Ticker: STEEL

Thesis:

This portfolio invests in steel companies that we believe are poised to benefit from policies meant to preserve US manufacturing. Domestic manufacturing policy often targets steel as it is critical for military equipment and infrastructure, and because steel mills are major employers in swing states. In his first term, President Trump implemented a 25% tariff on foreign steel, a move that boosted U.S. steel prices, increased domestic production, and improved profitability for American steel companies.

Risks:

This portfolio comprises stocks and is susceptible to the inherent volatility and potential declines that characterize the stock market. Additionally, this portfolio is concentrated in a particular narrow industrial sector and is therefore extremely exposed to risks affecting this particular part of the economy. Steel is considered a highly cyclical industry for many reasons and steel producers see large profit swings between cycles. While this portfolio may benefit from upcoming changes to US policy, such changes may not materialize, or the market reaction to them may not be what we expect.

Risk score: 5