Voyager 2025 Year End Commentary — Embracing Turbulence

Voyager Fund ended this year +24.18%. The execution of our research process has allowed us to build a portfolio of businesses that are better capitalized than the market, with superior earnings and free cash flow growth prospects that has resulted in the Voyager strategy compounding at +13.27% after costs since inception in 2018.

One of our goals is to take fewer steps backwards than forwards during down months and years. Fortunately, there have been more positive months and years overall.  We will provide examples below of a diversified set of global investment ideas that leave us just as excited about our opportunity set as we were when we launched the strategy in 2018. A significant tailwind for our approach is the growing trend of more capital being managed by fewer firms. This, combined with the continued shift toward passive investing, has led to increased valuation inefficiencies in equity markets around the world — inefficiencies we can take advantage of during periods of volatility, such as those seen amid tariff-war fears in 2025.

VOYAGER FUND MONTHLY RETURNS*

Reading The Pessimist’s Guide to History early in my career taught me that bad things happen every year. I have learned that as an investor, you can make a lot of money when you allocate capital prudently, when pessimism gets overdone. As Warren Buffett says: “Be greedy when others are fearful and fearful when others are greedy.”  During my career I have been able to buy growth in earnings and free cash flow on the cheap each and every time there was a spike in pessimism.

There has been a lot of fear over the last number of years, and we feel this has gifted us many opportunities to embrace above-average levels of volatility and stay invested in companies that hit our investment checklist below. We can’t control central bank policy mistakes, governments running high fiscal deficits, terrorist events, natural disasters, pandemics and many other negative events that sadly occur in the world.   

INVESTMENT CHECKLIST

We are proud to say that Voyager has never had a company go to zero because we follow this checklist and anchor the portfolio to balance sheet strength to better weather unforeseen negative events. This way our companies can take advantage of those market dislocations to get stronger. By being focused on capital structure strength we can avoid having to deal with any balance sheet disasters in our portfolio. As Warren Buffet has said: “Cash is to a business what oxygen is to an individual – you will never notice when it’s present, you will only notice when it’s absent.”

Heading into 2025, there was significant debate about whether AI was overhyped and in a bubble. That debate continues as we move into 2026, and as we have said over the past few years, there will be both winners and losers. As a result, I have unofficially dubbed Devon our Executive Vice President of Disruption Risk, leveraging his science background to help assess strengths and weaknesses across the technology stack. The chart below from Cohere, which Devon identified a few years ago while building our AI framework, illustrates how he and I collaborate with our Wealhouse teammates to identify companies that can pivot from rudimentary AI use toward more proprietary applications capable of taking market share from competitors. With credit spreads so tight, we believe this analysis will become increasingly important for our credit colleagues, Andrew and Mike, as they manage the Amplus strategy.

As we all know, the most obvious beneficiaries of AI to date have been the hyperscalers—such as Microsoft, Alphabet, Meta, and Amazon — and their large-cap suppliers, including NVIDIA, AMD, TSMC and Broadcom. Looking ahead, however, there will be many additional winners beyond semiconductor and software companies, as a wide range of nontraditional technology businesses benefit from the infrastructure and applications enabled by the hyperscalers’ massive capital expenditures. In effect, nearly every company is already a technology company and, over time, will become an AI-enabled one.

When we invest, we look for multiple pathways through which a company can outperform its peers, gain market share, and build durable competitive advantages. Concurrently, we are going through an investment cycle in leading edge tech that will not just produce menial productivity gains for enterprises, but significant competitive advantages. Custom and relevant applications of the technologies we have already built over the last few years will come to fruition as game changing applications for each and every industry. Just this past week, the CEO of Nvidia, Jensen Huang, was on stage at CES showcasing the suite of robotics Nvidia has contributed to training and building so far. Autonomous delivery robots for Uber, humanoid robots from Tesla and Figure, as well as programmable manufacturing robots from Boston Dynamics owned by Hyundai, will all drive material impact across their relevant use cases and for the businesses that adopt them. The same goes for custom and applicable software applications. However, this is pertinent to a company’s ability to be ready for AI adoption, not just the builders, but the enablers of what has been developed upstream. As illustrated in the chart above, companies aspiring to reach “Phase 3” of AI adoption must have the financial resources to harvest and leverage their proprietary data.

One company we believe is great example of progressing toward Phase 3 outside of pure tech industries is AO World, a U.K.-based retailer that describes itself as “the UK’s most trusted electrical retailer.” AO sells a wide range of household electrical products, including washing machines, refrigerators, dishwashers, small domestic appliances, audio-visual equipment, and computers. Despite a challenging U.K. economic backdrop since Brexit, AO has grown at a low double-digit rate while maintaining a net cash balance sheet. We are attracted to the company’s valuation at a high single-digit free cash flow yield, its share price trading below its IPO level from the past decade, and its opportunistic share buybacks. Additionally, the 52-year-old founder continues to own more than 17% of the company, further aligning management with shareholders.

We were impressed during our initial conversations with the founder in 2024, particularly when he discussed studying the Costco membership model before implementing a similar structure at AO. This approach has enabled the company to build a rich customer database that positions it well to execute on Phase 3 of its strategy. The data they’ve built on their network and their customers will be an invaluable intangible asset going forwards. As a result, AO has set a goal to double net income margins in the years ahead by using AI to improve cross-selling to its customer base. Below, we have included a quote from the founder on the company’s most recent conference call.  Opportunities like this with a proprietary membership program — where strong data assets, aligned ownership, and attractive valuations converge — are exactly where we like to allocate capital.

John Roberts, Founder and CEO of AO World

“So, in other words, is the AO margin target achievable and sustainable? As you’ll see from our profit guidance for the full year, the business is currently performing at about 4% PBT. Our medium-term plan is to get that margin to around 7% and to invest everything over this into more fuel for the flywheel for customers… it costs us around 9% to generate, process, and deliver an order. And we have a clear path over the next few years to reduce this to around 6% through AI and automation, as well as leveraging our sales mix into our growing member base… Added to this is the question of how far the service that Agentic AI might offer from products and retailer selection as a shopping assistant through to transaction, and who gets commoditized or marginalized through the process as a result. Well, this is where our depth of long-term belief and investment in the fundamentals of the business and its service really matter. And it’s difficult and it’s complex, and it will pay dividends. When AI is giving advice, it bases its recommendation on a formula on who is the best price. Well, we are. Who offers the best service? Well, we’re the most trusted electrical retailer with the greatest scale of reviews on Trustpilot. And how quickly can it be delivered? Well, we win there too… Our membership program also provides an inherent hedge to this, given that whilst we can serve the member pricing to the AI algorithm, our members also get the best experience when they’re logged in, and members are already invested in AO as their destination for electrical purchases. And this is, of course, the defence argument. Clearly, the opportunity is enormous as more of these facts are surfaced more effectively to customers and potential customers, where maybe for legacy brand reasons, we might not have been top of mind.”

Beyond AI narratives that caused significant volatility in large cap tech, there was no event more impactful this past year on valuations for certain U.S.-based businesses, or companies selling into the U.S., than the headlines around tariffs and the volatility driven by tariff-related pessimism. As we have said before, we embrace volatility in the Voyager strategy.

Based on the many meetings we held with companies across global supply chains serving consumers, enterprises, and governments, we heard a wide range of responses regarding how tariffs would be managed. In some cases, companies indicated they would absorb the tariffs and accept a margin hit. Others told us they planned to pass costs through to end markets, as tariffs were negatively affecting margins. For example, when we met with the CEO of Abercrombie & Fitch (ANF) in June, she explained that the company was working with its Asian supply chain to re-engineer its manufacturing footprint to minimize margin pressure and planned to increase prices heading into 2026 to offset tariff-related costs that could not be diversified away.

In certain cases, tariff fears created compelling opportunities to invest in companies that would later have the ability to raise prices. We seek to invest in businesses experiencing short-term challenges rather than structural issues. After visiting several malls and seeing ANF stores full of shoppers, I concluded that demand for its products remained strong. This thesis was later validated when ANF stated on its November conference call:

“The 280 basis point decline in operating margin from Q3 2024 was driven primarily by 210 basis points of tariff expense included in cost of sales we are taking targeted price increases here for the spring. So that inventory will start delivering here post-holiday. We’ve done all of that as we’ve kind of been navigating 2025 and we’ve delivered record sales for the first three quarters of the year. We’re positioned to do the same for the fourth quarter. And we’ve continued to invest in this business and return cash to shareholders. So bought back 350 million shares year-to-date, on track to do another 100 million here in the fourth quarter.”

Our investment in ANF is a good example of how we apply contrarian thinking to generate returns for clients. Many investors reacted reflexively and sold businesses with supply chains exposed to regions facing higher tariffs. At this time last year, the stock was trading above $150 per share before falling to the mid-$60s at its lows in early April following “Tariff Liberation Day.” At those levels, we calculated that the company was trading at a free cash flow yield in the low 20% range and assumed that ANF’s target customers would continue to buy its products—an assumption informed in part by conversations with my 21-year-old daughter and her friends. We embraced the volatility, believing the risks were more than priced in, and are pleased to see this free-cash-flow-generating business now trading back above $100 per share.

Over my three-decade career, I have invested across both public and private markets and served on the boards of both public and private companies. I can say with confidence that there has never been a time when the competitive advantages of investing in public markets have been more compelling than they are today. Never before in financial history has such a large portion of public market ownership been concentrated in passive funds that, by definition, conduct little to no fundamental research on their holdings. As a result, when market pessimism and volatility arise — as we saw last year around tariffs — passive investors often sell indiscriminately, unloading entire industries or even the broader market. This leads to both strong and weak companies being sold at the same time, creating attractive opportunities for investors who have done the work to identify high-quality businesses at compelling prices.

Another investment we added to during the tariff-related volatility was IMAX. As the U.S. and China negotiated tariff levels, there was rhetoric at one point suggesting China could ban Hollywood films, which led to a sell-off in IMAX shares, as more than 15% of its revenue is generated in China. Fortunately, Devon and I had met with IMAX’s CFO and Investor Relations team both at our offices and at their headquarters over the past few years while researching the business following the COVID-related sell-off. We were confident the company’s balance sheet could withstand this temporary tariff-related noise. In addition, I met with the CEO of IMAX China at the company’s analyst day in California this past December, where he confirmed that China sales are reaching all-time highs, as shown in the chart below.

IMAX CHINA GROWING VERY FAST

Our original thesis when we first invested in 2022 was based on the view that investors were underestimating the significant improvements made to IMAX’s uniquely-positioned business platform post-COVID, even as many legacy media businesses were disrupted by the rise of streaming services such as Netflix. In fact, Netflix will be promoting and releasing Narnia with an exclusive window next U.S. Thanksgiving on IMAX screens only. Further, the finale for Stranger Things, one of the most anticipated TV shows of the year, was also given a theatrical release over the holidays. This is a trend we see continuing as streaming services try to drive consumers to their shows and movies in a muddled entertainment landscape across services and movie screens. The streaming services have also increasingly positioned themselves as producers of their content and have become increasingly invested in its initial success. IMAX’s brand is perfect for this, as it has already seen a consolidation of movie goers to its screens due to the blockbuster effect of consumers targeting their entertainment spending outside of subscription services towards low-cost premium entertainment. As of 2025, IMAX accounted for 5% of global box office ticket sales globally, despite having just 1% of the global screen count. Rich Gelfond, CEO of IMAX, said this relevant to their growing share:

“2025 was truly a transformational year for IMAX in which we leveled up our performance across our business — capturing a greater share of total box office with a wider variety of releases across an expanding global footprint. We see no signs of slowing down given a very promising slate ahead and the consistency of our market share gains, as filmmakers, studios, and audiences worldwide continue to gravitate toward the IMAX Experience.”

It was also notable that a senior Netflix executive recently stated, “Our core strategy is to give our members exclusive first-run movies on Netflix. The Narnia IMAX release is a release tactic…I think it’s very differentiated from other runs, because I doubt anyone has a screen as big as an IMAX screen at home.” This speaks to the IMAX effect also being driven by the creators themselves, who want their projects front and center in the best formats with the box office being so hard to dominate post-covid. Directors like Denis Villeneuve (Dune Trilogy) and Chris Nolan (Odyssey, Oppenheimer) are emphasizing increased usage of IMAX formats in producing and creating their movies, with the upcoming Odyssey movie being entirely shot in 35mm film with IMAX cameras. Greta Gerwig (Narnia, Barbie), was also a champion of theatrical formats with her release of Barbie 2 years ago, which coincided with Nolan’s Oppenheimer on IMAX screens to drive one of the best performing box office tandems post-Covid. Imax notably had a 20% global share of Oppenheimer’s debut weekend on only 740 screens worldwide.

Moviegoing was significantly impacted during COVID between 2020 and 2021 as many people sheltered at home, which caused financial stress for certain IMAX customers and partners that lacked the company’s asset-light business model. IMAX, by contrast, operates a highly differentiated platform that generates revenue through ticket-sale royalties, projection and camera system sales, and recurring maintenance fees tied to its installed base. We estimate there are currently approximately 1,800 IMAX venues worldwide, and the company has identified a total addressable opportunity of roughly 4,500 sites globally.

STRESS-TESTED ASSET-LIGHT BUSINESS MODEL

IMAX’s share of global box office receipts has increased by 46% since before COVID, yet it currently stands at just 3.8%. We view IMAX as a steady growth company with more than 17% insider ownership and a free cash flow yield of over 6%, before accounting for the value of its $250 million stake in publicly listed IMAX China and its office and land holdings in California and Mississauga, which we estimate to be worth over a $100M million (USD). IMAX also owns more than 200 pieces of content. The company is targeting high single- to low double-digit top-line growth through 2028, EBITDA margin expansion to over 50% from the low 40% range, and a 50% cash flow conversion rate. We also respect that IMAX has repurchased nearly 20% of its outstanding shares since COVID and maintains excess cash on its balance sheet to support further buybacks during periods of market volatility.

Below are photos I took at the company’s analyst day, highlighting the growth in local content releases expected in China next year, the expansion of its partner ecosystem with companies such as Amazon, Apple, and Netflix, and the continued growth of its content library as operators increasingly use IMAX screens for a broader range of distribution opportunities, including music concerts, sporting events, and corporate programming.

IMAX 2025 INVESTOR DAY PICTURES

One company we sold from our portfolios after it became fully valued was MP Materials, which owns rare earth refining assets in Texas and a rare earth mine in Nevada. When Devon first joined Wealhouse a few years ago, we asked him to research second-derivative beneficiaries of AI adoption, and he concluded that as the world moves toward greater use of autonomous and electric vehicles, robotics, and defense drones, rare earths would become increasingly strategic. Further to this, 80% of Rare Earth Supply and a majority of refining share has consolidated to China over the decades since its entry to the WTO. We felt strongly that any trade volatility between China and the U.S. would cause the western administration to look closely at the supply chain for rare earths, especially as it is relevant to nearly every major technology the US would put a priority on developing in the coming decades. Shortly after tariffs were announced, we saw the U.S. Pentagon make a strategic investment in MP Materials, validating the push for greater domestic production of rare earth materials, including operation of the Mountain Pass mine in California—the largest deposit and only operational rare-earth mining and processing site in the Western Hemisphere. MP Materials was well positioned as a key domestic supplier amid efforts to reduce Western dependence on Chinese rare earth supply chains. With the stock up more than 500 percent over the past few years, we exited our position, as U.S. government incentives are likely to lead to increased rare earth production and supply.

During 2025, we have seen central banks in the U.S., U.K., Europe, Switzerland, and Canada begin to ease policy, and we anticipate that as the U.S. potentially cuts rates, more emerging market countries will follow. Historically, central bank rate cuts can be bullish for equities, provided the economy avoids recession. Over the past few years, we believe certain interest-rate-sensitive industries, such as real estate and autos, have experienced industry-level recessions, as buyers in these sectors often rely on borrowing to complete transactions. As a result, for the first time in several years, it has been advantageous to be a lender, as reflected in Voyager’s performance from our bank holdings in Bank of Ireland and Resona in Japan. In 2025, we exited our position in Erste Bank of Austria after valuation multiples expanded significantly from our 2022 entry point, when we were able to acquire the shares materially below book value.

One reason why we are being very vigilant around the balance sheet strength of our holdings is that despite so many central banks cutting short-term rates, for the first time in my career I have subsequently witnessed the 10-year bond yield move higher after the U.S. Fed began an interest rate easing cycle in September of 2024. At the time, the 10-year yield in the U.S. was around 3.6% versus near 4.20% today. From a “Finance 101” perspective, we have entered a new paradigm for the cost of debt and value of liquidity when the 10-year bond is considered. We are left wondering what will happened to risk free rates around the world in an era where government balance sheets have never been as levered.

The risk-free rate is also an important variable to consider carefully in the financial analysis process, particularly because, for the first time in my career, the Bank of Japan is raising rates, and its 10-year yield is steadily moving higher while many other G7 countries are cutting rates. This is a major risk factor we are monitoring, as Japan’s government debt exceeds 235% of GDP. In fact, in the post-COVID world, Germany is now the only G7 country with a debt-to-GDP ratio below 100%.

JAPAN: BANK OF JAPAN POLICY RATE AND 10Y JGB YIELD — KEY INTEREST RATE RISK TO MONITOR

At home here in Canada we saw the provinces of British Columbia and Quebec get downgraded by major rating agencies like Standard and Poor’s and Moody’s. We at Wealhouse are increasingly sensitive to monitoring the fiscal backdrop of the regions where we allocate capital since this will have major impacts on tax rates for both individuals and corporations. We discussed this global trend with the CEO, CFO and IR Head of EFG International, a long-term holding, during a meeting in our Wealhouse offices in late November. We are very pleased to have seen EFG’s stock nearly triple since we first invested back during Covid, as we correctly anticipated that their high-net-worth clientele would increasingly turn to them for opportunities to minimize tax across the many different low-cost tax regions where they have offices. We see now a scenario where tax-planning will not be an important financial need for wealthy families in the future, due to levered government balance sheets and certain other trends.

I have sadly seen many natural disasters unfold around the world, and I have long admired my brother-in-law, who is a District Fire Chief with the City of Toronto. As a first responder, it is his job to rush to dangerous situations. Still, good firefighters do not rush in blindly. As an investment team, we try to avoid disasters during market calamities by always analyzing balance sheet strength, downside scenarios and maintain liquidity. These are critically important values and principles across all three Wealhouse strategies in which I diversify my family’s savings. Wealhouse is proud of the long-term track record of Amplus, particularly through the worst bond market of my career, where it benefited from the rise in government yields noted above. Maintaining capital in Lions Bay through multiple “five-alarm fires,” such as those experienced during COVID and in 2022, has provided an effective balance to the more aggressive Voyager strategy. Together, I view these three strategies as a modern-day balanced fund for a world defined by both significant risks and meaningful opportunities.

I have also admired my brother-in-law’s work with GlobalFire, travelling to communities around the world affected by hurricanes, floods, forest fires, earthquakes, and volcanic eruptions. Through this work, he helps install water filtration systems and conducts training workshops in regions that lack the skills and tools available to firefighters here in Canada. At this year’s Christmas dinner, we were impressed to hear that his son, our nephew, recently joined him on a volunteer training trip to Southeast Asia. Over the years my brother-in-law has travelled overseas to Ukraine, Tonga, Philippines, Nicaragua, Nepal and West Africa while my son Devon and I have visited more developed economies like Japan, UK, France, Germany, the U.S. and South Korea this past year. These emerging, high-risk jurisdictions are not where we are investing your capital. If you would like to follow where Devon and I travel, please feel free to reach out to us over LinkedIn.

GLOBAL RESEARCH PROCESS EXECUTION TO BENCHMARK CANADIAN OPPORTUNITIES

Our primary focus at Wealhouse has always been identifying businesses with competitive advantages that enable them to outgrow the markets in earnings and free cash flow. We strive to anchor the portfolio to companies that we believe can double or triple in size in the medium- to long-term, led by management teams with equity alignment–just like everyone at Wealhouse owns units across our different funds. 

As you can see in the charts below taken from a Fraser Institute report, the investment landscape has improved in so many ways since the 2008 Global Financial Crisis for bottom-up active investors such as Wealhouse. Wealhouse and our well-capitalized companies will benefit from a world with more passive ETFs, smaller supply of new issues and capital trapped in illiquid private equity vehicles. We are discussing with our companies how they are taking advantage of this. Happy to discuss further.

All the best for 2026.

Q4 COMPANY RESEARCH MEETING EXAMPLES FOR DEVON AND SCOTT

AVERAGE MARKET CAPITALIZATION PER TSX LISTING AND NUMBER OF LISTINGS, 2008 – 2024

EQUITY CAPITAL ($ MLN) RAISED ON CANADIAN EXCHANGES, TSX AND TSXV, 2008 – 2024

EQUITY CAPITAL RAISED AS A PERCENTAGE OF TOTAL TSX MARKET CAP, 2008 – 2024

PRIVATE EQUITY (US$ BILLIONS) UNDER MANAGEMENT IN CANADA, 2000 – 2024