In summary:
- Challenged conditions have led to casualties across the global equity landscape, with macro and geopolitical factors impacting good and bad businesses alike.
- However, we believe the multiple-compression stage of the cycle is over; we are shifting our positioning to prepare for the start of a new cycle.
- We believe fallen leaders represent a promising growth opportunity for 2023.
- Fallen leaders can be found among quality companies with strong growth potential (from thematic tailwinds) that have suffered significant valuation erosion as the market has indiscriminately sold off this year.
- As thematic investors, we are seeing interesting opportunities for capturing the upside potential of these stocks across multiple themes and sectors, but during the initial recovery move on the other side of this drawdown, we expect those fallen leaders with some cyclicality to do better.
- We are focusing on fallen leader names within our ‘real estate & infrastructure’, ‘automation’ and ‘explosion of data’ portfolio themes.
- Find out why we’re targeting these themes and how we’re positioning for the turn in the cycle in our 2023 outlook.
