Kevin Bertoli, co-portfolio manager at Sydney-based PM Capital, which is owned by Regal Partners and oversees $5.5 billion in assets, notes that valuation discipline is critical in the current market. He observes significant intraday price movements based on earnings results, indicating market sensitivity to even minor disappointments. Elevated valuation risks, especially in areas with strong re-ratings, leave little room for error. PM Capital, an investment management firm, focuses on delivering consistent returns through a value-based and research-driven approach.
Bertoli highlights European banks as core holdings in the Global Companies Fund, citing the normalisation of interest rates, resumption of loan growth, and industry consolidation as key factors. Despite recent re-ratings, these banks still trade at attractive multiples and are returning capital to shareholders. PM Capital favours institutions with dominant domestic franchises and stable deposit funding bases.
One stock that PM Capital owns that investors may not have heard of is Royalty Pharma, a pharmaceutical financing company. It acquires royalty interests in approved and late-stage medicines, providing upfront capital to biotechs in exchange for a portion of future drug sales. Royalty Pharma recently reported strong fourth-quarter results, driven by leading therapies across oncology, immunology and rare diseases. Bertoli also sees potential in Union Pacific, the largest listed freight railroad in the United States, particularly if its proposed merger with Norfolk Southern proceeds, creating a coast-to-coast freight railroad.
