Bireme Capital Up 33% In 2025, 21% CAGR Since Inception [2025 Letter]

Bireme Capital ‘s commentary for the fourth quarter ended December 31, 2025.

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Fundamental Value returned 33.0% net of fees in 2025, significantly outperforming the S&P’s 17.7% return. FV is now up 507.6% net since inception in 2016 vs 284.0% for the S&P 500, representing annual outperformance of 5.7%.¹ For monthly performance, see our tearsheet.

Our letter below is deeply critical of the direction the United States is heading and the implications for its capital markets. We write these words with a heavy heart. As Americans, we desire nothing more than to see our country flourish. However, as investors, our job is to find opportunities wherever they present themselves. We profited handsomely in 2025 by owning inexpensive international equities while shorting overvalued US stocks. We expect this approach will be very successful in 2026 as well.

Due to its length, we have split this letter into two parts. This first installment is market commentary. Portfolio commentary will follow shortly by email, or you can find the full text on the web today here.

Market commentary

The US has dominated the past century, both geopolitically and economically. As a result, the US stock market has enjoyed decades of world-leading returns. Americans, and investors in American securities, have come to assume that this is a natural law.

However, American exceptionalism is not preordained. It is a function of many factors, but chief among them is institutional excellence: the rule of law, strong property rights, a competent and impartial bureaucracy, an independent judiciary, thriving academic and research institutions, fiscal prudence, deep and efficient capital markets, a stable currency, and leadership of an unparalleled network of friends, allies, and trading partners. All of these pillars are under attack, jeopardizing not only our prosperity and our way of life, but the foundations upon which market returns depend.

At the same time, US equity valuations are at or near all-time highs, and speculative excess has returned with a vengeance. Investors are applying peak multiples to peak earnings in an environment of deteriorating institutions, ballooning deficits, and rising geopolitical risk. It is difficult to imagine a scenario less likely to lead to durable stock market gains.

For prudent investors, the time to look elsewhere is now. In fact, it was last year: despite the US equity market dominating investor mindshare, the rest of the world returned 32.6% in dollar terms in 2025 vs the SPY’s 17.7%.