| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.5% | -1.1% | -0.6% |
| 2025 |
|---|
| -0.6% |
Kennedy Capital's Mid Cap Value strategy underperformed in Q4 2025, declining 1.07% net versus the Russell Midcap Value Index gain of 1.42%. For the full year 2025, the portfolio declined 0.63% compared to an 11.05% benchmark return. The underperformance stemmed from three primary factors: maintaining exposure to fundamentally strong holdings facing temporary industry challenges, underexposure to AI-related market enthusiasm, and outsized gains in benchmark constituents that don't meet investment criteria. The firm's CFROI-focused approach was out of favor as the top 50 performing index stocks were significantly lower-CFROI businesses. In response, Kennedy Capital has implemented targeted portfolio construction refinements while maintaining their core investment philosophy. They have exited positions overly dependent on interest rates, initiated investments in companies with underappreciated AI exposure, and adjusted position sizes for holdings with reduced intermediate-term visibility. The firm views current style headwinds as temporary and remains focused on companies with distinct, company-specific value drivers.
Kennedy Capital maintains a disciplined value approach focused on businesses with high cash flow return on invested capital (CFROI), while adapting portfolio construction to emphasize companies with company-specific drivers less dependent on broad market themes.
The firm remains committed to disciplined execution and thoughtful evolution as the strategy enters its 25th year in 2026. They maintain conviction in their core investment philosophy while implementing targeted refinements to portfolio construction. The focus has sharpened on companies with distinct, company-specific drivers that are less reliant on broad sector or macroeconomic conditions.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 22 2026 | 2025 Q4 | - | AI, CFROI, industrials, mid cap, Style, technology, underperformance, value | - | The portfolio was underexposed to AI-related enthusiasm that meaningfully influenced benchmark returns in 2025. The firm has initiated targeted investments in businesses with underappreciated exposure to AI-related capital spending, emphasizing companies positioned to benefit over a longer time horizon rather than those that have already experienced substantial multiple expansion. The investment approach emphasizes businesses with high cash flow return on invested capital (CFROI) which was out of favor during 2025. The top 50 performing stocks in the Russell Midcap Value Index were significantly lower-CFROI businesses, creating a style headwind that the firm views as temporary rather than structural. |
| Oct 30 2025 | 2025 Q3 | - | Artificial Intelligence, fundamentals, Mid Caps, Value Investing, volatility |
ROG LEA ROG LEA |
The fund underperformed the Russell Midcap Value Index as speculative themes like AI and crypto overshadowed fundamentals in small and mid-cap equities. Managers noted that macro-driven enthusiasm rather than corporate earnings fueled recent gains, but expect normalization as fundamentals regain focus. They remain committed to identifying high-quality businesses with durable models and attractive valuations, seeing long-term opportunity amid near-term volatility. |
| Jul 29 2025 | 2025 Q2 | - | earnings growth, mid cap value, ROIC, valuation upside, volatility | - | The letter centers on mid-cap value opportunities amid elevated uncertainty from tariffs and macro policy shifts. Management highlights valuation upside supported by solid earnings growth, strong ROIC, and resilient balance sheets. Volatility is viewed as a source of opportunity for long-term value realization. |
| Mar 31 2025 | 2025 Q1 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q3 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
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 | |
| 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 |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 30, 2025 | Fund Letters | Gary Kauppila | ROG | Rogers Corporation | Information Technology | Electronic Components | Bull | NYSE | 5G, Automation, Electric Vehicles, growth, innovation, Margins, materials | Login |
| Oct 30, 2025 | Fund Letters | Gary Kauppila | LEA | Lear Corp. | Consumer Discretionary | Auto Parts | Bull | NYSE | Auto parts, backlog, capital allocation, Electrification, EVs, Free Cash Flow, growth | Login |
| Oct 30, 2025 | Fund Letters | Gary Kauppila | ROG | Rogers Corporation | Information Technology | Electronic Components | Bull | NYSE | 5G, Automation, Electric Vehicles, growth, innovation, Margins, materials | Login |
| Oct 30, 2025 | Fund Letters | Gary Kauppila | LEA | Lear Corp. | Consumer Discretionary | Auto Parts | Bull | NYSE | Auto parts, backlog, capital allocation, Electrification, EVs, Free Cash Flow, growth | Login |
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|---|---|
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