Investor call - December 2025
During the investor call, Value Square looked back on the past stock market year, which — contrary to the expectations of many — was marked by remarkably strong returns. The major stock market indices achieved solid returns, with stock indices showing an average profit of between +13% and +20%. Bonds are also trading at a slight profit this year. And all this despite the continuing geopolitical tensions and the continuing volatility around import duties.
The market overview emphasized that US large caps and technology stocks in particular have performed better than the rest of the market in recent years. But that this outperformance is largely the result of multiple expansion rather than superior profit growth. Small- and mid-caps, in both the United States and Europe, on the other hand, remain at historically low valuations. Value Square sees this as important opportunities, as the fundamental profit growth of smaller companies has largely remained intact. Moreover, Europe seems to be relatively attractively valued compared to the US, especially if the expected profit growth is achieved in 2026 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 major technology companies. While some AI-related segments are showing signs of overheating, the current situation, according to Value Square, is not comparable to the 2000 technology bubble, as today's dominant players are profitable and generating strong free cash flows. Nevertheless, there are some excesses on the periphery of the major players. Something to keep a close eye on in 2026...
The thematic section focused on demography and productivity in Europe. The combination of rising pension expenditures — both in number of beneficiaries and amounts — and a relatively shrinking active population is putting structural pressure on public finances. Artificial Intelligence is often presented 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 here.
Internally, AI is used, among other things, as a supporting tool in the analysis process, without replacing the role of human decisions.
Finally, for 2026, Value Square reaffirmed its long-term strategy: disciplined investing in undervalued quality companies with higher margins and a more defensive balance sheet. In addition, preference is given to companies with an attractive dividend policy and share buy-back program. According to the team, the better risk-reward ratio currently remains in the small- and mid-cap segment.
