As the calendar turns, marking the close of the year’s first quarter, we find ourselves penning our third commentary. For many, this may be the first missive received, an artifact of April’s rapid developments in President Trump’s evolving trade policy. The unprecedented volatility surrounding those policies warranted two earlier, swiftly discarded drafts. With the dust settling in the wake of the so-called “Liberation Day,” we’re shifting our focus from the fleeting to the foundational. This letter centers on enduring themes, principles, and forces that persist regardless of the chaos around them, what we refer to as the “constants.” We begin with the consistent features of President Trump’s trade posture, and then turn to two deeper, structural constants shaping today’s investment landscape: Artificial Intelligence and Life Science.
In many respects, the only constants in Trump-era policy are uncertainty, change, and a transactional lens applied to nearly every Tweet. These three elements were on full display before and after the “Liberation Day” episode. Markets braced for some form of global tariff regime, hoping to convert uncertainty into quantifiable cost, but it was unclear whether tariffs would be global, country-specific, or sector-specific. It was equally unclear whether these would represent a final policy or merely an opening salvo in broader negotiations. Some interpret this ongoing ambiguity as a deliberate feature of Trump’s negotiation style; others see it as evidence of inadequate preparation by key administration officials. That tension stoked further volatility. Unsurprisingly, measures of “Economic Policy Uncertainty” reached historic highs, as noted by the St. Louis Fed.1
That uncertainty weighed heavily on markets through March, culminating in the worst 3-day stretch since the 1987 crash in early April.2 Markets have since recovered much of their losses, as Trump backed away from reciprocal tariffs and entered into negotiations with several trading partners. However, the damage to business planning remains, and consumer confidence has not yet stabilized. These clouds may linger, though each passing day helps quantify risks for both the economy and individual companies in this shifting policy landscape.
S&P 500 Three-Day Rate of Change (%): 1953 – 2025
In August 2010, as fears of a “double-dip recession” loomed in the wake of the Great Financial Crisis, Justin Fox published an article titled “Embracing Uncertainty Rather than Whining About It”.3 His core message was clear: investing amid uncertainty is exactly what entrepreneurs do. Citing economist Frank Knight, Fox reminded readers that uncertainty is the only true and sustainable source of profit in a competitive economy. In his words: “More uncertainty = more potential for big profits.”
That philosophy informed our approach during Q1. Times like these are ideal for extending duration and leaning into conviction. Late March and early April were among our most active periods in the markets in over five years and perhaps ever. We’re excited by the opportunities the market presented and while we’ll focus here on the first quarter moves, we’ll address the second quarter activity in our next letter.
AI and Life Science currently sit on opposite sides of the sentiment spectrum. AI continues to soar, even amid market turbulence, while Life Science has faced persistent headwinds. Despite this divergence, we view both as core pillars of the next decade.
AI’s march forward is relentless. We see strong value in companies enabling the buildout of AI infrastructure, particularly hardware. This momentum is insulated from macro and policy noise making it a true constant. From chips to the critical components that enable them, capital is flowing into this ecosystem at unprecedented speed. We’re focused on firms with pricing power, mission-critical positioning, and the scale to benefit from accelerating AI workloads globally.
Meanwhile, Life Science is contending with a severe COVID hangover, now compounded by concerns around NIH funding, FDA staffing, and drug pricing under Trump’s policies. This all leaves the Healthcare sector in one of its most pronounced moments of underperformance versus the S&P.4
Yet, the foundational importance remains unshaken; no sector is as mission-critical to life itself as healthcare. This sector delivers the most vital and irreplaceable innovations in our economy. And notably, it stands to benefit enormously from AI. From AlphaFold’s protein structure breakthroughs to AI models replacing animal testing to next-gen CRISPR targeting via panomics datasets; AI and Life Science are on a path toward transforming the next decade.
Our idea generation process combines both top-down and bottom-up insights. Top-down, we read voraciously and track macro trends. Bottom-up, we apply our valuation discipline and use screeners to surface opportunity.
These investments did not emerge by chance. Each passed through our rigorous research framework, a blend of thematic relevance, fundamental quality, and valuation discipline. This process enables us to remain selective, deliberate, and focused on long-term outcomes, especially when market participants are focused on the next headline.
In Q1, we made three notable investments. Two align with our thematic convictions (AI and Life Sciences); the third is outside these lanes but compelling nonetheless. Each offers strong fundamentals and valuations at the low end of their respective historical ranges. Here’s a look:
TAIWAN SEMICONDUCTOR MANUFACTURING (TSM)
AI winner with cyclical upside
TSMC has been a standout in an otherwise challenged semiconductor landscape. While the AI segment has flourished, broader chip markets, autos, consumer electronics, industrials are enduring one of the worst recessions in industry history. TSMC’s resilience in this challenging environment owes to its pricing power and position at the bleeding edge of chip manufacturing.
This industry bifurcation creates opportunity. The non-AI markets, which drive most of TSMC’s volume, are near cyclical lows. As demand recovers, TSMC stands to benefit from improved utilization and rising revenues. Meanwhile, AI datacenter buildouts continue unabated. Nvidia (NVDA), TSMC’s largest customer remains central to this theme, and now hyperscalers like Google (GOOG,GOOGL), META, and Amazon (AMZN) are following suit with custom chips also produced at TSMC. There is virtually no competition at these advanced nodes. The combination of enormous capital requirements, deep technical expertise, and a long track record of reliable execution creates formidable barriers to entry. As a result, TSMC’s competitive position is unlikely to change meaningfully over the next decade. This dominance affords the company significant pricing power, though notably, it exercises that power with discipline.
In 2024, revenues rose nearly 30%. 2025 consensus estimates point to ?27% growth. Despite this, the stock trades below 20x forward earnings of $9.33 —a PEG well under 1. The discount reflects a geopolitical risk premium related to Taiwan. We acknowledge this risk, but believe it is priced in and partially mitigated by TSMC’s expansion in the U.S., which serves both as a geopolitical hedge and trade buffer.
To fund this purchase, we exited our position in Entegris (ENTG). Despite ENTG being U.S.-based, the macro and geopolitical profiles are similar. TSMC offers better growth at a cheaper valuation, underpinned by its unmatched leadership in cutting-edge chip production.
Elliot and John Mihaljevic hosted Doug O’Laughlin, President of SemiAnalysis to discuss these themes on their podcast during the quarter.5
BRUKER CORP (BRKR)
Pan-Omics dominance at a margin inflection point
Bruker generates the majority of its revenues from the Life Science end market, though the company sells critical instrumentation for applied industrial markets, including semiconductors where TSM is an important customer. In Bruker’s most important end markets–mass spectrometry and NMR spectroscopy–the company participates in a duopoly with Thermo Fisher Scientific (TMO), selling critical instrumentation for the study of panomics analysis and spatial biology. Unfortunately for Bruker in today’s environment, many of their customers are defined as academic and amidst National Institute of Health budget cuts, investors fear exposure to this space. Although Academic and Government comprise roughly 40% of Bruker’s end market exposure, Europe (at 34% of revenues) is a bigger end market than the United States (30%).
In 2012, in the middle of the US Government sequestration chaos, Bruker traded down to a mid-teens P/E. This is where Bruker shares are changing hands today, despite the company having diversified its revenue base considerably. Specifically, Bruker is larger, sells to more end markets and recurring revenues now comprise over 1/3rd of sales versus less than 20% back then. Bruker today is run by CEO Frank Laukien, the son of the founder Gunther Laukien. In aggregate, the Laukien family owns over 30% of the outstanding shares. Notably, Frank has purchased over $6m of shares on the open market at prices in the $50 range.
Over the past decade, Laukien has made a string of acquisitions. These acquisitions have extended the capabilities of the company, diversified their revenue base and broadened end markets (both within and beyond the life sciences). Although management continues to search for acquisition opportunities, they have signaled the majority of the building is behind them and the time has come to harvest the fruits of their recent building. Laukien has stated that operating margins will get back to the 20% range (from today’s 15% ) in the next few years, and beyond that timeframe, “think we can do another 800 bps to 1,000 bps of margin expansion over an unspecified period and reach the mid-20s operating margin over time.” Although growth today is challenged by the macro, incremental gross profit from here should drop down to the bottom line. The top line growth drivers remain intact, despite today’s turbulence. Rolling things forward a few years, what is today a mid-teens P/E, quickly becomes a mid single digit P/E, for a company that typically trades in the mid-20 or higher multiple range.
We funded our purchase of Bruker by selling our position in Danaher (DHR). Our goal was to maintain our allocation to life science, without increasing it. In making this move, we slightly reduced our exposure to bioprocessing, though notably Sartorius already gives us pure-play exposure to the space. Moreover, Bruker’s valuation today is decently cheaper than Danaher’s, with a fairly similar growth profile over the mid-term.
LULULEMON (LULU)
Fit for better returns
Late in the quarter, we purchased shares in Lululemon, despite uncertainty about the tariff situation. Many of you are familiar with the brand. Lulu is a leading athleisure brand and though competition has increased from upstart offerings like Vuori, Alo and Fabletics, the company has continued to maintain relevance and perform admirably. These upstarts have varied approaches, but in aggregate, they have won share with a combination of faster, more tasteful fashion and cheaper prices. Importantly, this share has predominantly come from Nike (NKE)–the 10,000 pound gorilla of the industry that continues to see negative topline growth. Even within the competitive landscape, it is notable that Vuori and Alo enthusiasts still consider Lulu core to their wardrobe, given the demonstrable quality advantage of the company’s proprietary fabrics. Although Lulu has benefited from dominance in fashion, its core calling has been performance and that segment of the market remains unquestioned.
For Lulu, U.S. Women’s in particular has slowed, though the company continues to drive growth in the men’s market, while expanding geographically to China and Europe. The slowdown in women’s seems tied both to broader weakness in apparel, particularly athleisure, and to rising competitive pressure – factors that have contributed to investor caution.. Meanwhile, China alone holds the potential to double the scale of Lulu’s business should the company attain a similar degree of resonance as Nike. We are not expecting this to be the case, though it is a notable source of potential upside.
As it stands today, Lulu is at a mid-single digit free cash flow yield with top line growing right in the mid to upper single digits. We think this is near a trough in growth rate as Lulu has taken steps to better position, especially with respect to fashion, versus the competition. Further, as ex-North America becomes a bigger piece of the pie, growth will naturally pull its way higher. EPS growth will be closer to the double digit range as the company repurchases shares at the most aggressive rate in its history. Although the company traded at lower multiples during the summer of 2024, only in the Great Financial Crisis did Lulu trade at a P/E similar to today. We think this is a very reasonable price for a truly great company with durable competitive advantages and growing visibility into accretive, long-term growth.
We sold our long-held position in (IAC) in order to fund our purchase of Lulu.
Each of these investments; TSMC, Bruker, and Lululemon, reflects a common thread: conviction amid uncertainty. While markets remain preoccupied with shifting headlines and short-term noise, we continue to focus on enduring truths – businesses with competitive moats, secular growth drivers, and the capacity to compound value over time. Whether driven by technological infrastructure, scientific innovation, or brand dominance, these companies exemplify the kind of opportunity that uncertainty makes possible. As always, our role is to filter the chaos, anchor to durable insights, and invest where the disconnect between perception and reality creates meaningful upside. We look forward to updating you further in our next letter as we continue to navigate, and capitalize on, this evolving landscape.
As we look ahead to Q2, we’re closely monitoring the evolution of trade negotiations, the continued bifurcation in tech and consumer sectors, and signals of stabilization (or further deterioration) in the life sciences complex. We’re also watching macro signals such as inflation resilience, consumer sentiment, and capital spending across key verticals. These dynamics will help shape our positioning in what remains an uneven yet opportunity-rich environment.
Thank you for the continued trust you place in us, it’s a responsibility we deeply value. If you’d like to discuss how these themes relate to your portfolio, or have any questions about the investments we’ve highlighted, we welcome the conversation. You can reach either of us directly at 516-665-1945, or via our individual lines listed below.
Jason Gilbert, CPA/PFS, CFF, CGMA, Managing Partner, President
Elliot Turner, CFA Managing Partner
Original Post
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
RGA Investment Advisors Q1 2025 Investment Commentary
Torsten Asmus/iStock via Getty Images
Amid the Chaos: Investing in Enduring Themes
As the calendar turns, marking the close of the year’s first quarter, we find ourselves penning our third commentary. For many, this may be the first missive received, an artifact of April’s rapid developments in President Trump’s evolving trade policy. The unprecedented volatility surrounding those policies warranted two earlier, swiftly discarded drafts. With the dust settling in the wake of the so-called “Liberation Day,” we’re shifting our focus from the fleeting to the foundational. This letter centers on enduring themes, principles, and forces that persist regardless of the chaos around them, what we refer to as the “constants.” We begin with the consistent features of President Trump’s trade posture, and then turn to two deeper, structural constants shaping today’s investment landscape: Artificial Intelligence and Life Science.
In many respects, the only constants in Trump-era policy are uncertainty, change, and a transactional lens applied to nearly every Tweet. These three elements were on full display before and after the “Liberation Day” episode. Markets braced for some form of global tariff regime, hoping to convert uncertainty into quantifiable cost, but it was unclear whether tariffs would be global, country-specific, or sector-specific. It was equally unclear whether these would represent a final policy or merely an opening salvo in broader negotiations. Some interpret this ongoing ambiguity as a deliberate feature of Trump’s negotiation style; others see it as evidence of inadequate preparation by key administration officials. That tension stoked further volatility. Unsurprisingly, measures of “Economic Policy Uncertainty” reached historic highs, as noted by the St. Louis Fed.1
That uncertainty weighed heavily on markets through March, culminating in the worst 3-day stretch since the 1987 crash in early April.2 Markets have since recovered much of their losses, as Trump backed away from reciprocal tariffs and entered into negotiations with several trading partners. However, the damage to business planning remains, and consumer confidence has not yet stabilized. These clouds may linger, though each passing day helps quantify risks for both the economy and individual companies in this shifting policy landscape.
S&P 500 Three-Day Rate of Change (%): 1953 – 2025
In August 2010, as fears of a “double-dip recession” loomed in the wake of the Great Financial Crisis, Justin Fox published an article titled “Embracing Uncertainty Rather than Whining About It”.3 His core message was clear: investing amid uncertainty is exactly what entrepreneurs do. Citing economist Frank Knight, Fox reminded readers that uncertainty is the only true and sustainable source of profit in a competitive economy. In his words: “More uncertainty = more potential for big profits.”
That philosophy informed our approach during Q1. Times like these are ideal for extending duration and leaning into conviction. Late March and early April were among our most active periods in the markets in over five years and perhaps ever. We’re excited by the opportunities the market presented and while we’ll focus here on the first quarter moves, we’ll address the second quarter activity in our next letter.
AI and Life Science currently sit on opposite sides of the sentiment spectrum. AI continues to soar, even amid market turbulence, while Life Science has faced persistent headwinds. Despite this divergence, we view both as core pillars of the next decade.
AI’s march forward is relentless. We see strong value in companies enabling the buildout of AI infrastructure, particularly hardware. This momentum is insulated from macro and policy noise making it a true constant. From chips to the critical components that enable them, capital is flowing into this ecosystem at unprecedented speed. We’re focused on firms with pricing power, mission-critical positioning, and the scale to benefit from accelerating AI workloads globally.
Meanwhile, Life Science is contending with a severe COVID hangover, now compounded by concerns around NIH funding, FDA staffing, and drug pricing under Trump’s policies. This all leaves the Healthcare sector in one of its most pronounced moments of underperformance versus the S&P.4
Yet, the foundational importance remains unshaken; no sector is as mission-critical to life itself as healthcare. This sector delivers the most vital and irreplaceable innovations in our economy. And notably, it stands to benefit enormously from AI. From AlphaFold’s protein structure breakthroughs to AI models replacing animal testing to next-gen CRISPR targeting via panomics datasets; AI and Life Science are on a path toward transforming the next decade.
Our idea generation process combines both top-down and bottom-up insights. Top-down, we read voraciously and track macro trends. Bottom-up, we apply our valuation discipline and use screeners to surface opportunity.
These investments did not emerge by chance. Each passed through our rigorous research framework, a blend of thematic relevance, fundamental quality, and valuation discipline. This process enables us to remain selective, deliberate, and focused on long-term outcomes, especially when market participants are focused on the next headline.
In Q1, we made three notable investments. Two align with our thematic convictions (AI and Life Sciences); the third is outside these lanes but compelling nonetheless. Each offers strong fundamentals and valuations at the low end of their respective historical ranges. Here’s a look:
TAIWAN SEMICONDUCTOR MANUFACTURING (TSM)
AI winner with cyclical upside
TSMC has been a standout in an otherwise challenged semiconductor landscape. While the AI segment has flourished, broader chip markets, autos, consumer electronics, industrials are enduring one of the worst recessions in industry history. TSMC’s resilience in this challenging environment owes to its pricing power and position at the bleeding edge of chip manufacturing.
This industry bifurcation creates opportunity. The non-AI markets, which drive most of TSMC’s volume, are near cyclical lows. As demand recovers, TSMC stands to benefit from improved utilization and rising revenues. Meanwhile, AI datacenter buildouts continue unabated. Nvidia (NVDA), TSMC’s largest customer remains central to this theme, and now hyperscalers like Google (GOOG,GOOGL), META, and Amazon (AMZN) are following suit with custom chips also produced at TSMC. There is virtually no competition at these advanced nodes. The combination of enormous capital requirements, deep technical expertise, and a long track record of reliable execution creates formidable barriers to entry. As a result, TSMC’s competitive position is unlikely to change meaningfully over the next decade. This dominance affords the company significant pricing power, though notably, it exercises that power with discipline.
In 2024, revenues rose nearly 30%. 2025 consensus estimates point to ?27% growth. Despite this, the stock trades below 20x forward earnings of $9.33 —a PEG well under 1. The discount reflects a geopolitical risk premium related to Taiwan. We acknowledge this risk, but believe it is priced in and partially mitigated by TSMC’s expansion in the U.S., which serves both as a geopolitical hedge and trade buffer.
To fund this purchase, we exited our position in Entegris (ENTG). Despite ENTG being U.S.-based, the macro and geopolitical profiles are similar. TSMC offers better growth at a cheaper valuation, underpinned by its unmatched leadership in cutting-edge chip production.
Elliot and John Mihaljevic hosted Doug O’Laughlin, President of SemiAnalysis to discuss these themes on their podcast during the quarter.5
BRUKER CORP (BRKR)
Pan-Omics dominance at a margin inflection point
Bruker generates the majority of its revenues from the Life Science end market, though the company sells critical instrumentation for applied industrial markets, including semiconductors where TSM is an important customer. In Bruker’s most important end markets–mass spectrometry and NMR spectroscopy–the company participates in a duopoly with Thermo Fisher Scientific (TMO), selling critical instrumentation for the study of panomics analysis and spatial biology. Unfortunately for Bruker in today’s environment, many of their customers are defined as academic and amidst National Institute of Health budget cuts, investors fear exposure to this space. Although Academic and Government comprise roughly 40% of Bruker’s end market exposure, Europe (at 34% of revenues) is a bigger end market than the United States (30%).
In 2012, in the middle of the US Government sequestration chaos, Bruker traded down to a mid-teens P/E. This is where Bruker shares are changing hands today, despite the company having diversified its revenue base considerably. Specifically, Bruker is larger, sells to more end markets and recurring revenues now comprise over 1/3rd of sales versus less than 20% back then. Bruker today is run by CEO Frank Laukien, the son of the founder Gunther Laukien. In aggregate, the Laukien family owns over 30% of the outstanding shares. Notably, Frank has purchased over $6m of shares on the open market at prices in the $50 range.
Over the past decade, Laukien has made a string of acquisitions. These acquisitions have extended the capabilities of the company, diversified their revenue base and broadened end markets (both within and beyond the life sciences). Although management continues to search for acquisition opportunities, they have signaled the majority of the building is behind them and the time has come to harvest the fruits of their recent building. Laukien has stated that operating margins will get back to the 20% range (from today’s 15% ) in the next few years, and beyond that timeframe, “think we can do another 800 bps to 1,000 bps of margin expansion over an unspecified period and reach the mid-20s operating margin over time.” Although growth today is challenged by the macro, incremental gross profit from here should drop down to the bottom line. The top line growth drivers remain intact, despite today’s turbulence. Rolling things forward a few years, what is today a mid-teens P/E, quickly becomes a mid single digit P/E, for a company that typically trades in the mid-20 or higher multiple range.
We funded our purchase of Bruker by selling our position in Danaher (DHR). Our goal was to maintain our allocation to life science, without increasing it. In making this move, we slightly reduced our exposure to bioprocessing, though notably Sartorius already gives us pure-play exposure to the space. Moreover, Bruker’s valuation today is decently cheaper than Danaher’s, with a fairly similar growth profile over the mid-term.
LULULEMON (LULU)
Fit for better returns
Late in the quarter, we purchased shares in Lululemon, despite uncertainty about the tariff situation. Many of you are familiar with the brand. Lulu is a leading athleisure brand and though competition has increased from upstart offerings like Vuori, Alo and Fabletics, the company has continued to maintain relevance and perform admirably. These upstarts have varied approaches, but in aggregate, they have won share with a combination of faster, more tasteful fashion and cheaper prices. Importantly, this share has predominantly come from Nike (NKE)–the 10,000 pound gorilla of the industry that continues to see negative topline growth. Even within the competitive landscape, it is notable that Vuori and Alo enthusiasts still consider Lulu core to their wardrobe, given the demonstrable quality advantage of the company’s proprietary fabrics. Although Lulu has benefited from dominance in fashion, its core calling has been performance and that segment of the market remains unquestioned.
For Lulu, U.S. Women’s in particular has slowed, though the company continues to drive growth in the men’s market, while expanding geographically to China and Europe. The slowdown in women’s seems tied both to broader weakness in apparel, particularly athleisure, and to rising competitive pressure – factors that have contributed to investor caution.. Meanwhile, China alone holds the potential to double the scale of Lulu’s business should the company attain a similar degree of resonance as Nike. We are not expecting this to be the case, though it is a notable source of potential upside.
As it stands today, Lulu is at a mid-single digit free cash flow yield with top line growing right in the mid to upper single digits. We think this is near a trough in growth rate as Lulu has taken steps to better position, especially with respect to fashion, versus the competition. Further, as ex-North America becomes a bigger piece of the pie, growth will naturally pull its way higher. EPS growth will be closer to the double digit range as the company repurchases shares at the most aggressive rate in its history. Although the company traded at lower multiples during the summer of 2024, only in the Great Financial Crisis did Lulu trade at a P/E similar to today. We think this is a very reasonable price for a truly great company with durable competitive advantages and growing visibility into accretive, long-term growth.
We sold our long-held position in (IAC) in order to fund our purchase of Lulu.
Each of these investments; TSMC, Bruker, and Lululemon, reflects a common thread: conviction amid uncertainty. While markets remain preoccupied with shifting headlines and short-term noise, we continue to focus on enduring truths – businesses with competitive moats, secular growth drivers, and the capacity to compound value over time. Whether driven by technological infrastructure, scientific innovation, or brand dominance, these companies exemplify the kind of opportunity that uncertainty makes possible. As always, our role is to filter the chaos, anchor to durable insights, and invest where the disconnect between perception and reality creates meaningful upside. We look forward to updating you further in our next letter as we continue to navigate, and capitalize on, this evolving landscape.
As we look ahead to Q2, we’re closely monitoring the evolution of trade negotiations, the continued bifurcation in tech and consumer sectors, and signals of stabilization (or further deterioration) in the life sciences complex. We’re also watching macro signals such as inflation resilience, consumer sentiment, and capital spending across key verticals. These dynamics will help shape our positioning in what remains an uneven yet opportunity-rich environment.
Thank you for the continued trust you place in us, it’s a responsibility we deeply value. If you’d like to discuss how these themes relate to your portfolio, or have any questions about the investments we’ve highlighted, we welcome the conversation. You can reach either of us directly at 516-665-1945, or via our individual lines listed below.
Jason Gilbert, CPA/PFS, CFF, CGMA, Managing Partner, President
Elliot Turner, CFA Managing Partner
Original Post
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
#RGA #Investment #Advisors #Investment #Commentary