| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.3% | -1.1% | -3.3% |
| 2025 |
|---|
| -3.3% |
American Century Small Cap Value Fund underperformed in Q4 2025, declining 1.06% versus the Russell 2000 Value Index gain of 3.26%. The fund's underperformance was primarily driven by healthcare sector underweight and materials sector positioning. Healthcare lagged due to lack of exposure to outperforming biotechnology and pharmaceuticals, while materials underperformed due to missing metals and mining exposure and weakness in Graphic Packaging Holding. Information technology contributed through strong stock selection, particularly Amkor Technology which benefited from AI packaging solutions and domestic chip manufacturing trends. The portfolio maintains significant overweight positions in financials, particularly banks where managers remain constructive on net interest income trends and believe credit cycle fears are overstated. Consumer discretionary overweight focuses on higher-quality businesses targeting high-end consumers including Brunswick and Birkenstock. Industrial overweight emphasizes companies with demonstrated pricing power during inflation. Key risks include weak consumer packaged-food volumes and executive turnover impacts. The managers continue seeking undervalued small-cap companies where valuations do not reflect quality and earnings power.
Invest in undervalued small-cap companies where current valuations do not reflect the quality and normal earnings power of the business, with focus on individual security selection across financials, consumer discretionary, and industrials sectors.
The portfolio continues to seek investment in small-cap companies where valuations do not reflect quality and normal earnings power. The managers remain constructive on banks due to positive net interest income trends and believe fears of extended credit cycles are overstated. They see continued opportunities in industrials and consumer discretionary focused on higher-quality businesses, while remaining cautious on healthcare and utilities sectors.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 23 2026 | 2025 Q4 | AMKR, ARCB, ARW, AVT, AXS, BBWI, BC, BIRK, COLB, EEFT, ENOV, EVTC, GPK, HZO, MARA, OKLO, ONB, PATK, SSB, TKR, UMBF | banks, consumer discretionary, healthcare, industrials, semiconductors, small cap, value | - | The fund maintains significant overweight exposure to banks, remaining constructive on the industry due to continued positive inflection in net interest income and belief that… |
| Oct 19 2025 | 2025 Q3 | ACGL, ASH, AXS, BBWI, VC | consumer, financials, industrials, small caps, Value Investing | - | Small-cap equities benefited from steady U.S. growth and improving valuations despite volatility from rate and policy shifts. The fund emphasized financials and consumer discretionary sectors,… |
| Jul 22 2025 | 2025 Q2 | ACLS, AHL, CODI, DOO CN, ENOV, GMS, GPK, GTES, MRX | Balance Sheets, Mean reversion, small caps, valuation, value | - | The letter argues that small-cap value stocks remain deeply undervalued following years of underperformance. Management highlights balance sheet strength, pricing power, and mean reversion as… |
| Mar 31 2025 | 2025 Q1 | - | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Consumer DiscretionaryOverweight positioning tilted toward higher-quality, unique businesses targeting high-end consumers including global consumer brands like Brunswick and Birkenstock. Specialty retail exposure includes marine dealers and Bath & Body Works. |
High-end Consumers Specialty Retail Consumer Brands |
IndustrialsThe fund increased exposure to high-quality industrial businesses with potential for cyclical upturn. Added Quanta Services for AI data center build-out, Hubbell for electrical grid upgrades, Old Dominion for freight cycle recovery, and Waste Connections for secondary market focus. |
Infrastructure Automation Transportation Electrical Equipment Waste Management | |
Regional BanksFirst Citizens Bancshares was a contributor with solid results exceeding consensus expectations. Loans and deposits grew healthily while management continues steady share repurchases. The manager believes it's a high-quality regional bank with strong management that can unlock sustained long-term value. |
Banking Deposits Loans Buybacks Quality | |
SemiconductorsMACOM Technology Solutions rose nearly +40% as the company experienced broad-based demand, similar to many semiconductor companies in 2025. The team exited Astera Labs following industry conference presentations that suggested emerging competitive risks and concerns over single customer concentration, while initiating a position in Credo Technology for AI-connectivity exposure. |
Demand Competition Connectivity Customer Concentration | |
| 2025 Q3 |
ConsumerThe consumer segment includes DJL Petfoods (pet food ingredients distributor) and TSDC Wholesale (food and grocery wholesale). DJL exemplifies RDCP 2.0 characteristics as an asset-light but infrastructure-critical business with long-standing customer relationships, exceptional retention rates, and exposure to growing pet ownership and premiumisation trends. These businesses benefit from structural advantages and recurring revenue streams. |
Pet Care Food Distribution Consumer Staples Wholesale Distribution |
FinancialsEuropean banks have been rehabilitated after years in purgatory, with returns of 77% in 2025. Return on equity has normalized above 12% following exit from ultra-low rates, while capital positions have been rebuilt. However, supportive factors are well-appreciated by markets, reflected in significant valuation re-rating. |
Banks Return On Equity Interest Rates Capital Valuations | |
Small CapsThe fund invests in a portfolio of competitively advantaged small and medium-sized businesses, which remained out of favor for most of the quarter. The strategy of owning leading small-cap businesses has been the foundation since inception, delivering 354 basis points of annual outperformance over the benchmark since inception despite recent headwinds. |
Growth Outperformance Benchmark Russell Businesses | |
| 2025 Q2 |
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| AMKR | Amkor Technology Inc. (AMKR) was the top performer. AMKR saw a re-rating that centered around AI/Advanced Packaging excitement, which is being driven by significant demand for AI compute. This was bolstered in November when NVIDIA Corp. (NVDA) cited AMKR has an Advanced Packing partner as part of a broader investment cycle we are seeing to reshore and expand chip production capacity in the U.S. |
| ARCB | ArcBest is a transportation and logistics company. Based on our view, its diversified operations and strategic investments position it to benefit from a freight cycle recovery. |
| ARW | We initiated a position in this electronics wholesaler. We believe Arrow is a higher-quality distributor and more attractively valued than Avnet, which we sold. |
| AVT | We exited our position in this electronics distribution company to fund our new position in Arrow Electronics, which we believe had a better risk/reward profile. |
| AXS | Axis Capital Holdings Ltd. 2.35% |
| BBWI | This leading maker and retailer of home fragrance products and personal care products detracted from results. While we believe the company's new management can solve its growth issues, we think recovery may take longer than expected. |
| BIRK | The biggest laggard in the Consumer Discretionary sector was footwear manufacturer Birkenstock, which provided guidance for fiscal year 2026 that was below expectations, despite reporting a strong third quarter that exceeded both top- and bottom-line estimates. The company cited production constraints, which would limit volume growth to ~10%, and a shift to selling through wholesalers, as customers now prefer buying in-store versus online. We believe the softer Q3 guidance will prove to be conservative and the stock is set up for a solid 2026. |
| EEFT | In 2025 we realized ~60% of these gains (mostly long-term) and rolled the remainder into its acquirer, Euronet Worldwide (EEFT). There is a bear market for legacy payments stalwarts like EEFT, but it is profitable and cash generative, trades for a single digit valuation and has several potential growth tailwinds including the benefits from the CCRD purchase that may reward investors over time. |
| EVTC | This software company continued to decline despite reporting solid earnings results. We took advantage of the weak share price and added to our position as we believed the company was well positioned for 2026. |
| GPK | We believe Graphic Packaging Holding continues to face headwinds as consumer packaged-food and food service volumes have been weak. We also think executive turnover has likely hindered shares. |
| HZO | MarineMax remains an attractive long-term asset owner with a valuable portfolio of marinas and waterfront real estate. However, absent near-term catalysts and given the cyclical nature of the retail boating business, I elected to sell in-the-money covered calls during the quarter. The shares were called away, and the position was reduced by roughly half. While I like management's stated shift toward higher-margin service, storage, and marina revenue, it remains unclear how much of this mix shift reflects structural improvement versus cyclical weakness in retail sales. I continue to monitor the position but will remain selective in deploying additional capital. |
| MARA | Shares of this bitcoin miner and data center power solutions provider underperformed during the quarter as cryptocurrency-related plays sold off amid weakness in bitcoin prices. As a result, our lack of exposure to MARA was beneficial to relative returns. |
| OKLO | Avoiding this development-stage manufacturer of small-cell nuclear power systems contributed. Shares of Oklo declined as investors rotated from high-volatility companies into more cyclical holdings. |
| PATK | Although this provider of components for recreational vehicle and housing end markets gained market share and performed well in late 2024 and 2025, we exited our position as shares rose above their long-term average. |
| SSB | SouthState Bank (-4.2%) underperformed due to net interest margin pressure and cautious loan growth outlooks. |
| TKR | We exited our position in TKR after a long and successful investment in favor of more attractive opportunities. Despite still believing TKR has strong and durable brands in industrial bearings, we don't expect the company's strategy of redeploying capital into acquiring industrial motion businesses to create material value for shareholders. |
| UMBF | UMB Financial also contributed negatively. UMB Financial has also been a model of the owner-operator mentality. Many of the traits described above relating to how a good owner-operator company finances itself and guides capital reinvestment decisions can be seen in UMB Financial, which has established a long record of excellent financial stewardship. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
