Wall Street Week Ahead | Seeking Alpha

Wall Street’s focus next week will squarely be on trade developments, as a 90-day pause on reciprocal tariffs against U.S. trading partners is set to expire on Wednesday. U.S. President Donald Trump has said he will not extend the pause and will start sending letters to countries specifying the tariff rates they will have to pay.

With substantially higher tariffs possibly being implemented amid a lack of further announcements of trade deals, investor sentiment will certainly be tested and the benchmark S&P 500’s (SP500) record levels could come under pressure.

Next week’s economic calendar is fairly light, with the main event being the publication of the minutes of the Federal Reserve’s May monetary policy committee meeting.

Though the second quarter earnings season will start in earnest in mid-July, next week will see results from the biggest U.S. carrier, Delta Air Lines (DAL).

Investing Group Spotlight

At High Yield Investor, we have been looking for opportunities to profit from two major macro-themes on a value basis:

(1) The increasing attractiveness of Latin America as an investment region. It is far away from potential conflicts and is poised to benefit from the current decoupling from China that the United States is pursuing. The region’s alternative asset market is also still largely untapped, offering high potential returns to investors. Valuations are low, yields are high, and as the continent continues to develop, it could enjoy rapid economic growth.

(2) The rapid shift to alternative assets in institutional investors’ portfolios. This is being driven by the need for inflation-resistant and defensive cash flows in an increasingly uncertain world, the need for attractive and dependable yields to fund pensions that are higher than can be generated through traditional bond portfolios, and the desire for diversification into asset classes that are less volatile and relatively uncorrelated with publicly traded equity strategies.

Patria Investments (PAX) is ideally positioned to benefit from the intersection of these macro trends, as it is one of the leading alternative asset managers in Latin America and is moving aggressively via strategic M&A to further consolidate its leadership position in the region. Since its IPO in 2022, it has grown its Fee Related Earnings at a 14% CAGR while also paying out a substantial dividend. Over the next three years, it expects its organic growth rate to accelerate significantly, leading to a 17% projected CAGR through 2027, while growing the dividend as well.

We recently met with the CFO and gleaned additional insights about the length and strength of its growth runway, which we shared with members of High Yield Investor. With its Price to Distributable Earnings multiple currently trading at about ~1/3 that of peers like Blackstone (BX), despite PAX having even stronger growth potential, we think the market is overpenalizing PAX for its concentration in Latin America. Therefore, it is our top pick in our International Portfolio, and we expect its significant year-to-date total return outperformance to continue in the coming quarters and years.

Discover more analysis from Samuel Smith. Jussi Askola & R. Paul Drake with the SA Investing Group service – High Yield Investor.