Investment Considerations

In stark contrast to the record real capital investment in computers and electrical equipment, real capital investment for other sectors that matter more to trucking companies from a freight generation standpoint are performing dismally so far in 2025. Two charts below. Thoughts: •The top chart shows real agricultural equipment investment. Investment was down 20% year-over-year in Q1 2025 and 14% in Q2 2025. These are two of the weakest readings over the last 18 years (data stretches back to Q1 2007). The most recent investment peak occurred during 2021 and 2022 when commodity prices for corn and soybeans were far stronger. Farmers today face many challenges including (i) China’s reluctance to purchase new crop soybeans that are about to be harvested; (ii) low commodity prices (outside of slaughter cattle); and (iii) labor availability due to changes in immigration enforcement. All these factors bode ill for domestic farm equipment producers like John Deere, which is made more problematic because tariffs are substantially raising manufacturing costs (making US exports of farm equipment less competitive). •The bottom chart shows real capital investment for mining & oilfield machinery. Despite repeated statements of “drill, baby, drill”, capital investment has fallen in 2025. Q2 2025’s reading was particularly bad, coming in a -27% year-over-year. Low crude oil prices, more OPEC production, and oil drillers increasingly focusing on return on investment (as opposed to sinking as many wells as quickly as possible like they did in 2011-2014) mean that we won’t ever see the type of capital investment in this equipment that we did 11 years ago. Furthermore, on the mining front, coal mining certainly isn’t a growth sector (output today is down 25% from 2017 and down 50% from 2006: https://lnkd.in/gBG-MMA6). Implication: one observation that fascinates me is how many people believe a change of the resident of 1600 Pennsylvania Avenue can somehow change the workings of underlying economic mechanisms. People can throw out slogans like “drill, baby, drill”, but at the end of the data, fundamental economic mechanisms and principles drive outcomes. For firms like trucking companies trying to forecast demand, don’t let political biases get in the way of economic reality. For example, back in December and January, I was one of the few commentators who predicted how detrimental major tariffs would be to what we all thought would be a much stronger year in the for-hire trucking sector. Other commentators disagreed. It turns out I was far more correct than the pro-tariff perspective ended up being. Why? Because my predictions are grounded in underlying economic theory and empirical findings, whereas the other perspective wasn’t. If people can’t provide multiple peer reviewed studies to support their predictions, it’s troubling to say the least. #supplychain #shipsandshipping #freight #trucking #truckload #economics

Moody's Ratings has made a significant announcement (to me at least): Water is no longer just an ESG concern; it is now recognized as a credit risk. In their recent analysis, water is identified as: • A credit differentiator • Embedded in sovereign and infrastructure risk • Modeled as a systemic dependency (e.g., desalination in the Middle East) Approximately one-third of rated sovereigns are already experiencing elevated water stress. For investors and private equity, this shift changes the landscape: Water risk now directly affects: • Asset valuations • Cash flow stability • Insurance availability • Exit multiples The transition is clear: Yesterday → Water was merely a disclosure topic Today → Water is being factored into risk assessments What does this mean? We are moving towards a repricing of: • Energy and utilities • Industrials • Infrastructure portfolios Additionally, there will be an increasing premium on: • Water resilience capital expenditures • Basin-level risk understanding • Scalable water technologies If water is not yet included in your investment committee memo, it will soon be a critical factor in your downside case. On the positive side, its good news for new water technologies that are able to mitigate those risks compared to the usual suspects 😉 For further insights, consider these sources: https://lnkd.in/eWhx-_wJ https://lnkd.in/emEpxztA https://lnkd.in/ex8xwv8X

Who Controls the Land Controls the Future of Farming Lack of land access is another of the main obstacles to regenerative agriculture in Europe. Farmers who want to build soil health, restore biodiversity, and farm in a way that benefits both people and the planet often face an impossible hurdle: they don’t own the land they farm - or they can’t afford to buy it. Why Access to Land Is the Problem 📈 Farmland prices differ significantly across Europe, but are rising throughout. In 2022, the cost of a hectare of arable land ranged from €3,700 in Croatia to €233,230 in Malta. England and Wales hit record highs in early 2024, driven by speculation, government funding, and private investment in environmental schemes. ⏳ Leases are too short for long-term stewardship. In Ireland, 91% of rented farmland is under 11-month (!) “conacre” agreements. In Finland, nearly 40% of leases last just five years. If you don’t know if you’ll be farming the same land in a few years, why invest in soil restoration or agroforestry? 🏦 Investment is a double-edged sword. There's a significant rise in institutional money flowing into farmland, partly to support regenerative agriculture. But this also drives up prices and consolidates land ownership, making it even harder for small farmers and new entrants to get a foothold. What good is ecological regenerative management if it erodes the social fabric of the place? What are the Opportunities for Change? ✅ Stronger lease protections. France’s Statut du fermage mandates minimum 9-year leases, giving tenant farmers stability to invest in soil health. Similar policies across Europe would make regenerative agriculture a viable long-term choice. ✅ Tax incentives for long leases. Ireland offers tax breaks for landowners leasing for 5 to 15 years or more. The U.S. has similar programs under its Conservation Reserve Transition Incentives Program (CRP-TIP). These strategies work. ✅ Community and cooperative land models. Across Europe, innovative land ownership structures are breaking the cycle of speculation and exclusion: Lenteland (Netherlands): Community-owned cooperatives steward farmland regeneratively. Terre de Liens (France): Buys farmland and leases it long-term to sustainable farmers. Regionalwert AG (Germany): A citizen investment model funding regional organic farms. And the new Land Stewards (Italy): A program by regenerartive farmers for regenerative farmers to purchase land together. Regenerative agriculture is about more than cover crops and no-till. If we want a resilient, regenerative food system, we need to think about ownership, access, and incentives. What models are working in your region? From private initiatives to national policies to cooperative models, we have many solutions already. Let's list them below. (Photo below of Herberto Brunk's beautiful Herdade das Escravides de Baixo in Portugal)

Water the investment risk? Our new Danske Bank white paper is finally OUT!! Our analysis shows that 39 Nordic companies dependent on water in their operations generate DKK 1,700 billion in revenues while operating in high or extreme water-stressed areas. That equals around 13% of Nordic GDP – and that’s a conservative estimate, as value chains are not included. So what’s the issue? 💧Many of these water-dependent companies are not disclosing whether they measure, mitigate, or prepare for water risk. 💧This leaves them exposed to production disruptions, higher costs, license-to-operate challenges – and ultimately investor pressure. 💧and it won't stop here: scenario modelling shows that company exposure to water stress will only increase in the future. This is not a future dystopia: 🚗 Tesla’s Berlin gigafactory faced costly delays due to groundwater protests. 🍺 Constellation Brands wrote down $660 million abandoning a brewery in Mexico. 🌊 Antofagasta had to invest $1.5 billion to secure seawater access in Chile. The risks are systemic. Today, more than 4 billion people live under water-stressed conditions for at least one month of the year. The WEF Global Risk Report 2025 lists water shortages as a top-five risk in 27 countries. The Stockholm Resilience Centre confirms the planetary boundary for freshwater has already been crossed. By 2050, 31% of global GDP is projected to be exposed to high water stress. In our research, we combined company revenue data, asset locations, materiality data, and water stress maps – structured via the TNFD-aligned LEAP framework – this can enable investors to: ✔ Identify water-exposed holdings ✔ Inform engagement strategies ✔ Integrate water risk into portfolio construction We also include a deep dive on beverage companies - a sector that is for obvious reason very dependent on water - and compare Nordic players to their global peers. The results highlight the different approaches taken by global beverage companies. Nordic companies are not yet waterproof. But with the right tools, data, and investor engagement, they can be. This paper offers a concrete starting point for that journey. Find the paper here: https://lnkd.in/dekSVkFJ #Danskebank #responsibleinvestments #waterstress #dkfinans Peter Lindström, CFA, Allan Emanuelsson

Greenland is not about territory. It is about Arctic access — security footprint, critical-minerals optionality, and how alliance politics now show up inside capital allocation. Three takeaways matter for business leaders and investors. First, this is about Arctic operating advantage, not sovereignty. The United States does not need to own Greenland to secure what it wants. The objective is forward positioning: missile warning, space surveillance, Arctic air and naval reach, and logistics corridors between North America and Europe. Formal ownership would be politically explosive and unnecessary. What matters is privileged access to infrastructure, ports, airspace, and basing rights. Second, critical minerals are leverage, not near-term production. Greenland’s mineral potential matters less for immediate extraction than for strategic optionality. In a world where China dominates rare-earth processing, even the possibility of alternative supply strengthens negotiating power and investment planning. This is about supply-chain bargaining power over the next decade, not mines coming online tomorrow. Third, this is a signal to allies as much as to rivals. The episode reminds us that security guarantees now come with expectations of alignment. For Europe, it has already triggered a rethink on energy and dependency risk. For smaller partners, it reinforces a new reality: access to U.S. security architecture increasingly travels alongside expectations on infrastructure, resources, and strategic cooperation. So what does this translate into for boardrooms? This is already landing in investment committees from Singapore to London, from New York City to Tokyo, and increasingly in Frankfurt and Abu Dhabi — wherever CEOs, CIOs, and investment committees are making long-duration bets under geopolitical constraint. Concretely, that means: Defense and Arctic-adjacent infrastructure: ports, radar, space monitoring, cold-region logistics Critical-minerals exposure: early positioning via partnerships and offtake, not headline acquisitions Supply-chain redesign: routing, redundancy, inventory strategy for northern corridors Risk pricing: insurance, shipping, and sovereign-interface risk moving into project IRRs Greenland is where this shift becomes visible: in defence contracts and port upgrades, mineral off-take and shipping routes — as supply chains are rerouted and investment committees price Arctic access, logistics resilience, and resource security into real projects. Policymakers will draw lessons too. But the first-order moves are already being made by business leaders and investors allocating capital across a more fragmented operating environment. #Geopolitics #Arctic #CriticalMinerals #Infrastructure #Defense #Investing #SupplyChains #EnergySecurity #GlobalRisk

Excited to share my latest piece for the International Institute for Strategic Studies on American state capitalism and critical-mineral diplomacy. Since January 2025, the Trump administration has moved decisively toward a more forceful, state-led approach to securing critical mineral supply chains—accelerating permits, brokering private capital, and deploying public financial institutions as strategic tools. China’s April 2025 export controls and licensing restrictions only reinforced this shift, helping trigger a surge of U.S. public investment into rare earths and other critical inputs. In the article, I argue the U.S. strategy now runs on three tracks—launched in stages but increasingly intertwined: 🏈 “America First” deals that deepen state involvement in domestic projects; 🤝 Bilateral agreements abroad, backed by government finance and public–private partnerships; 🌍 Pax Silica, a coalition-of-capabilities framework linking capital, reserves, processing know-how, and downstream demand across allied jurisdictions. Together, these tracks aim to secure “reliable supply chains and access to critical minerals,” now framed as a national-security priority. The real test is execution—and whether coalition-building can hold when it is paired with tariff threats and other leverage tools that strain transatlantic and wider allied trust. #EconomicSecurity #CriticalMinerals #RareEarths #Geoeconomics #IndustrialPolicy #SupplyChains #StateCapitalism https://lnkd.in/dJfPeKDh

Seems like The Weeknd is exploring a $1 billion financing deal using his catalog as collateral, according to Bloomberg. Turns out his records really are gold. It's a strategy that lets artists unlock value in their albums without completely losing control of their work. The report indicates New York-based Lyric Capital Group is leading discussions for a sophisticated financing package that breaks down into three tiers: 🟦 $500 million in senior debt 🟦 $250 million in junior debt 🟦 $250 million in equity What's backing this massive potential deal? The Weeknd's stake in his music publishing rights and his share of master recordings. Think hits like "Blinding Lights" (Spotify's most-streamed song ever), "Starboy," and "Can't Feel My Face." These tracks generate consistent revenue through streaming, radio play, sync licensing, and performance rights. This isn't a sale. The Weeknd likely keeps creative control while accessing capital that could fund everything from his production company Manic Phase to other business ventures. If the deal goes through, investors get returns from his music's ongoing revenue streams. This approach reflects a fundamental shift in how music intellectual property is being valued and traded. Since 2019, at least $20.4 billion has flowed into music rights deals, attracting major players like BlackRock, Blackstone, Apollo Global Management, and KKR. But it's not just institutional investors - new digital platforms are also allowing smaller investors to participate in this asset class. (I'll add a link with a preview of some of WIPO's research work in this space). What makes music rights particularly attractive to investors? They aren't as susceptible to economic downturns as traditional investments, offering portfolio diversification and relatively stable income streams. The streaming economy has made music distribution cheaper and future revenue more predictable - especially for established artists with proven catalogs. The Weeknd's potential deal represents the modern evolution of David Bowie's pioneering "Bowie Bonds" from 1997, when Bowie raised $55 million by securitizing his pre-1990 catalog. Today's music finance operates at a completely different scale, with The Weeknd's catalog generating massive revenue streams across multiple platforms and licensing opportunities. Which artist's catalog would you finance for a deal like this? #ipfinance #copyright #BlindingLights #StarboyCash #AfterHoursBanking

While most financial institutions scrambled to survive the 2025 "permacrisis," three firms didn't just adapt—they thrived. Mastercard (#1), DBS (#2), and Progressive (#6) now top our Future Readiness Index by turning regulatory headwinds into growth engines. BACKGROUND: Global GDP crawling at 2.7-3.3% and fragmented regulatory landscapes have created true "permacrisis" conditions. Most institutions delayed decisions. The winners did the opposite. Future-ready organizations demonstrate two counterintuitive characteristics: First, they master technological patience. DBS didn't rush AI implementation. CEO Piyush Gupta orchestrated a "house-wide spring clean" with frontline staff rewriting workflows before adding cloud services. The result? Sub-second account openings and products rolling out across six markets in weeks. Second, they turn compliance from burden to advantage. Progressive transformed actuarial science into a real-time sensing network years before competitors. The payoff was five million new policies and 21% premium growth in 2024. But here’s the most striking insight: Each took a different path. Mastercard exploded their payment rail into bite-sized public APIs—powering transactions from China to Ghana while maintaining "five-nines" uptime. DBS compressed internal complexity until change became routine, completely rewiring the bank from within. Progressive gambled early on Snapshot devices, collecting billions of miles of driving data. By 2024, they could auto-detect crashes and dispatch help in milliseconds. As our research at IMD shows: "Future readiness is not a single playbook but a shared mindset." Three principles that set these leaders apart: 1. Build platforms that welcome future possibility. 2. Build cores that absorb future shock. 3. Treat every regulatory jolt as design input rather than drag. In 2025's uncertain landscape, you won't just survive the next discontinuity … you'll define it.

SpaceX’s listing is kicking off a mammoth cycle for IPOs. Other AI leaders will follow, seeking to raise an estimated USD 215 billion in markets which are already at record highs. A tipping point? Enthusiasm is understandable because AI is fundamentally reshaping economies. It’s also a regime change for the tech sector. Focus will now shift from storytelling to spreadsheets as investors move from narratives to price discovery. We will now have the tools to measure revenues, leverage, free cash flows, and customer concentration risks. We will learn which business models will deliver consistent returns and where value is being created. But we will also see more market volatility, pressure on existing tech leaders, and a need to manage rising dependence on AI-driven names that have dominated returns so far. This IPO cycle marks the next phase in financial and technological evolution, and is already reshaping markets. Some index rules are bending, passive flows are being redirected, and concentration risks are intensifying. The impact on portfolio diversification is hard to overstate. History tells us that investing in IPOs usually disappoints over the long term, with the average newly listed US firm trailing the market over its first three years, especially during periods of peak enthusiasm. Early trading grabs headlines, but the average investor often pays a higher price for shares and inherits weaker performance over time. Diversification remains the most effective tool for investors, yet it can no longer be assumed – it must be carefully built. With Clément Dumur, I explore these shifts and investment risks in the new chapter of our ‘Intelligent Allocator’ series. Don’t miss it – and watch out for the elephants in the index.

"What's Capitalmind Mutual Fund's policy about investing in IPOs?" - one of the most frequent questions we've got in the last month. TL,DR: The odds tend to be against you, but never say never. We analyzed 2,000+ Indian IPOs from 2000 to 2025. The headline finding: Only 40% beat the NIFTY 500 Total Return Index over the long term. Less than a coin flip. The problem isn't the businesses, many grow earnings impressively. The problem is timing and pricing. IPOs flood the market when optimism peaks and valuations stretch. By the time you get allocated shares, much of the upside is already priced in. Three patterns from the data: 𝟭. Listing pops are theater. Median first-day gain is just 7%, and 30% of IPOs list flat or down. The spectacular gainers you remember? Availability bias. 𝟮. The years they list matters. IPOs that list during "quiet" times do better long-term than those listing in the throes of a bull market. The liquidity regime and sentiment at listing often overwhelms company performance for years. 𝟯. Smaller IPOs perform better. Smaller deal sizes have posted 14% median returns vs. 9% for the largest IPOs. And 49% beat the index vs. just 39% of large IPOs. At Capitalmind, our default stance: pass. We engage only when we find a business we already understand deeply, priced with genuine margin of safety. The full analysis breaks down issuance cycles, return dispersion, and why adverse selection makes IPO investing structurally difficult. 👇🏼 Here's the full article from the October Factsheet.