In this episode of CIO Perspectives, host Sid Ahl explores how active investors can seek an edge in markets increasingly shaped by passive investing, short-term trading and artificial intelligence.

The conversation examines how shifting market structures may create opportunities for patient, fundamentally oriented investors, including the role active engagement can play as a potential catalyst for change. The discussion also looks beyond the U.S. to evolving opportunities in Europe and changing corporate governance and shareholder dynamics in Japan.

The episode also explores the rapid buildout of AI infrastructure, where opportunities may emerge across the broader AI ecosystem, and how investors can weigh potential upside against the risks of a significant capital expenditure cycle.

Highlights:

  • Value with a catalyst: How investors can identify businesses with strong underlying earnings power and potential catalysts for change.
  • The role of active engagement: How activism can be used as a tool within an investment thesis and how investors can assess whether change is achievable.
  • Opportunities beyond the U.S.: Valuation differences and opportunities in Europe, as well as evolving corporate governance and shareholder dynamics in Japan.
  • Finding an edge in changing markets: How the growth of passive investing, quantitative strategies and short-term trading may create opportunities for investors with longer time horizons.
  • AI and active investing: Why some aspects of investing and active engagement remain inherently human, even as AI increasingly shapes markets.
  • Underappreciated AI opportunities: How investors can look beyond the most prominent AI names for businesses that may benefit from the continued buildout of AI infrastructure.
 
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Sources: Certain market, company and investment data referenced in this podcast are derived from Sachem Head Capital Management, Bloomberg®, Ionic Digital, Toshiba Corporation, public company filings, public company disclosures and public news reporting, as of the recording date unless otherwise indicated.

Sources: Certain market, economic and company data referenced in this podcast are derived from Robert Shiller data, Goldman Sachs Research, PitchBook, FINRA, Investment Company Institute, Kiplinger, Jay R. Ritter’s Initial Public Offerings: Updated Statistics (University of Florida), TD Asset Management, TD Epoch, Bloomberg Finance L.P., the U.S. Bureau of Economic Analysis, Reuters and Morningstar, as of the recording date unless otherwise indicated.
ADR (American Depositary Receipt) A negotiable certificate issued by a U.S. depositary bank that represents shares in a foreign company and allows those shares to trade in U.S. markets.
A-share A share of a company incorporated in mainland China that is traded on a mainland Chinese stock exchange, generally in renminbi.
Beta A measure of the volatility of a security or portfolio relative to the broader market. A beta greater than 1 indicates greater volatility than the market, while a beta below 1 indicates lower volatility.
CapEx (Capital Expenditures) Funds used by a company to acquire, maintain or improve long-term physical assets such as property, equipment or infrastructure.
DRAM (Dynamic Random-Access Memory) A type of semiconductor memory commonly used in computers, servers and other electronic devices to temporarily store data that needs to be accessed quickly.
EBIT (Earnings Before Interest and Taxes) A measure of a company's profitability before interest expenses and income taxes are deducted.
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A measure of a company's operating performance before the impact of interest, taxes, depreciation and amortization.
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Gross Margin: A company's revenue less its cost of goods sold, generally expressed as a percentage of revenue.
HBM (High-Bandwidth Memory): A type of high-performance computer memory designed to provide significantly greater data-transfer speeds than conventional memory and commonly used in advanced computing and artificial intelligence applications.
LBO (Leveraged Buyout): The acquisition of a company using a significant amount of borrowed capital to finance the transaction.
LOI (Letter of Intent): A document outlining the preliminary terms and intentions of parties considering a transaction or other agreement. An LOI is generally entered into before a definitive agreement.
LTA (Long-Term Agreement): An agreement between parties establishing terms for the purchase or supply of goods or services over an extended period.
M&A (Mergers and Acquisitions): Transactions involving the combination of companies or assets through mergers, acquisitions or related corporate transactions.
NAND: A type of non-volatile flash memory that retains stored data without power and is commonly used in solid-state drives and other data-storage devices.
P/E Multiple (Price-to-Earnings Multiple): A valuation measure calculated by dividing a company's share price by its earnings per share. It is commonly used to compare a company's valuation with its historical valuation or that of other companies.
PIPE (Private Investment in Public Equity): A transaction in which private investors purchase securities issued by a publicly traded company, generally through a privately negotiated transaction.
Pro Forma: Financial information prepared using assumptions or adjustments to illustrate how a transaction, event or other change might affect a company's financial results.
REIT (Real Estate Investment Trust): A company that owns, operates or finances income-producing real estate or real estate-related assets.
ROE (Return on Equity): A measure of profitability calculated by dividing net income by shareholders' equity.
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VIE (Variable Interest Entity): A legal structure in which an investor may have a controlling financial interest despite not holding a majority of voting rights. VIE structures are also used by some Chinese companies to provide foreign investors with economic exposure to businesses subject to foreign ownership restrictions.
YieldCo: A company formed to own and operate assets that are expected to generate relatively stable cash flows, often with the objective of distributing a portion of those cash flows to shareholders.