Portfolio Update
- Brazil: OM re-entered Brazil (EWZ, iShares MSCI Brazil ETF) early in the third quarter, as it now better fits OM’s standard dislocation framework. A cheap market (second cheapest globally) that has frustrated investors by going nowhere for 20-years, but where things are improving and there’s a catalyst for change with October elections (especially if the younger Bolsonaro wins over Lula). Somewhat ironically, OM moved Brazil to a Dislocation in late 2022 on Lula’s return. Unlike his first stint, Lula fell back on old habits, favoring state spending over reform, and the opportunity was squandered. The position also reflects a broader geopolitical view – Latin America is drifting rightwards (see recent elections in Chile, Bolivia, and Ecuador) and towards the US rather than China.
- Uranium: Our Man re-entered URNJ in early August; both the term price and spot price have increased over recent quarters while uranium miners corrected by ~50% from their peak. The good news is that OM re-entered at a price ~20% lower than his earlier exit and has room to add to the position. The bad news is the stock prices have kept going down…
- AI & Semis: The sharp 30-40% pull back in Memory stocks (DRAM) allowed OM to enter the DRAM position discussed last quarter. The positioning is relatively small, reflecting that it remains an attractive investment even if the most explosive part of the theme is unfortunately behind us.
Performance and Review
Our Man’s portfolio fell -0.6% during the third quarter, lagging both the S&P 500 TR (+2.3%) and the MSCI World (+1.8%). The underperformance was concentrated in September, when the portfolio fell -3.9%, while the S&P 500 TR (-0.4%) and MSCI World (-0.8%) had more muted losses. The portfolio had outperformed slightly across July (+0.0%) and August (+3.3%).
For the year, the portfolio (+7.8%) sits behind the S&P 500 TR (+12.7%) and MSCI World (+12.4%).
The medium-term history of the portfolio is below:
Third Quarter Attribution
Shipping/Tankers (+408bps) was the largest contributor to performance during the quarter. OM ran his historical posts and thesis through Claude and asked for its opinion on the position. Suffice to say that Claude was not a fan;
- Tanker rates are historically high, driven by the Russia/Ukraine and the Iran conflicts more than structural tightness
- Valuations are no longer very cheap
- Owners have placed record orders for new ships
- New IPOs/secondaries in the space (the historical sign of a top in the markets).
To be fair, Claude isn’t wrong about how this ends. It perhaps, lacks the imagination to see how far things can run before then.
The conflicts are increasing demand from both longer routes (US to anywhere) and inefficient trading patterns (see here for a prior example), while sanctions and attacks are reducing supply. In physical markets, unlike software, the price reaction and profit flow-through are non-linear. At the start of 2026 it cost ~$30K/day to charter a supertanker from the Middle East to Asia. Claude was right to be aghast when spot rates reached ~$300K/day, and to expect mean reversion. Instead, spot rates have climbed to over $1M/day, dragging recent 1-year time charters above $300K/day. With costs largely fixed, most of this drops straight to the P&L. Tanker companies are expected to earn a typical year’s earnings in Q3 alone, and recent trading statements (e.g. DHT) have indicated Q4 will surpass even the most bullish analyst expectations, with much of it being returned to shareholders.
OM held the full position through Q3, though has crystallized the 2026 profits in recent days after the trading statements came out highlighting the impact on Q4. The supply response is inevitable, with VLCC super tanker orders in 2026 already running at multiples of 2024 and 2025’s orders, and maybe one of the many peace deals will eventually be real.
The positions in the US Reindustrialization theme (-233bps) and Uranium (-231bps) were both hurt by a combination of higher Treasury rates and AI funding fears. With Treasury yields continuing to rise during the quarter, and a WSJ analysis revealing significant off-balance sheet commitments from major tech companies, investors cut exposure to AI-related industrial names. This reduction in exposure saw outflows from both AIRR and the Uranium ETFs, which forced further selling. Uranium stocks declined, despite the decent underlying uranium price moves, as concerns grew whether new plants would be commissioned and built in the West especially given a number are tied to AI-data centers. OM remains more sanguine than the market here as uranium will be undersupplied before these new build plants are operational – they add to a future uranium deficit, rather than impacting the next few years.
Argentina (-181bps) suffered from higher Treasury rates and an increased risk premium. This was amplified by worries that the Argentine economy was slowing, with the rate of loan growth guidance reduced at Grupo Financiero Galicia, and fears about Milei’s chances in the 2027 election.
Elsewhere there was strong performance from Tin (+89bps), Brazil (+48bps), and Commodities (+45bps), which all benefited from broad strength in the commodities market. Brazil also benefited as electoral polls tightened during the quarter. Tin remains the most interesting of the commodities exposures. Supply is both waning naturally and being disrupted, demand continues to grow (especially in electronics), and the stocks are cheap either due to location (Alphamin) or uncertainty over capital allocation (Metals X).
There were limited contributions/detractions from AI/Semis (+12bps), Idiosyncratic (+13bps), Carbon (-14bps) and UK/European Financials (-18bps).
Portfolio (as at 09/30/26 - all delta and leverage adjusted, as appropriate)
Dislocations: 47.1%
17.3% - Uranium (URNM & URNJ)
10.5% - Brazil (EWZ)
7.5% - Tin (AFMJF, MLXEF and SBWFF)
6.6% - Commodities/Mining (LUNMF, TLOFF, PMCOF and IVPAF)
5.1% - Argentina (BMA, GGAL, SUPV)
Thematic: 42.4%
12.8% - Shipping/Tankers (STNG, INSW, TNK, DHT and FRO)
9.9% - European/UK Financials (BCS, LYG, NWG)
8.1% - US Reindustrialization (AIRR)
7.4% - Carbon Credit Allowances (KCCA)
4.1% - AI/Semis (DRAM)
Idiosyncratic: 2.6%
2.6% - Equities (JOE)
Shorts/Hedges: 0.0%
Cash: 7.9%
Disclaimer: Nothing above should be considered investment advice or a recommendation to buy or sell any security. While Our Man is invested in all of the securities mentioned, that alone is a terrible reason for anyone else to be. Our Man also holds some cash and a few other positions (of negligible value). Investors should always do their own work and make decisions based on their own circumstances, objectives, and risk tolerance—and not because Our Man happened to mention something here.