Aoris cuts Sherwin-Williams weight as industrial slowdown weighs on returns

Aoris Investment Management reported significant losses for the Aoris International Fund in the first quarter of 2026, with the fund’s Class A (Unhedged) shares returning -13.7% and Class C (Hedged) shares dropping 10.1% in Australian dollar terms. The underperformance against the MSCI AC World Accumulation Index ex Australia was driven by declines in international equity markets and currency fluctuations, with the benchmark falling 5.8% in AUD terms compared to a 2.8% drop in local currencies.

The manager’s investor letter highlighted growing concerns regarding The Sherwin-Williams Company (SHW), a key holding in the portfolio. Aoris noted that higher mortgage rates and lower population growth in the United States have suppressed property sales, a critical driver for residential paint volumes. Additionally, the firm identified a sluggish industrial economy as a factor weakening demand for Sherwin-Williams’ industrial coatings business.

Despite the company’s ability to continue growing its market share, Aoris expressed concern that Sherwin-Williams’ end markets are experiencing structurally slower growth. The firm indicated that these macroeconomic headwinds have reduced the attractiveness of the paint manufacturer relative to other opportunities in the market, particularly as investor sentiment shifts toward technology sectors.

In response to these conditions, Aoris stated it had the opportunity to purchase Cintas at a wider discount to fair value, describing it as a higher-quality alternative. The manager also noted a broader rotation in preference, suggesting that certain AI stocks offer greater upside potential with less downside risk compared to traditional industrial and consumer staples names.

Data from the end of the first quarter shows that 73 hedge fund portfolios held Sherwin-Williams, a decrease from 83 in the previous quarter. Shares of the paint and coatings manufacturer closed at $322.90 on June 23, 2026, recording a one-month return of 4.17% but a 52-week loss of 6.03%. The fund’s Class A shares underperformed their benchmark by 7.8%, while the hedged Class C class lagged by 7.3%.