In crisis lie opportunites

As Warren Buffett rightly said, “The best time to get rich is a crisis,” provided one has independent thinking, financial preparation and the right temperament. Charlie Munger usefully completes the thought: temperament alone is not enough; it must be combined with the right basic idea and pursued with curiosity over a long period of time.

That is very much how we currently look at parts of the European equity market.

In our view, European media stocks and software companies are being unfairly neglected by investors who are excessively focused on the risks of AI disruption. By contrast, semiconductor stocks continue to benefit from the powerful narrative of rising AI-related capex, which has driven a very sharp divergence in market performance. The chart illustrates this clearly: over the past year, European media and software ( white and blue lines ) have materially underperformed semiconductor names.

We believe this reaction is too indiscriminate. Not every software or media business is structurally threatened by AI. Some will adapt, reinforce their competitive positions and continue to create value over time. When markets begin to price an entire segment as if it were structurally impaired, opportunities often emerge for patient, disciplined long-term investors.

This is one of the dislocations we are currently exploiting in our European Value Fund.