Investor call - December 2025

During the investor call, Value Square looked back on the past trading year, which—contrary to many expectations—was characterized by remarkably strong returns. The main stock market indices achieved solid returns, with equity indices recording average gains of between +13% and +20%. Bonds also posted slight gains this year. All this despite ongoing geopolitical tensions and continued volatility surrounding import tariffs.

The market overview emphasized that US large caps and technology stocks in particular have outperformed the rest of the market in recent years. However, this outperformance is largely due to multiple expansion rather than superior earnings growth. Small and mid caps, both in the United States and in Europe, continue to trade at historically low valuations. Value Square sees significant opportunities here, as the fundamental earnings growth of smaller companies has remained largely intact. Moreover, Europe appears to be relatively attractively valued compared to the US, especially if the expected earnings growth in 2026 is realized and major investment programs begin to show their effect.

In addition, extensive consideration was given to macroeconomic risks, including high government debt, geopolitical tensions, and the sustainability of massive investments in artificial intelligence by large technology companies. Although certain AI-related segments are showing signs of overheating, Value Square believes that the current situation is not comparable to the technology bubble of 2000. After all, the dominant players today are profitable and generate strong free cash flows. Nevertheless, some excesses are emerging on the periphery of the major players. This is something that will need to be monitored closely in 2026 as well...

The thematic section focused on demographics and productivity in Europe. The combination of rising pension expenditure—both in terms of the number of beneficiaries and the amounts involved—and a relatively shrinking working population is putting structural pressure on public finances. Artificial Intelligence is often touted as a kind of magic solution, but although it can increase productivity in a number of sectors, Value Square remains more realistic and cautious in its forecasts.

Internally, AI is used, among other things, as a supporting tool within the analysis process, without replacing the role of human decisions.

Finally, Value Square reaffirmed its long-term strategy for 2026: disciplined investment in undervalued quality companies with higher margins and a more defensive balance sheet. Preference is given to companies with an attractive dividend policy and share buyback program. According to the team, the better risk-return ratio can currently be found in the small and mid-cap segment.