Core Viewpoint - The prevailing belief is that lower interest rates negatively impact banks and the financial sector by compressing net interest margins, reducing lending profits, and stalling dividend growth [1] Group 1 - Lower interest rates lead to a compression of net interest margins for banks [1] - Lending profits are expected to shrink as a result of lower interest rates [1] - Dividend growth for financial institutions may stall due to the effects of lower interest rates [1]

Core Viewpoint - U.S. Treasury Secretary Scott Bessent emphasizes the importance of lower interest rates for future economic growth, advocating for the Federal Reserve to act promptly in cutting rates [2][4]. Group 1: Interest Rate Cuts - The Federal Reserve implemented three interest rate cuts in the last four months of 2025, totaling 0.75 percentage points, bringing the key interest rate down to a range of 3.5%-3.75% [2]. - The pace of interest rate reductions is expected to slow in 2026, with markets anticipating only two cuts and Fed officials projecting just one [3]. Group 2: Economic Agenda - Bessent supports President Trump's economic agenda, highlighting the passage of the One Big Beautiful Bill, new trade deals, and a deregulation agenda as foundational for robust economic growth [5]. - The administration believes that cutting interest rates is the missing ingredient for stronger economic growth, which will positively impact the lives of citizens [2]. Group 3: Federal Reserve Leadership - A new chair for the Federal Reserve will be appointed this year, with Bessent overseeing the selection process, as current Chair Jerome Powell's term ends in May [4]. - Scott Bessent and former Fed Governor Kevin Warsh are considered the leading candidates for the position [4].

Group 1: Artisan Mid Cap Value Fund Performance - Artisan Mid Cap Value Fund's Investor Class fund ARTQX returned 0.97%, Advisor Class fund APDQX posted a return of 0.98%, and Institutional Class fund APHQX returned 0.97% in Q3 2025, compared to a 6.18% return for the Russell Midcap Value Index [1] - The equity markets continued to rally in Q3 2025, driven by strong corporate earnings, rising AI capital expenditures, and expectations for economic support from US fiscal policy and lower interest rates [1] Group 2: ICON Public Limited Company Overview - ICON Public Limited Company (NASDAQ:ICLR) is the second-largest global contract research organization (CRO), providing outsourced clinical development services to the pharmaceutical and biotechnology industries [3] - The one-month return for ICON was 3.61%, while its shares lost 12.45% over the last 52 weeks, closing at $188.67 per share on January 2, 2026, with a market capitalization of $14.673 billion [2] Group 3: Market Conditions and Outlook for ICON - The life sciences, pharma, and biotech sectors have faced weakness over the past year, but positive earnings reports from ICON and other CROs suggest that biopharma demand may be bottoming [3] - The biopharma funding environment has been challenging due to higher interest rates and macroeconomic uncertainty, leading to cautious decision-making among pharma and biotech companies [3] - The current market conditions present an opportunity to build a position in ICON, which is expected to generate mid- to high-single-digit revenue growth in a normalized environment and gain market share in a fragmented industry [3] - ICON is trading at just 13X forward earnings, near its cheapest levels since the 2008–2009 global financial crisis, making the risk/reward profile attractive [3]

Core Insights - Artisan Mid Cap Value Fund's third-quarter 2025 performance was below the Russell Midcap Value Index, with returns of 0.97% for Investor Class and 0.98% for Advisor Class, compared to 6.18% for the index [1] Fund Performance - The fund's Investor Class returned 0.97%, Advisor Class returned 0.98%, and Institutional Class returned 0.97% in Q3 2025 [1] - The Russell Midcap Value Index achieved a return of 6.18% during the same period [1] Market Context - Equity markets rallied in Q3 2025, driven by strong corporate earnings, rising AI capital expenditures, and expectations of economic support from US fiscal policy and lower interest rates [1] Company Focus: Polaris Inc. - Polaris Inc. (NYSE: PII) is highlighted as a top contributor, with a one-month return of -0.28% and a 52-week gain of 13.91% [2] - As of January 2, 2026, Polaris Inc. shares closed at $66.48, with a market capitalization of $3.739 billion [2] Operational Challenges and Strategies - Polaris faced a weak retail environment and high dealer inventories, leading to margin pressures due to increased promotional activities and financing assistance [3] - The company is addressing tariff impacts by reducing sourcing from China and increasing sourcing from Mexico and other countries with lower trade barriers [3] - Historical management has shown operational discipline by divesting less profitable businesses and focusing on core powersports operations [3] - Despite a challenging retail backdrop, Polaris remains well financed, with strong returns on tangible capital typically in the mid-to-high teens [3]

Core Viewpoint - Artisan Mid Cap Value Fund's performance in Q3 2025 was below the benchmark, with returns of approximately 0.97% compared to the Russell Midcap Value Index's 6.18% return, attributed to broader market conditions and specific sector challenges [1] Fund Performance - The Investor Class fund ARTQX returned 0.97%, Advisor Class fund APDQX returned 0.98%, and Institutional Class fund APHQX returned 0.97% in Q3 2025 [1] - The overall equity markets rallied, driven by strong corporate earnings, rising AI capital expenditures, and expectations of economic support from US fiscal policy and lower interest rates [1] Company Focus: Align Technology, Inc. - Align Technology, Inc. (NASDAQ:ALGN) experienced a one-month return of -1.05% and a 52-week loss of 28.71%, with a market capitalization of $11.31 billion as of January 2, 2026 [2] - The company is recognized for its Invisalign clear aligners and iTero intraoral scanners, but faced underperformance in Q3 due to high expectations and disappointing quarterly results [3] Sector Analysis - The health care sector was a significant source of underperformance for the fund, with Align Technology being one of the major detractors alongside Centene and Baxter International [3] - The health care sector has struggled due to policy uncertainty, leading to reduced investor interest [3] Investment Strategy - The fund initiated a position in Align Technology at $150 per share, following a market sell-off due to tariff concerns, viewing it as a high-quality business with long-term potential [3] - Despite recent challenges, the company is seen as a market leader in clear aligners, with expectations that it can continue to capture market share in the orthodontics space [3]

Market Overview - Asia-Pacific markets exhibited mixed trading patterns as the final trading week of the year commenced, with Japan's Nikkei 225 declining by 0.55% and the Topix falling by 0.26% [1] - In contrast, South Korea's Kospi increased by 0.62%, and the Kosdaq index saw a rise of 0.19% [1] - Hong Kong's Hang Seng index futures were slightly lower at 25,810 compared to the last close of 25,818.93 [1] Silver Market Insights - Spot silver prices reached a record high of over $80 per ounce, driven by speculative buying and ongoing supply tightness [2] - Sprott Asset Management noted that the silver rally this year is attributed to a depletion of freely traded inventory, which has intensified price movements as demand rises [2] - The favorable macro-outlook for 2026, characterized by lower interest rates and a potentially weaker U.S. dollar, is enhancing the attractiveness of hard assets like silver [3]

Core Insights - Vistra Corp. (VST) is positioned to benefit from a declining interest rate environment, enhancing its competitive edge as a power producer with a diversified generation portfolio [1] - The Federal Reserve's reduction of benchmark interest rates is expected to positively impact capital-intensive utility operators like Vistra, allowing for lower borrowing costs and improved financial profiles [2][4] Financial Performance and Projections - Vistra plans to invest $2.2 billion in 2026 to expand its zero-carbon nuclear output, solar, and battery storage capacity, following a similar investment in 2025 [3][9] - The Zacks Consensus Estimate indicates a year-over-year decline of 29% in earnings per share (EPS) for 2025, with a projected increase of 70.48% for 2026 [7] - Current estimates for EPS are 4.97 for 2025 and 8.47 for 2026, with a high estimate of 9.37 for 2026 [8] Return on Equity and Market Performance - Vistra's trailing 12-month return on equity (ROE) stands at 64.4%, significantly higher than the industry average of 9.9%, indicating strong capital efficiency [10] - Over the past year, Vistra's shares have increased by 20.4%, slightly below the industry's growth of 21.4% [12]

Core Insights - The shipping industry is essential for global trade but faces challenges from inflation, tariffs, and supply-chain disruptions [1] - The outlook for the shipping sector is improving as macroeconomic conditions become more favorable heading into 2026 [2] Industry Overview - The shipping industry is considered the backbone of the world economy, handling the bulk of global trade [1] - Despite current challenges, the macro backdrop is showing signs of improvement, particularly in the United States where inflation is decreasing [3] Economic Factors - Easing monetary policies and lower global interest rates are creating favorable financing conditions for shipping companies [4] - Lower interest rates can stimulate consumer spending and business investment, boosting demand for shipping services [6] Shipping Stocks Performance - Companies like Seanergy Maritime Holdings (SHIP), Global Ship Lease (GSL), and KNOT Offshore Partners LP (KNOP) are positioned to benefit from the improving economic conditions [2][9] - The consensus estimate for 2026 earnings indicates significant growth: SHIP at 32.7%, GSL at 3.1%, and KNOP at 85.1% [10] Specific Company Insights - Seanergy Maritime is a leading Capesize ship-owner with a strong track record of exceeding earnings estimates, projecting a 32.7% increase in 2026 earnings [14] - Global Ship Lease operates a diversified fleet of containerships and has consistently outperformed earnings estimates, with a projected 3.1% increase in 2026 earnings [15] - KNOT Offshore specializes in shuttle tankers for crude oil transport and has shown exceptional earnings performance, with an expected 85.1% increase in 2026 earnings [16] Market Trends - The demand for capsize bulk carriers is expected to rise due to strong iron ore and bauxite demand, supported by the inauguration of Guinea's Simandou iron ore mine [7][8]

Core Viewpoint - Concerns regarding the impact of lower interest rates on Business Development Companies (BDCs) earnings have been exaggerated [1] Group 1: Analyst Background - Roberts Berzins has over a decade of experience in financial management, assisting top-tier corporates in shaping financial strategies and executing large-scale financings [2] - He has contributed to institutionalizing the REIT framework in Latvia to enhance the liquidity of pan-Baltic capital markets [2] - His policy-level work includes developing national SOE financing guidelines and frameworks for channeling private capital into affordable housing [2] Group 2: Analyst's Position - The analyst holds a beneficial long position in the shares of KBDC and FDUS through stock ownership, options, or other derivatives [3]

Core Viewpoint - President Trump is advocating for lower interest rates and the appointment of a new Federal Reserve chair, but recent divisions indicate that achieving one may not ensure the other [1] Group 1 - The call for lower interest rates reflects concerns about economic growth and inflation [1] - The potential appointment of a new Fed chair could lead to shifts in monetary policy, impacting market expectations [1] - Current divisions within the Federal Reserve suggest that consensus on interest rate changes may be difficult to achieve [1]