higher volume of flights. This boosts both passenger and cargo traffic and attracts foreign investment, suggesting that CAP is trading at a discount and has room to outperform over the next couple of years.
Buy Amsterdam Commodities for Value Exposure
"And now we can go to the best buy here on my YouTube quadrant for me, Amsterdam commodities. And you can see here, this is my model research platform portfolio. And that position is at 3.75% of the portfolio. Perhaps I should have been a little bit bolder when the stock price was lower, but I might still add that these prices because the fundamentals are really great. 5.5% yield P ratio of 10. It is an essential business. Spices, seeds, organic tea, food solutions. They have nailed the previous strategic objectives with 8% EPS growth over the last 10 years."
The speaker identifies Amsterdam Commodities as the best buy in his quadrant, highlighting attractive fundamentals such as a low P/E ratio, robust dividend yield, and consistent EPS growth. He notes that while a lower entry point would have been ideal, the current price still presents value for long-term accumulation.
Portillos: Quality Value Story Hinged on Marketing and Operational Execution
"I believe most of Portillos' problems stemmed from not having a chief marketing officer, and now that they have hired a new CMO with a strong background, the narrative is changing. If they stick to their everyday value approach without jacking up prices, the fanatic customer base and impressive per-location economics suggest the stock could see a dramatic rerating from a low price-to-sales multiple to something higher as operational efficiency and scale improve."
The guest provides insightful company-specific commentary on Portillos. He details the operational strengths of the restaurant chain including high revenue per location, exceptional customer net promoter scores, and robust cash flow fundamentals even in a down market. The commentary is nuanced with a focus on the importance of marketing; he suggests that the lack of a CMO was a primary shortcoming that has now been addressed. While the stock is burdened by near-term growth capex and experimental initiatives, the fundamentals and the strong brand may enable an eventual rerating. The risk factor is clearly outlined: should management deviate from the value proposition by increasing prices aggressively, the investment thesis could quickly sour.