Contrarian investing in a world drowning in AI slop (plus 2 oddball stock ideas)

Please note, this interview was recorded 26 November 2025

When I last spoke with Orbis Investment Management’s Alec Cutler, the backdrop was one of narrowing leadership and shrinking opportunity. Contrarian investing required patience, conviction and a willingness to sit out a market that rewarded sameness. This time, the tone was very different. Cutler believes the market has finally shifted into a place where fundamentals matter again and where investors who think independently have a genuine edge.

He described today’s environment as follows: 

“The market is a fairer place for investors and you are getting more shots on goal than you would have from the end of the global financial crisis through a year or so ago.” 

For someone who has spent years warning about the risks of concentration, this reflects not just optimism but relief that the playing field is widening.

Cutler also senses something broader taking shape beneath the surface, noting that “it is a more fun time to invest and the hope would be that we are going to be in a long period like that, which is kind of synonymous with a value cycle.” The giants are running low on headroom, massive capital expenditure is spilling stimulus into the real economy, and long-ignored industries are finally being noticed.

What struck me throughout this conversation was his emphasis on independent thinking. In a world increasingly shaped by consensus, algorithms and repetition, Cutler argues that the real advantage lies with investors who resist the echo chamber. In this interview, he explains why dispersion is returning, why contrarians thrive when consensus forms and where he is finding the most compelling idiosyncratic opportunities today.

INTERVIEW SUMMARY

A broader and more dynamic market takes shape

Cutler believes the defining shift in markets is the transition from a narrow, mega-cap-dominated rally to a more rotational environment. What excites him is not simply dispersion but the return of genuine opportunity for active investors after more than a decade of one-directional leadership. He frames it as a natural consequence of valuation extremes unwinding. In his words, the period from the post-GFC years to recently was a “one-way freight train of a narrowing market”. 

By contrast, today’s setup provides a wider playing field and a healthier competitive landscape for ideas.

This broadening is not purely sentiment-driven. Cutler argues that mega caps are finally reaching natural limits. He noted that discussing trillion-dollar companies used to be extraordinary, yet now investors must grapple with valuations at four or five trillion. At that scale, further gains require the consumption of entire industries. This creates both mechanical and practical headwinds that naturally slow the largest stocks and create room for others to rise.

Stimulus flows and the limits of giants

A major theme in Cutler’s thinking is the interaction between corporate ambition and economic stimulus. Mega caps still need to grow and the only way to do that is by driving enormous capital expenditure that spills into the broader economy. He cited Microsoft’s (NYSE: MSFT) requirement to invest roughly half a trillion dollars to maintain its growth trajectory. That spending flows into semiconductors, buildings, transport, energy generation and transmission. These second order effects look much more like traditional government stimulus and help spread momentum across previously neglected parts of the market.

This creates the unusual but welcome environment where the largest companies continue to build infrastructure, yet their ability to dominate performance diminishes. For value investors, this is fertile ground.

The importance of thinking differently in an AI slop world

Cutler’s commentary on artificial intelligence was unambiguous. He fears that investors are increasingly outsourcing their thinking to models that cannot distinguish genuine importance. He used a vivid example, explaining that if asked what matters today, AI might give equal weight to self-esteem and energy security simply because they receive similar mention frequency online. 

“These things are not equal.”

This is where the contrarian mindset becomes essential. He wants to surround himself with people who can look around corners rather than aggregate consensus. The danger, he says, is a massive echo chamber in which everyone receives the same answers and positioning becomes even more crowded.

For Orbis, the sweet spot is where consensus is clear. That clarity gives a contrarian the ability to buy what others avoid and sell what others love. The discomfort that investors feel when he mentions a hated company at a cocktail party is, for him, a sign of genuine opportunity.

Consensus as a contrarian’s best friend

Cutler believes the easiest environment for Orbis is when consensus is strong, whether positive or negative. He explains that contrarian investing follows a familiar pattern. A stock is unfavoured by the market. Orbis buys it. It begins to recover. It enters a short period where it is still inexpensive but improving. Eventually, the consensus turns and the stock becomes widely owned, widely celebrated and priced at a premium. That is when Orbis sells.

He illustrated this cycle using the defence industry. During the peak of ESG exclusion, European defence stocks traded at four to five times earnings and were considered uninvestable. As geopolitical tensions rose, these companies became ESG neutral and then ESG necessary. Today, they appear to be consensus longs, with analysts arguing that premium valuations are justified. This is the point when Orbis would exit.

Idiosyncratic opportunities: chocolate and litigation finance

The ideas that excite Cutler now are those that sit entirely outside the macro narrative.

Barry Callebaut AG (Swiss chocolate producer) (SWX: BARN)

Barry Callebaut suffered a massive share price decline after cocoa prices rose sixfold due to repeated crop failures in West Africa. The inventory effect damaged the balance sheet and drove the stock down more than 50%. 

Cutler sees this as a unique chance to buy a high-quality business at compressed valuations while betting indirectly on the normalisation of agricultural cycles. New cocoa supply is already being planted across Latin America, suggesting that future oversupply could reset the economics and unwind the pressure.

Burford Capital (litigation finance leader) (NYSE: BUR)

Burford is one of Cutler’s highest conviction idiosyncratic ideas. He emphasised that the company effectively invented litigation finance and has a long record of selecting cases with exceptional accuracy. Its internal rate of return is 29%, which Cutler described as extraordinary.

The opportunity exists on both the debt and equity sides. He highlighted that Burford debt yields 6.5-7.5% despite the company’s strong financial position. Rating agencies classify it as non-investment grade only because specialty finance cannot be rated higher under their rules, not because of any measurable weakness.

On the equity side, the company has a judgment (currently on appeal) against Argentina worth US$16 billion, of which Burford could receive 40%. With a market cap near $2 billion, Cutler sees a potential asymmetric upside that does not depend on the global economy, monetary policy or market direction.

Looking ahead to 2026

Cutler closed with a simple message. Investors should “keep your seatbelt on.” He sees plenty of volatility ahead but also abundant opportunity for investors willing to think independently and step away from consensus ideas.

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