January 2026

Canary in the Coalmine

Over the course of January, we met with 41 European mid-cap management teams across a broad range of industries.

What stood out wasn’t a sudden improvement in reported numbers - it was a change in tone.

Across conversations with companies exposed to construction, capital goods and equipment rental, management teams began describing something we hadn’t consistently heard since early 2022: a sense that the conditions for recovery are falling into place. Not orders yet - but fewer cancellations, greater customer engagement, and early signs that confidence is returning at the margin.

Several pointed to easing inventory pressure further down the supply chain and a growing willingness among customers to move from planning to execution. In Germany in particular, companies suggested that government-led stimulus programmes - previously viewed with scepticism - are now starting to feel more tangible, even if the impact on revenues remains back-end loaded.

The contrast with autumn was notable. Then, visibility was limited and timelines were repeatedly pushed out. Now, while caution remains, the direction of travel feels clearer.

It’s still early - but the pre-conditions for improvement appear to be forming.

Mid Cap of the Month - Accor

Accor is a French-listed global hotel group with a portfolio of over 40 brands, including Sofitel, Fairmont, Swissotel and Raffles.

Despite having transitioned to a largely asset-light model, Accor continues to trade at a meaningful discount to comparable global peers such as IHG, Marriott and Hilton. In our view, that gap reflects complexity rather than fundamentals - and complexity can create opportunity.

What makes the current set-up particularly interesting is the presence of several company-specific catalysts that could help close that valuation gap:

• The group still owns a 30% stake in Essendi, carried at a book value of approximately €850m (against a current market capitalisation of around €11bn). A disposal would simplify the story and strengthen the balance sheet.

• Accor is also reviewing strategic options for Ennismore, its luxury and lifestyle platform. We believe this business is underappreciated within the group and could command a higher multiple if partially or fully separated.

• Either development would likely create scope for a meaningful return of capital, with share buybacks looking particularly attractive at current valuation levels.

• Finally, we expect an update on trading and pipeline momentum in the coming months, where our assessment is currently more constructive than consensus expectations.
  

Taken together, we see a combination of improving fundamentals, identifiable catalysts and valuation support - a mix we find compelling.

Starr's Rating

Starting off strong with a personal favourite.

Kudu, a South African restaurant, has recently moved from its Peckham roots to Marylebone.

It has a laid-back atmosphere with a focus on its grill (or braii), perfect for sharing. The interior has been curated with Marylebone glamour in mind - think maroon granite counters offset with dark green tones.

Start with a cocktail upstairs at Smokey Kudu, a discrete bar offering skilfully crafted twists on the classics. Over dinner, choose a mix of small plates followed by something off the braii - my favourites are the grilled tiger prawns followed by the dry aged rib eye to share. And don’t skip the bread!

Take your (Date/Mate/Colleague/Mum): Mate

StarrRating: 7/10