| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | 7.0% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 7.0% | 40.3% | 28.4% | 10.3% | 32.4% | 9.0% |
Legacy Ridge Capital returned 7% net in 2025, underperforming broader markets due to high cash allocation and concentrated value approach. The fund maintains 30% cash as defensive positioning against stretched market valuations, particularly in large tech stocks where the Magnificent 7 average only 1.9% free cash flow yields. Core holdings include energy companies Mach Natural Resources and Kimbell Royalty Partners, which exemplify the firm's business-owner mentality through disciplined capital allocation and high dividend yields of 19.3% and 10.8% respectively. The portfolio's 6% dividend yield provides steady cash flow for redeployment opportunities. Management acknowledges the opportunity cost of high cash levels but views current positioning as prudent given expensive market conditions. The investment philosophy centers on buying businesses at discounts to intrinsic value based on discounted cash flows, contrasting with speculative growth stocks like Palantir trading at extreme valuations. The firm expects market corrections to create attractive buying opportunities for patient capital.
Maintain significant cash reserves to capitalize on market dislocations while focusing on undervalued dividend-paying businesses, particularly in energy sector, that demonstrate disciplined capital allocation and strong cash flow generation.
Cautiously optimistic with significant cash reserves positioned for opportunistic deployment when attractive valuations emerge. Expects continued focus on dividend-paying businesses with strong capital allocation policies while avoiding expensive growth stocks.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 30 2026 | 2025 Q4 | AAPL, AMZN, GOOGL, KRP, META, MNR, MSFT, NVDA, PII, PLTR, TSLA | Capital Allocation, Cash, dividends, energy, Exploration & Production, value | MNR | Fund maintains 30% cash position as defensive measure against expensive market valuations. Cash provides optionality for opportunistic deployment when attractive opportunities arise. Management views current… |
| Jul 21 2025 | 2025 Q2 | PII | Balance Sheets, cash flow, dispersion, Intrinsic Value, value | PII | The letter focuses on value investing in underappreciated companies trading below intrinsic worth. Management highlights balance sheet strength, cash flow durability, and conservative capital allocation… |
| Jan 31 2025 | 2024 Q4 | - | - | - | - |
| Jul 29 2024 | 2024 Q2 | EQT, ETRN, NRG, SMLP, VST | - | - | - |
| Jan 31 2024 | 2023 Q4 | ENGH, ETRN, VST | - | - | - |
| Jul 28 2023 | 2023 Q2 | ETRN | - | - | - |
| Jan 31 2023 | 2022 Q4 | DCP, EPD, NRG, SMLP, VST | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
CashFund maintains 30% cash position as defensive measure against expensive market valuations. Cash provides optionality for opportunistic deployment when attractive opportunities arise. Management views current cash levels as necessary given stretched valuations across broader markets. |
Cash Management Liquidity Defensive Positioning Opportunity Cost Capital Allocation |
DividendsDividend-paying companies lagged non-dividend-paying companies by more than 50%. On average, portfolio holdings raised their dividends 9% over 2025, in line with their earnings growth. The top three dividend raisers were Amphenol (55%), Cintas (15%), and Verisk Analytics (15%). |
Dividend Growth Income Yield Distribution Payout | |
Exploration & ProductionSignificant allocation to energy sector through Mach Natural Resources and Kimbell Royalty Partners. Focus on companies with disciplined capital allocation, low leverage, and high distribution yields. Both companies emphasize acquiring cash-flowing assets and returning capital to shareholders. |
Energy Oil Production Natural Gas Royalties Asset Acquisition | |
ValueBlue Tower focuses on value investing with international diversification. The manager notes that the valuation spread between cheap and expensive stocks is one of the greatest in market history, creating a favorable environment for their value-oriented approach. |
Value International Cheap Expensive Valuation | |
| 2025 Q2 |
ValueThe portfolio trades at significant discounts to the broad market, with P/E ratios 40-42% below the S&P 500. The manager believes many steady-growing companies are overlooked by markets focused on AI winners, creating opportunities in businesses with lower assumed margins and productivity that could benefit from AI adoption. |
Discount Multiples Undervalued Overlooked Opportunity |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 21, 2025 | Fund Letters | Kris Kelley | PII | Polaris Inc. | Consumer Discretionary | Leisure Products | Bull | New York Stock Exchange | buybacks, capital allocation, Powersports, Sum-of-the-Parts, turnaround | Login |
| Jan 30, 2026 | Fund Letters | Kris Kelley | MNR | Mach Natural Resources LP | Energy | Oil & Gas Exploration & Production | Bull | New York Stock Exchange | capital allocation, cashflow, dividends, energy, Pdp | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | The largest 10 companies, by market capitalization, had reached 40.7% of the S&P 500 by the end of 2025, up from roughly 30% at the end of 2021. At the top of this list are Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Broadcom (AVGO), Meta (META), and Tesla (TSLA). Apple: Market capitalization near $4 trillion. A double requires creating a company larger than the size of Walmart, JPMorgan, and Pfizer combined. |
| AMZN | We added to our holdings in Amazon.com Inc. |
| GOOGL | I'm willing to go bankrupt rather than lose this race. Larry Page, co-founder of Google |
| KRP | Kimbell owns mineral rights. That means they don't own land, they don't have an obligation to drill, they don't even have to put up capital to benefit from the assets they own. KRP owns approximately 158K net royalty acres, an interest in over 131,000 wells, 68 million barrels of oil equivalent (BOE) of reserves, and produces 25,530 BOE per day. KRP has more than 14 years of drilling inventory, and a production decline rate of ~14%. Lastly, next year's dividend is expected to be $1.43/share, or a 10.8% yield. KRP's capital allocation policy stipulates that 75% of distributable cash flow be distributed to shareholders. |
| META | Meta was cited as a larger position that contributed little despite what I thought was positive operating progress, representing opportunity cost in the portfolio. |
| MNR | Mach is different from KRP in the sense that MNR is a non-traditional exploration and production (E&P) company. The company buys or leases producing acreage and then drills additional wells when and where they think they have a knowledge or operational advantage. MNR has an interest in 12,600 operating wells, 653 million BOE of reserves, and produces 151,000 BOE/d. And finally, consensus estimates for next year's dividend are $2.20/share, or a 19.3% yield. MNR goes a few steps farther in defining four operating pillars: Maintain low leverage - 1.0x or less; Acquire cash flowing properties - Buy PDP assets at less than PV10, then focus on reducing costs; Disciplined reinvestment rate - Less than 50% of cash flow is used for drilling wells and paying down debt. The balance goes toward shareholder distributions; Maximize distributions – This pillar drives all other decisions. |
| MSFT | OpenAI's well-documented 'circular' funding with its business partners (NVIDIA, Microsoft, among others) is additional cause for concern. |
| NVDA | Nvidia sits at the top of the S&P 500 as the designer in the AI ecosystem. |
| PII | Our investment in Polaris (PII) last summer is a great example. Deploying 22% of our cash balance, we purchased a 7% position when the stock had over a 7% dividend yield and was trading at multi-year lows. |
| PLTR | AI-enabled surveillance company Palantir trades at over 100 times sales. |
| TSLA | The largest 10 companies, by market capitalization, had reached 40.7% of the S&P 500 by the end of 2025, up from roughly 30% at the end of 2021. At the top of this list are Nvidia (NVDA), Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Amazon (AMZN), Broadcom (AVGO), Meta (META), and Tesla (TSLA). |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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