As we determine our 2026 portfolio positioning, we are highlighting a small set of themes where we believe the risk–reward profile is particularly attractive and where selective exposure can add value within a diversified portfolio.

Today, parts of the equity market—especially cyclical, real-asset industries—remain priced with caution, while credit markets reflect a high degree of confidence, with spreads offering limited compensation for risk. That divergence informs how we are allocating incremental risk this year.

The themes discussed here—petrochemicals, agribusiness, and selective use of credit default swaps—represent specific positioning ideas grounded in fundamentals and cycle awareness. They are not exhaustive, but illustrative of how we are expressing conviction in 2026.

Our positioning framework: selecting themes, not forecasting outcomes

We do not pick themes because they are fashionable. We pick them because they can do three things at once:

• Create asymmetry: limited downside relative to upside if the environment shifts.
• Pay us for patience: through cash generation, dividends, or structural advantages.
• Improve portfolio resilience: by diversifying drivers of return beyond large-cap growth.

That approach matters because many of the best positioning opportunities rarely look clean in the moment. Cyclical investing rarely feels comfortable at the bottom of the cycle. Earnings are soft, sentiment is skeptical, and the news flow is usually unhelpful.

But cycles do not shift because investors feel safe again. They end when supply, demand, and capital discipline start to rebalance—often quietly at first.

Theme 1: Petrochemicals — cyclical exposure within our 2026 portfolio positioning

Current conditions informing our positioning

Petrochemicals has lived through a difficult stretch. Years of capacity additions, uneven demand growth, and regional cost pressures have weighed on margins. In plain terms: too much supply in the wrong places, and too little pricing power.

When an industry goes through that kind of compression, two things happen:

• Capital allocation improves. Projects get delayed, and management teams become more disciplined.
• The weak players weaken further. High-cost assets and highly levered balance sheets become harder to carry.

Both improve the payoff profile if conditions begin to normalize. Not a straight line—nothing cyclical is—but a shift in the odds.

Why this exposure fits our 2026 portfolio positioning

We are not relying on a macro forecast. We are relying on mean reversion and incentives.

When spreads and margins stay depressed long enough, rational behavior takes over:

• Capacity gets rationalized or repurposed.
• Non-core assets get sold.
• Cost programs become real, not aspirational.
• The industry’s “marginal producer” loses influence over pricing.

In that environment, firms with scale, integration, and balance-sheet capacity tend to have more resilient outcomes. They can stay standing through the downturn—and then benefit disproportionately when pricing improves.

How we implement this exposure

We are emphasizing high-quality petrochemical exposure rather than speculative turnarounds. In practice, that means businesses that can plausibly be “mid-cycle cash machines” even if the next few quarters are choppy.

Theme 2: Agribusiness — selective exposure to essential, cyclical businesses

Agribusiness can look deceptively simple. People have to eat. Demand grows over time. That much is true.

But agribusiness profits are not linear. They are shaped by cycles in:

• crop supply and weather variability
• fertilizer prices
• freight and energy costs
• policy and trade flows
• inventory dynamics and working capital

That cyclicality creates opportunity. The strongest operators can use downturns to widen the gap.

Why this theme plays a role in our 2026 portfolio positioning

Several agribusiness segments are coming off a period of normalization after an unusually volatile few years. In many cases, that means:

• margins have compressed
• free cash flow is under pressure
• sentiment is cautious

Those conditions can feel uncomfortable, but they historically improve asymmetry. In agriculture, downturns are frequently the moment when:

• capacity growth slows
• pricing stabilizes
• the value of logistics networks becomes more visible
• the best firms take share through reliability and execution

This is a positioning decision based on the essential nature of agriculture and the potential for cyclical mean reversion to improve return asymmetry—especially when starting expectations are low.

How we express it

We are focusing on scaled, integrated agribusiness franchises—businesses that:

• sit at key points in global supply chains
• have logistics and origination networks that are hard to replicate
• can benefit from both volatility and normalization, depending on the segment

We also include exposure to the fertilizer cycle where the risk/reward looks favorable, recognizing that this portion of the theme can be more volatile and requires careful sizing.

Theme 3: Credit default swaps — targeted protection within our 2026 portfolio positioning

The most overlooked element of our current positioning is the one that does not require bullishness at all.

In broad investment-grade credit, spreads remain tight by historical standards. Tight spreads are not “wrong” by definition. But they do imply something specific:

The market is being paid very little to absorb a deterioration in growth, liquidity, or refinancing conditions.

When spreads are tight, credit risk does not disappear. It tends to concentrate. And that is where CDS becomes useful.

Why CDS fits within our current positioning

A credit default swap is, at its core, default insurance. The buyer pays a periodic premium, and receives protection if a defined credit event occurs.

We use CDS for one main reason: convexity.

In the right situations, CDS can deliver meaningful upside from a negative outcome while requiring less capital than shorting bonds or equities. It can also work when:

• shorting equity is impractical or expensive
• borrow costs are unstable
• bond liquidity is poor
• the timing of stress is uncertain

Most importantly, CDS allows us to be selective. We are not interested in “short credit” as a broad thesis. Broad credit indices can stay calm longer than many investors expect.

In tight-spread regimes, dispersion tends to matter more than direction:

• the index looks serene
• certain individual balance sheets quietly deteriorate
• refinancing cliffs get closer
• business models with structural fragility get exposed

That gap—index calm versus single-name stress—is where CDS can be most effective within 2026 portfolio positioning.

How we assess and manage CDS risk

We translate CDS spreads into a disciplined framing:

• What default probability is the market implying?
• Does that probability match the issuer’s balance-sheet reality?
• What does the CDS curve suggest about timing (near-term stress vs long-term solvency concerns)?
• Is there a meaningful dislocation between the bond market and the CDS market?

This helps avoid the most common mistake in credit: anchoring on “tight” or “wide” without context.

How CDS complements our equity positioning

Petrochemicals and agribusiness are recovery-oriented exposures. CDS is different. It is not designed to “go up with markets.” It is designed to do well in the specific pockets where credit is mispriced.

That combination matters. It gives us a portfolio that is not dependent on a single macro outcome.

How these themes work together within a broader portfolio

At first glance, petrochemicals, agribusiness, and CDS look unrelated.

They are not.

They share a single, consistent view: markets often price the world as smoother than it is. Cycles, refinancing constraints, and operational leverage still matter. In 2026, we want exposure where those realities can reassert themselves.

• In petrochemicals, recovery can be powerful because operating leverage is real.
• In agribusiness, essential demand meets cyclical earnings, and scale wins.
• In credit, tight spreads make index-level risk unattractive—but single-name mispricings more likely.

Key risks and positioning considerations

No theme is risk-free, and we are explicit about what could go wrong.

Petrochemicals:

• oversupply persists longer than expected
• energy and feedstock dynamics move against margins
• weak pricing leads to prolonged cash flow pressure

Agribusiness:

• adverse price moves in key inputs or outputs
• policy and trade disruptions
• working capital volatility that impacts near-term earnings

CDS:

• spreads can tighten further before they widen
• issuer-specific timing risk (the “right idea, early” problem)
• liquidity constraints in less-traded names

Risk management is not an afterthought here. It is part of why these themes can coexist in a single portfolio.

Closing thought: positioning themes, not a market outlook

The themes outlined above are targeted positioning decisions, not a comprehensive investment roadmap. They represent areas where we see favorable asymmetry and where selective exposure can complement broader portfolio allocations.

This approach does not rely on precise forecasts. It reflects a preference for resilience, balance-sheet strength, and assets that can benefit from normalization without requiring it. As always, these positions are implemented with careful sizing and ongoing risk management and remain part of a broader, diversified strategy rather than a standalone view.

The positioning themes outlined above reflect a disciplined approach to allocating risk—focusing on asymmetry, cash generation, and balance-sheet resilience rather than broad market forecasts. Tiempo Capital works with families to translate selective views like these into well-sized positions within a diversified investment management and family office framework. Learn more about our approach and contact us to discuss how your portfolio is positioned for 2026.

This material is for informational purposes only and does not constitute financial, legal, tax, or investment advice. All opinions, analyses, or strategies discussed are general in nature and may not be appropriate for all individuals or situations. Readers are encouraged to consult their own advisors regarding their specific circumstances. Investments involve risk, including the potential loss of principal, and past performance is not indicative of future results.