| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.5% | 1.6% | 0.0% |
| 2025 |
|---|
| 0.0% |
Cambiar SMID Fund posted modest gains in Q4 2025 but underperformed the Russell 2500 Value Index for the full year, as the fund's quality bias and valuation sensitivity were out of step with a speculative market favoring higher-beta momentum stocks. The challenging 2025 environment paralleled 2021, where companies with negative income significantly outperformed profitable businesses. However, the fourth quarter marked a positive inflection as traditional value sectors like Healthcare and Financials outperformed while the Mag7 largely lagged. The portfolio benefited from this rotation, with Healthcare's overweight allocation contributing positively. Key risks include elevated market valuations, spiking corporate bankruptcies, and stretched consumer finances with delinquencies at 2008 levels. Catalysts include an expected steepening yield curve benefiting the fund's 22% Financials allocation and increased capital market activity. Management remains cautiously optimistic about value stock prospects in 2026, maintaining their disciplined approach of seeking quality companies with strong balance sheets at attractive valuations in a concentrated 35-40 position portfolio.
Cambiar maintains a quality-focused, valuation-sensitive approach targeting well-managed small-to-mid cap companies with strong balance sheets and durable competitive advantages, purchased at attractive prices in a concentrated 35-40 position portfolio.
Cambiar's outlook is best described as cautiously optimistic, with a strong dose of selectivity. The team believes return potential for value stocks is attractive in the coming year following the fourth quarter shift in leadership to value. They continue seeking well-managed companies with strong balance sheets, steady margins, and durable competitive advantages at attractive valuations.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 26 2026 | 2025 Q4 | ACVA, ALGN, BOKF, COO, EEFT, FNF, GOOGL, JBHT, LAZ, MAS, NVDA, WFC, WSC | AI, Credit Stress, financials, healthcare, Quality, small caps, value | COO | The market has priced in a near-flawless AI future for years, but sentiment is shifting as investors become more scrutinizing. Only two of the Mag7… |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
Credit StressThe fund is responding to historically low credit spreads by reducing exposure to high yield and other lower-rated debt. They believe current spreads offer insufficient compensation for credit risk and increase the risk of permanent impairment of capital. The managers are downside-focused and do not share the market's optimism needed to justify such low spreads. |
Credit spreads High yield Credit risk Permanent impairment Risk compensation | |
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 | |
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 |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 26, 2026 | Fund Letters | Ania A. Aldrich | COO | The Cooper Companies, Inc. | Health Care | Health Care Supplies | Bull | New York Stock Exchange | capacity expansion, Contac tlenses, Medical devices, recurring revenue, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| ACVA | Security selection within Industrials comprised the biggest drag on relative performance in the year, as positions in Masco, WillScot Holdings, and ACV Auctions all incurred pullbacks of varying magnitudes (vs. a positive return for the overall sector). The resultant sell-offs in WillScot and ACV in particular create what we view to be a potentially asymmetric return opportunity for both positions – should industry conditions in their respective industries (WillScot provides modular office/storage for construction sites, ACV is a leader in wholesale car auctions) normalize as anticipated. |
| ALGN | This past summer, however, the valuation came into range. The change in sentiment is to some extent understandable. The fact is Align's business has stagnated since 2021, when a pandemic-driven surge in demand for clear aligners propelled revenues forward by approximately 60%. We purchased our shares in Align for a low-to-mid-teens multiple of our estimate of forward earnings. |
| BOKF | gains from Webster Financial and BOK Financial were overshadowed by drawdowns in non-bank holdings Euronet, Fidelity National, and Lazard. |
| COO | Cooper was a top contributor during the quarter after reporting good operating results and announcing several shareholder-friendly developments. In terms of operating results, the company demonstrated progress in alleviating supply constraints for its premium daily silicone hydrogel contact lenses, announced new private label contract wins in the U.S. and Europe, and delivered innovation in myopia control and multifocal lens platforms. |
| 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. |
| FNF | Fidelity National Financial, the largest provider of title insurance for residential and commercial properties in the U.S. distributing a near $500 million stake in its life insurance affiliate F&G Annuities and Life (F&G). The transaction will increase the public float of the separately listed entity, with the aim of improving (i) F&G's cost of capital (i.e., implied multiple) relative to other market comparables in this line of insurance and (ii) the sum of the parts value for Fidelity National when also factoring in its other distinctive title insurance and transactions businesses. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| JBHT | J.B. Hunt, which falls into the Deep Value bucket, is a diversified transportation company focusing on intermodal shipping. Customers hire Hunt to move freight using different methods of transportation to reduce cost. The company owns the largest fleet of 53-foot shipping containers, which allow for three ocean-freight shipping units to be consolidated into two Hunt containers that can then be moved by rail and company-owned trucks. Hunt's mode agnostic approach sets it apart from the competition, as does its size. JBHT's intermodal business is roughly twice as big as the next largest competitor, resulting in a scale and cost advantage that has produced high returns on capital and better prices for customers. In recent years, the freight market has been put through the wringer, as supply chains during and after the pandemic experienced a tremendous amount of volatility. In Q3, however, Hunt beat analysts' forecasts, owing to recent actions to reduce costs. Management's focus on improving areas that they can control seems to be working, as operating margins for JBHT's intermodal segment expanded by 100 basis points year over year, despite fewer loads shipped in the quarter. While managing through a freight recession, cash flow generation remains strong, the company's balance sheet is in fantastic shape with a leverage ratio of less than 1x, and management has been aggressively repurchasing company stock below our view of intrinsic value. In 2025, the company bought back more than 5% of the shares outstanding. JBHT currently trades at 11.8 times consensus next 12-month EV/EBITDA, which represents a 25% discount to the Industrial sector. |
| LAZ | gains from Webster Financial and BOK Financial were overshadowed by drawdowns in non-bank holdings Euronet, Fidelity National, and Lazard. |
| MAS | Security selection within Industrials comprised the biggest drag on relative performance in the year, as positions in Masco, WillScot Holdings, and ACV Auctions all incurred pullbacks of varying magnitudes (vs. a positive return for the overall sector). |
| NVDA | Capital spending from Google, Microsoft, Amazon, Meta, OpenAI, and more have led to Nvidia becoming the Rrst 5 trillion market cap company. |
| WFC | and money center banks Citigroup and Wells Fargo, all following strong performance |
| WSC | Security selection within Industrials comprised the biggest drag on relative performance in the year, as positions in Masco, WillScot Holdings, and ACV Auctions all incurred pullbacks of varying magnitudes (vs. a positive return for the overall sector). The resultant sell-offs in WillScot and ACV in particular create what we view to be a potentially asymmetric return opportunity for both positions – should industry conditions in their respective industries (WillScot provides modular office/storage for construction sites, ACV is a leader in wholesale car auctions) normalize as anticipated. |
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