St. James Investment Company has released its “Value Investors” third-quarter 2026 investor letter, outlining an increasingly difficult environment for value investors. Rising interest rates, higher energy prices, record government debt, and geopolitical conflicts are testing market fundamentals, even as the S&P 500 trades near all-time highs and stock valuations remain elevated.
The letter does not disclose a specific third-quarter return for the Select Value portfolio. Instead, it highlights the widening gap between stocks and bonds since the pandemic. According to the firm, U.S. equities have outperformed bonds by an average of 28% annually over that period, while stocks now account for 52% of U.S. households’ financial assets.
St. James warns that rising oil prices and long-term Treasury yields could intensify inflationary pressures and increase the risk of stagflation. The letter cites a 10-year Treasury yield of 5.23% and a 30-year yield of 5.55%, underscoring the higher borrowing costs facing consumers, businesses, and the government.
Looking ahead, the firm remains cautious about a market increasingly shaped by enthusiasm for artificial intelligence. Its message is straightforward: resist chasing compelling narratives and focus on businesses with durable competitive advantages, sound economics, and prices that leave room for unexpected setbacks. St. James continues to emphasize patience, valuation discipline, and a sufficient margin of safety.
For a closer look at the firm’s stock selections, explore its top five holdings in 2026.
In its third quarter 2026 investor letter, St. James Investment Company mentioned Arm Holdings plc (NASDAQ:ARM). The firm is a semiconductor technology company that develops and licenses processor designs, chip architecture, and related software used in smartphones, computers, vehicles, and data centers. Its business earns licensing fees and royalties from companies that incorporate Arm technology into their chips, while its newer silicon business expands its role in supplying processors directly to customers. On November 6, 2026, the stock closed at $174.55, an increase of 4.70%, or $7.83, from the previous session. Its market capitalization was approximately $186.77 billion.
Here’s what St. James Investment Company has to say about Arm Holdings plc (NASDAQ:ARM):
“The introduction of the smartphone reshaped the battlefield through extreme power efficiency, a different instruction set (ARM), and a foundry model in which the best factories no longer belonged to chip designers… Apple was once Intel’s most prestigious PC customer, yet beginning in 2020, it transitioned the entire Mac line to its own ARM-based M-series chips. Hyperscalers, a market segment Intel once completely dominated, began dual-sourcing AMD’s EPYC processors and later designed their own silicon. Microsoft promoted Windows on ARM, while OEMs that had treated Intel as the default began viewing it as just one option. The moat that had once protected Intel’s business quickly disappeared.”
In its November 4 earnings update, Arm reported fiscal second-quarter 2027 revenue of $1.44 billion, up 27% year over year, marking its fifth consecutive quarter with revenue growth above 20%. Licensing and other revenue climbed 50% to $773 million, while royalty revenue reached $670 million and data-center royalties doubled. Arm also said its first commercial deliveries of the Arm AGI CPU remained on track for fiscal fourth-quarter 2027, with customer purchase orders extending through calendar 2027. These developments show how the company is broadening its business beyond its established strength in mobile devices.
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Disclosure: No material interests to disclose. This article was originally published on Global Market Bulletin.
