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Grey Owl Capital Management Q4 2025 Client Letter
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Expansion create opportunity. – Anonymous
Dear Client,
The Grey Owl All-Season Strategy’s objectives are to minimize drawdowns, outperform short-term bonds by several hundred basis points each year (i.e., beat “cash”), and participate meaningfully in risk-on rallies. For the full year 2025, GOAS returned +11.4% and met each of these objectives.
We are particularly pleased with the strategy’s 2025 performance given how the year began. While the popular “Magnificent 7 (MAGS)” group of stocks declined roughly -30% from its December 17, 2024 peak to the April 8, 2025 low 1 , the Grey Owl All-Season (GOAS) portfolio was down less than -3% at its worst point in early April. The rebound that followed was rapid, and the year ultimately proved strong for most risk assets. GOAS managed risk during the drawdown and then repositioned to participate as conditions turned risk-on.
A few specifics below on the present environment and our current positioning, but first a more detailed review of the performance of the “primary” asset classes. 2
For the full year 2025, gold gained +63.7%, global equities rose +22.4%, U.S. equities followed closely at +17.7%, commodities increased 5.9%, and long-dated U.S. Treasury bonds returned +4.3%.
During the fourth quarter of 2025, precious metals continued to shine, with gold up another +11.5%. U.S. equities gained +2.7%, while global equities performed slightly better at +3.3%. Commodities were essentially flat, up +0.4%, and long-dated U.S. Treasury bonds declined -1.0%. Over this period, GOAS delivered a respectable +2.4% return.
As 2026 gets underway, a more dramatic shift may be developing. In 2025, technology and growth outperformed the broader market (i.e., the Nasdaq beat the S&P 500, finishing up +20.8%), while small-capitalization stocks lagged, ending the year up +12.7%. 3 That dynamic has changed meaningfully during the first three weeks of 2026.
As of the close on January 23, 2026, the “Magnificent 7” group was down -3.6% from its October 29, 2025, high and -0.5% year-to-date. In contrast, small-capitalization equities and commodities are significantly outperforming, up +7.6% and +7.4% year-to-date, respectively. GOAS is aligned with these prevailing conditions and is up +5.3% through January 23, 2026.
In short, our diversified, risk-managed approach delivered solid double-digit returns in 2025 while avoiding major drawdowns during early-year volatility. Today, we are positioned for meaningful economic growth in the U.S. and much of the rest of the world. We believe conditions now favor cyclical outperformance and a broadening of equity participation. That means overweight exposure to commodities and smaller-capitalization equities. As the charts below indicate, this phase may only persist through the first half of 2026. For now, that is the prevailing condition regardless of how long it lasts. We are prepared to adjust as conditions evolve.
Economic Growth
Hedgeye’s real GDP projection model shows a reacceleration in growth gaining significant momentum in the first quarter and continuing through much of the second quarter. As growth has accelerated, cyclical equities and commodities have outperformed. While this acceleration continues, we expect risk assets to continue performing well.
Figure 1 – GDP Projections
Economic growth is accelerating, which historically supports risk assets—particularly cyclical equities and commodities.
Inflation
Inflation expectations have been decelerating for several quarters, as evidenced by the five-year breakeven spread—often referred to as “the market’s” inflation forecast.
Figure 2 -5-Year Breakeven
Hedgelye’s CPI model corroborates this trend, projecting continued disinflation through the second quarter of 2026, followed by only a modest seven-basis-point increase in the third quarter. Combined with accelerating growth, this backdrop is favorable for risk-taking.
Figure 3 – Inflation Projections
A key driver of lower inflation has been the price of oil—one of the few major commodities not yet firmly in a bull market.
Figure 4 -US Crude Oil Spot
Inflation pressures remain contained, creating a favorable backdrop for risk-assets.
Broadening US Equity Market
While the broader macro environment—accelerating real growth alongside disinflation—is critical to the rally’s expansion, sector-level dynamics are also playing an important role. Mega-capitalization technology companies are now facing more difficult year-over-year comparisons, as cycle-peak artificial-intelligence capital expenditures may be behind us, pressuring both revenue growth and margins.
The opposite is true for much of the rest of the market, particularly smaller-capitalization and cyclical businesses. With easier comparisons to last year, both revenues and margins are improving.
Hedgeye data show that while S&P 500 earnings are expected to continue growing, a greater share of that growth is coming from the “other 493” stocks.
Figure 5 – Earnings Projections
Market leadership is expanding beyond mega-cap technology, increasing opportunity across smaller and more cyclical companies.
Market Signals
Last quarter we wrote:
Market internals also point to change beneath the surface. While large-cap indices hit new highs in the third quarter, participation was narrow—signs of enthusiasm were limited. In October, that pattern began to broaden as Buying Power improved and Selling Pressure eased. With Buying Power still stronger overall, we do not see a shift toward a risk-off environment. Instead, the data suggest equity markets are transitioning as investors respond to—and anticipate—changes in growth and inflation, opening the door for new leadership among sectors and styles.
That improvement and broadening has continued. Selling Pressure is receding, and Buying Power shows further signs of strengthening.
Figure 6
More granular market data look even better. Lowry’s writes:
While many investors and the financial media are focused on the cap-weighted price indexes, the Lowry Analysis is predominantly centered on the full market on an equal weighted basis, which is dominated by smaller stocks. The reason for this is simple: the greater the number of stocks participating in a market advance and displaying promising Demand trends, the more difficult it is for sellers to take control of the market. While such features do not make the market impervious to pullbacks, recent evidence continues to mount in favor of a broad and durable advance. Still, we would like to see these improvements reflected in our longer-term measures of market health to solidify our conviction in the bulls further.
In their most recent weekly report, Lowry’s emphasized the dramatic increase in the percentage of stocks within 2% of their 52-week highs.
Figure 7
Explaining the chart, Lowry’s wrote:
One method to view how many stocks are carrying the performance load within the market is our measure of Demand intensity, or the Percent of OCO1 Stocks At or Within 2% of 52-Week Highs. This is one of the more sensitive indicators in our suite, and on January 15, it reached a one-year high of 33.36%. While this was an impressive development, the indicator moving above its multi-month range is perhaps even more important. It essentially reflects a change in character within demand intensity from good to great, as the OCO Index is dominated by smaller stocks. The more stocks that reach new highs, the stronger the market’s constitution ultimately becomes.
Market internals support the case for a broader, more durable advance.
Current Positioning
Our current portfolio remains balanced within an all-season framework but is more aggressive than when we last reported in October 2025. Since last quarter, we have increased exposure to U.S. small-capitalization equities, expanded global equity exposure—particularly in emerging markets—and added to precious metals and commodities. Fixed income and cash allocations declined from 28% to 16%.
Figure 8 – GOAS Allocation
This positioning maintains meaningful protection against inflation or market stress while remaining tilted toward growth. This balance—rooted in our all-season philosophy and adjusted for present conditions—reflects our core belief: don’t try to predict the future; position with prevailing conditions while diversifying to enable success across many possible futures.
The portfolio remains balanced but is intentionally tilted toward growth.
As always, if you have any thoughts regarding the above ideas or your specific portfolio that you would like to discuss, please feel free to call us at 1-888-GREY-OWL.
Sincerely,
Grey Owl Capital Management
Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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NFL Hall of Famer Terrell Owens said Wednesday that the recent snubs of New England Patriots owner Robert Kraft and former coach Bill Belichick from the institution show the system is flawed, and someone needs to be held accountable.
“It’s just plain dumb” Owens told CNBC Sport in an interview in San Francisco ahead of Super Bowl LX. “Something has to change.”
The decisions not to vote Kraft and Belichick into the Pro Football Hall of Fame raised eyebrows because of the Patriots’ success. With a win over the Seattle Seahawks on Sunday, the franchise would hold the most Super Bowl wins of any NFL team with seven. Belichick was the team’s head coach for all six of its championship victories, including one over Owens’ Philadelphia Eagles.
2018 Hall of Fame inductee Terrell Owens speaks during a ceremony at halftime of the game between the San Francisco 49ers and the Oakland Raiders at Levi’s Stadium on Nov. 1, 2018 in Santa Clara, California.
Daniel Shirey | Getty Images
Owens suggested it may be Jim Porter, the Hall of Fame’s president, who has the power to change the system.
“He has to change or make some some adjustments or amendments into either the criteria or the mission statement of the Hall of Fame. Something has to be done,” Owens said.
He also placed the blame on the writers responsible for voting.
“Whoever put the guidelines and the bylaws in place to ultimately land coaches and athletes in the most prestigious place that you could ever be, and that’s Canton. If the people that you’re appointed aren’t adhering to that, then something’s wrong. They should be held accountable. They should be stripped of their position,” he said.
The Pro Football Hall of Fame did not immediately respond to a request for comment.
The former six-time Pro Bowler Owens would know something about Hall of Fame voting. Owens played 15 seasons in the NFL and was inducted into the Pro Football Hall of Fame in 2018 after being passed over twice despite being ranked near the top of nearly every receiving category. Owens said it cost him financially.
“There’s a lot of complicated financial opportunity that comes with being really a first-ballot Hall of Famer. There’s a ring to it,” he added. “It used to mean so much, and now it seems to be a little bit watered down.”
When he was inducted into the Hall of Fame, Owens opted to skip the celebration in Canton, Ohio, instead holding his own celebration at the University of Tennessee at Chattanooga, his alma mater, in protest of what he called a “flawed process,” according to ESPN.
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A major distributor in the gun and outdoor sporting goods industry has filed for bankruptcy.
Big Rock Sports, LLC, a key supplier serving tens of thousands of retailers across the U.S. and abroad, has filed for Chapter 7 bankruptcy liquidation in the U.S. Bankruptcy Court for the Eastern District of North Carolina, according to court documents obtained by FOX Business.
The North Carolina–based company reported more than $100.9 million in liabilities, compared with estimated assets of between $10 million and $50 million.
The bankruptcy filing does not specify what triggered the liquidation but indicates that Big Rock Sports was overwhelmed by a surge of lawsuits from property owners, suppliers and business partners, SBG Media reported.
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A collection of rifles (iStock / iStock)
Roughly $83 million in unsecured claims are expected to go unpaid, according to SBG Media.
Although the company’s website is currently inaccessible, archived versions reviewed by FOX Business show Big Rock Sports claimed to serve more than 20,000 retailers across the fishing, shooting, camping, taxidermy and marine industries.
The distributor said its operations spanned the U.S., Canada, the Caribbean region and eight other countries.
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A fisherman is pictured on a boat. (iStock / iStock)
Big Rock Sports also reported working with roughly 1,200 vendor partners and operating approximately 850,000 square feet of distribution space at warehouses in North Carolina, Minnesota and Nevada.
“Although Big Rock is one of the largest outdoor sporting goods distributors in North America, we’re much more than that,” the company stated on its website. “We offer an exclusive array of tools and resources that are designed to give retailers a competitive edge.”
Big Rock Sports traces its roots back to 1955, when All-Sports Supply was founded in Portland, Oregon.
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Big Rock Sports filed for Chapter 7 Bankruptcy. (iStock / iStock)
“The history of Big Rock Sports goes back more than 60 years to the founding of All-Sports Supply in Portland, [Oregon],” the company wrote. “At that time, sporting goods was a much more personal business, and distributors knew the names of their retailers as well as their families.”
The company’s Canadian subsidiary was liquidated prior to the U.S. bankruptcy filing, according to The Street.
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Big Rock Sports could not immediately be reached by FOX Business for comment.
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For decades, markets were places you entered through permission. A broker. A bank. A credential. Participation came with paperwork, minimums, and a quiet sense that most people were visitors, not stakeholders. That posture no longer holds.
Across finance, sports, media, and commerce, digital platforms have reshaped who gets to participate and what participation looks like. Markets feel looser. Interfaces simpler. Having a “stake” no longer requires ownership or long-term commitment.
People can engage briefly, more often, and with clearer limits around control. What’s emerging isn’t just wider access, it’s a fundamentally different shape.
Lower Barriers, Wider Doors: Who Gets to Participate Now
The most visible change is the simplest one. Entry costs have collapsed. In earlier eras, market participation demanded scale. Capital. Patience. Confidence in systems that rarely explained themselves. Digital platforms stripped much of that away. A smartphone now does the work of entire intermediaries.
Fractional access became normal. So did zero-commission models. These weren’t cosmetic tweaks. They changed the psychology of participation. People could test ideas instead of committing identities. They could step in briefly, observe, and step back out.
That shift pulled new voices into spaces once dominated by institutions. Retail participants moved from the margins toward the center of daily activity. Not as professionals, but as contributors whose collective presence began to matter.
It’s worth lingering on that word, collective. Because participation at scale changes how markets behave, not just who shows up, but how influence forms and shifts over time.
Markets That Reflect Opinion, Not Just Capital
Markets have always reflected belief, but rarely so directly. What digital platforms introduced was a way to express opinion without requiring deep technical fluency. Binary frameworks. Clear outcomes. Transparent pricing shaped by the crowd rather than a central authority.
This structure shows up in more places than many people notice. Fans are voting on club decisions. Consumers are backing product ideas before launch. Users are signaling confidence or doubt around real-world events, not by writing essays or placing long-term bets, but by participating in short, defined windows.
In that context, platforms like FanDuel Predicts represent a broader movement rather than an isolated product. They sit alongside other outcome-based environments where users engage with events by expressing belief within structured limits.
The appeal isn’t a prediction for its own sake. It’s the ability to participate without overcommitting, to test intuition, and to see how personal perspective aligns or clashes with the wider crowd. The market, in these moments, feels less like a machine and more like a conversation.
From Passive Audiences to Active Stakeholders
Something else happens when participation becomes easier. People begin to care differently, bringing attention, emotion, and judgment into the process.
Passive consumption gives way to light ownership. Not always financial. Sometimes emotional. Sometimes reputational. A fan who votes on a decision feels invested even if the stake is symbolic. A user who contributes to an outcome feels seen.
Digital platforms learned this quickly. Participation deepens loyalty in ways discounts never could. It also changes behavior. People return not just to consume, but to check how their view is aging. To see where the crowd moved. To decide whether to stay in or step away.
This shift echoes across sectors. Creator platforms rely on it. Community marketplaces thrive on it. Even civic tools increasingly borrow the same logic. Markets, in this sense, are no longer just places to transact. There are places to engage identity.
Real-Time, Fractional, and Always On
One of the quieter revolutions of digital participation is time, how quickly it moves and how flexibly it’s experienced.
Traditional markets operated on schedules. Open. Close. Settle. Digital platforms blurred those boundaries. Participation became continuous, but not compulsory. Users could engage briefly and leave without penalty. Several mechanics make this possible:
- Real-time data that updates expectations instantly,
- Fractional exposure that avoids binary commitment,
- Optional exits that allow users to lock in or step back.
This design philosophy reflects the rise of digital marketplace ecosystems, where platforms act less like vendors and more like orchestrators. Value compounds through connection rather than inventory, through participation rather than possession, reshaping how digital markets scale and sustain engagement.
The model is increasingly visible across finance, telecom, and public services alike. The common thread is flexibility. Users aren’t pushed toward permanence or long-term commitment. They’re offered presence, with the freedom to engage on their own terms.
Regulation Catching Up to Participation
As participation widened, scrutiny followed. Regulators tend to arrive late to new market forms, and then all at once. Digital participation platforms are no exception. What’s notable now is the tone of the conversation. Less about whether these models should exist. More about how they should be governed.
That shift matters. Clear frameworks signal legitimacy. They also encourage broader adoption. Users trust systems that acknowledge limits and enforce transparency. Platforms that operate within visible guardrails tend to last longer than those racing ahead of oversight.
The regulatory process is uneven, state by state and sector by sector. Still, the direction feels settled. Participation markets are no longer fringe experiments. They’re becoming formal components of the economic landscape.
A More Flexible Market Mindset
The changing shape of market participation isn’t about technology alone. It reflects a cultural shift in how people relate to systems of value and influence. Access now comes with an expectation of autonomy.
Participation is no longer about commitment for its own sake, but about the freedom to engage, observe, and step back without friction or consequence.
Markets are responding in kind. They listen more closely, adapt more quickly, and leave room for lighter, temporary forms of involvement. Participation has become fluid rather than fixed. The future will be shaped less by who controls entry and more by how individuals choose to show up and how easily they can move on.
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