| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 15.9% | - | 41.2% |
| 2025 | 2024 | 2023 | 2022 | 2021 |
|---|---|---|---|---|
| 41.2% | 16.4% | 15.1% | -14.9% | 31.0% |
Alluvial Fund delivered its best year ever with 41.2% net returns in 2025, driven by value investments in boring, defensive companies rather than AI and technology trends. Key contributors included Zegona Communications, which executed a successful leveraged buyout of Vodafone Spain and returned €1.4 billion to shareholders through asset sales, and Crawford United, which agreed to be acquired by SPX Technologies for a 7x return. The fund benefited from aggressive share buyback programs at Garrett Motion and McBride, while Net Lease Office Properties continued its real estate liquidation process. New positions include Sylvamo Corp, a paper manufacturer facing short-term headwinds but positioned for recovery, and Itafos, a phosphate fertilizer producer benefiting from structural supply shortages. The manager maintains conviction in plain vanilla value investing principles, focusing on deeply undervalued companies in defensive industries. With $180 million in assets under management, the firm continues to find attractive opportunities in the $100 million to $2 billion market cap range while avoiding speculative market trends.
Plain vanilla value investing in deeply undervalued, quality companies in defensive industries continues to generate strong returns while avoiding speculative AI and technology trends.
The manager commits to spending each day looking for opportunities and is confident the portfolio represents good quality, deeply undervalued companies. The firm can continue growing assets under management considerably before opportunities of $3-10 million investment size will no longer move the needle.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 2 2026 | 2025 Q4 | CRAW, EAC, FTLF, GTX, IFOS, MBR.L, MDR, NLOP, SLVM, TLN | Buybacks, dividends, Europe, industrials, materials, small caps, Telecommunications, value |
ZEG LN CRAWA GTX MCB LN NLOP SLVM MCDIF |
The fund earned returns from boring companies in defensive industries using plain vanilla value investing principles while ignoring the market's shiny objects. The portfolio represents a collection of good quality, deeply undervalued companies trading at significant discounts to intrinsic value. Multiple portfolio companies executed aggressive share repurchase programs including Zegona with €200 million reserved for buybacks, Garrett Motion repurchasing 9% of shares, and McBride implementing an aggressive share repurchase plan. These capital return programs drove significant stock price appreciation. Several holdings initiated or resumed dividend payments as part of capital return strategies. Garrett Motion initiated a dividend and committed to returning 75% of free cash flow to shareholders, while McBride reinitiated its dividend alongside share buybacks. The fund initiated a position in Itafos, a phosphate fertilizer producer, based on structural undersupply dynamics. American phosphate production has declined by more than half since 1980, Florida reserves are dwindling, and China is reducing exports to ensure domestic availability for agriculture and lithium battery production. The fund purchased Sylvamo Corp, a manufacturer of uncoated freesheet paper, facing short-term headwinds from expiring supply agreements and weak European demand. Industry supply reduction from mill conversions and closures should support pricing recovery as the company invests in South Carolina capacity expansion. Net Lease Office Properties continues its liquidation process with multiple property sales and large distributions to shareholders. While recent sale prices have been underwhelming, the current share price represents a large discount to remaining property values with liquidation expected to complete by end of 2026. |
| Oct 22 2025 | 2025 Q3 | CBL, FTLF, MCB LN, NLOP, NWLM, PHIL, PKST, UD IM, ZEG LN | Europe, infrastructure, real assets, small caps, value |
ZEG LN FTLF MCB LN NLOP CBL ZEG LN FTLF MCB LN NLOP CBL |
Alluvial returned 15.5% in Q3, led by Zegonas asset monetization and strong performance in European small caps. The fund focuses on cash-generative niche companies like FitLife and McBride while emphasizing discounted valuations in UK and European equities. Managers see opportunity in underfollowed real asset operators and Expert Market securities trading below intrinsic value. |
| Jul 27 2025 | 2025 Q2 | CBL, MCB LN, NLOP, NWL IM, PKST, SENEB, SRC LN, TITN, TLN, WISH, ZEG | Assets, cash flows, Discipline, dislocation, value |
TLNE ZEG LN MCB LN SENEA SRC LN NLOP PKST CBL WISH |
The letter highlights valuation-driven opportunities created by market dislocations and investor pessimism. Management focuses on underappreciated businesses with strong assets, cash flows, and downside protection, while avoiding speculative growth excesses. Patience and capital discipline are emphasized as key to long-term returns. |
| Apr 21 2025 | 2025 Q1 | CBL, FTLF, GTX, MCB LN, MNCL IN, NLOP, TCJ GR, ZEG LN | - | - | |
| Jan 24 2025 | 2024 Q4 | CBL, CRAWA, GTX, MCB LN, NLOP, TITC BB, UBAB, ZEG LN | - | - | |
| Oct 29 2024 | 2024 Q3 | BAHNB SS, FTLF, MCB LN, NLOP, TLN, ZEG LN | - | - | |
| Jul 24 2024 | 2024 Q2 | HRBR, MCB LN, NLOP, SENEA, SXP CN, TLN, UBAB | - | - | |
| May 14 2024 | 2024 Q1 | FRAGUAB MM, FTLF, GTX, GUZOF, HMM/A CN, MCB LN, MRC, NLOP, SHOT SS, TLNE | - | - | |
| Jan 25 2024 | 2023 Q4 | BFCC, CRAWA, FTLF, LICT, MRC, NLOP, SENEA, UBAB | - | - | |
| Oct 24 2023 | 2023 Q3 | FTLF, HMM/A CN, LGT/B CN, MCEM, NAVIGOST SS, PX, SENEA, TLNE, WHLR | - | - | |
| Jul 15 2023 | 2023 Q2 | AI, CRAWA, LGT/A CN, PLPC, PX, RWWI, UD IM | - | - | |
| Apr 25 2023 | 2023 Q1 | EACO, HPS/A CN, JOB, PKST, PX, SKTP, TIMB, UD IM | - | - | |
| Oct 1 2023 | 2022 Q4 | 6KF GR, FTLF, GTXAP, JOB, PX, RVIC, SUMXF, UD IM | - | - | |
| Oct 10 2022 | 2022 Q3 | BFC, CBOBA, GTX, HRBR, JOB, PX, UBAB, UD IM | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
BuybacksShare repurchases in 2024 and 2025 hit consecutive records as companies raced to meet Tokyo Stock Exchange capital efficiency mandates. Buybacks were a primary driver of the market's 20% climb in the first half of FY2025. |
Share Repurchases Capital Efficiency TSE Mandates Shareholder Returns Records |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth | |
PaperThe fund purchased Sylvamo Corp, a manufacturer of uncoated freesheet paper, facing short-term headwinds from expiring supply agreements and weak European demand. Industry supply reduction from mill conversions and closures should support pricing recovery as the company invests in South Carolina capacity expansion. |
Cyclical Recovery Capacity Investment Supply Reduction | |
PhosphateThe fund initiated a position in Itafos, a phosphate fertilizer producer, based on structural undersupply dynamics. American phosphate production has declined by more than half since 1980, Florida reserves are dwindling, and China is reducing exports to ensure domestic availability for agriculture and lithium battery production. |
Fertilizers Critical Minerals Supply Shortage | |
Real EstateExposure through liquidating real estate holdings (STHO) and entertainment real estate (SEG). Focus on asset monetization and development projects with major tenants like Meow Wolf driving traffic and rental income growth. |
Liquidation Development Asset Sales Entertainment Manhattan | |
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 |
InfrastructureDigital 9 Infrastructure holds telecom infrastructure assets including Arqiva stake. Despite poor 2025 performance, potential capital returns and asset sales could unlock value. Infrastructure assets provide defensive characteristics. |
Telecom Infrastructure Digital Infrastructure |
Small CapsSmall caps getting strong start in 2026 supported by easing monetary conditions and constructive fiscal backdrop. Small caps more sensitive to economic cyclicality which is overdue for expansion. Expected to grow at better pace than large caps in 2026 after long period of underperformance. |
Value Growth Cyclical Monetary Policy Fiscal Policy | |
| 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 |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 27, 2025 | Fund Letters | Dave Waters | SRC LN | SigmaRoc plc | Materials | Construction Materials | Bull | NYSE | Acquisitions, construction, infrastructure, Lime, Pricing power | Login |
| Jul 27, 2025 | Fund Letters | Dave Waters | NLOP | Net Lease Office Properties | Real Estate | Office REITs | Bull | NYSE | asset sales, cap rate, Liquidation, Office, REIT | Login |
| Oct 22, 2025 | Fund Letters | Dave Waters | ZEG LN | Zegona Communications | Communication Services | Wireless Telecommunication Services | Bull | NYSE | asset sales, deleveraging, Fiber, monetization, Multiple arbitrage, Re-rating, Special dividend | Login |
| Jul 27, 2025 | Fund Letters | Dave Waters | PKST | PeakStone Realty Trust | Real Estate | Industrial REITs | Bull | NYSE | deleveraging, Free Cash Flow, Industrial, net asset value, REIT | Login |
| Oct 22, 2025 | Fund Letters | Dave Waters | FTLF | FitLife Brands | Consumer Staples | Personal Products | Bull | NASDAQ | acquisition, brand portfolio, consolidation, Distribution, Execution, Free Cash Flow, Roll-up | Login |
| Jul 27, 2025 | Fund Letters | Dave Waters | CBL | CBL & Associates Properties, Inc. | Real Estate | Retail REITs | Bull | NYSE | leverage, Malls, Refinancing, Retail real estate, Turnarounds | Login |
| Oct 22, 2025 | Fund Letters | Dave Waters | MCB LN | McBride plc | Financials | Household Products | Bull | NYSE | dividend, Europe, Margins, Private-label, rerating, takeover, valuation | Login |
| Jul 27, 2025 | Fund Letters | Dave Waters | WISH | ContextLogic, Inc. | Materials | Internet & Direct Marketing Retail | Bull | - | acquisition, cash, downside protection, NOLs, Special situations | Login |
| Oct 22, 2025 | Fund Letters | Dave Waters | NLOP | Net Lease Office Properties | Real Estate | Office REIT | Bull | NYSE | asset sales, cap rate, deleveraging, Dispositions, NAV discount, Office, REIT | Login |
| Feb 2, 2026 | Fund Letters | Dave Waters | ZEG LN | Zegona Communications plc | Communication Services | Telecom Services | Bull | New York Stock Exchange | asset sales, buybacks, capital returns, deleveraging, Telecom-Turnaround | Login |
| Oct 22, 2025 | Fund Letters | Dave Waters | CBL | CBL & Associates Properties | Real Estate | Retail REIT | Bull | NYSE | deleveraging, Distributions, FFO, Float, Malls, Refinancing, Retail real estate | Login |
| Feb 2, 2026 | Fund Letters | Dave Waters | CRAWA | Crawford United Corporation | Industrials | Industrial Conglomerates | Bull | New York Stock Exchange | conglomerate discount, Hidden-Assets, Industrials, M&A, valuation upside | Login |
| Oct 22, 2025 | Fund Letters | Dave Waters | ZEG LN | Zegona Communications | Communication Services | Wireless Telecommunication Services | Bull | NYSE | asset sales, deleveraging, Fiber, monetization, Multiple arbitrage, Re-rating, Special dividend | Login |
| Feb 2, 2026 | Fund Letters | Dave Waters | GTX | Garrett Motion Inc. | Consumer Discretionary | Auto Parts | Bull | NASDAQ | Auto parts, buybacks, capital allocation, Ev-Transition, Free Cash Flow | Login |
| Oct 22, 2025 | Fund Letters | Dave Waters | FTLF | FitLife Brands | Consumer Staples | Personal Products | Bull | NASDAQ | acquisition, brand portfolio, consolidation, Distribution, Execution, Free Cash Flow, Roll-up | Login |
| Feb 2, 2026 | Fund Letters | Dave Waters | MCB LN | McBride plc | Consumer Staples | Household Products | Bull | New York Stock Exchange | balance sheet, buybacks, consumer staples, dividends, valuation gap | Login |
| Oct 22, 2025 | Fund Letters | Dave Waters | MCB LN | McBride plc | Financials | Household Products | Bull | NYSE | dividend, Europe, Margins, Private-label, rerating, takeover, valuation | Login |
| Feb 2, 2026 | Fund Letters | Dave Waters | NLOP | Net Lease Office Properties | Real Estate | Office REITs | Bull | New York Stock Exchange | Cap rates, capital returns, Liquidation, NAV discount, Property-Dispositions | Login |
| Oct 22, 2025 | Fund Letters | Dave Waters | NLOP | Net Lease Office Properties | Real Estate | Office REIT | Bull | NYSE | asset sales, cap rate, deleveraging, Dispositions, NAV discount, Office, REIT | Login |
| Feb 2, 2026 | Fund Letters | Dave Waters | SLVM | Sylvamo Corporation | Materials | Paper & Forest Products | Bull | New York Stock Exchange | Capacity-Reduction, Cyclicals, Free Cash Flow, industry consolidation, Paper | Login |
| Oct 22, 2025 | Fund Letters | Dave Waters | CBL | CBL & Associates Properties | Real Estate | Retail REIT | Bull | NYSE | deleveraging, Distributions, FFO, Float, Malls, Refinancing, Retail real estate | Login |
| Feb 2, 2026 | Fund Letters | Dave Waters | MCDIF | McDermott International Ltd. | Industrials | Engineering & Construction | Bull | Dubai Financial Market | backlog growth, energy infrastructure, operating leverage, Refinancing, turnaround | Login |
| Jul 27, 2025 | Fund Letters | Dave Waters | TLNE | Talen Energy, Corp. | Other | Independent Power Producers & Energy Traders | Bull | - | Contracts, data centers, Free Cash Flow, Nuclear, utilities | Login |
| Jul 27, 2025 | Fund Letters | Dave Waters | ZEG LN | Zegona Communications plc | Communication Services | Integrated Telecommunication Services | Bull | NYSE | cash flow, corporate actions, Fiber, restructuring, Telecom | Login |
| Jul 27, 2025 | Fund Letters | Dave Waters | MCB LN | McBride plc | Financials | Household Products | Bull | NYSE | Automation, Detergents, dividends, Margins, Private-label | Login |
| Jul 27, 2025 | Fund Letters | Dave Waters | SENEA | Seneca Foods, Corp. | Consumer Staples | Packaged Foods & Meats | Bull | NASDAQ | agriculture, Canned food, consolidation, deleveraging, working capital | Login |
| TICKER | COMMENTARY |
|---|---|
| CRAW | Crawford United, our scrappy Ohio industrial conglomerate, announced an agreement to be sold to SPX Technologies for $300 million, or $83.42 per share. This was the culmination of an extremely successful investment for Alluvial. We purchased our first Crawford United shares in late 2018 and continued to add in 2019, paying an average of $12 per share. When the sale completes in a few months, we will have earned 7x our investment, or about 32% annualized. |
| FTLF | Since taking over as CEO in 2018, Dayton has been deliberate in executing multiple of the strategies listed above at various stages of his long-term plan to maximize shareholder value, growing the market cap from ~$5m to now ~$150m. He began by slashing 60% of costs – including public company costs – and running FitLife like a private company with all his time allocated towards fixing and growing the business. He then grew the company out of underfollowed territory by acquiring multiple complementary nutrition brands purchased at distressed multiples of 3–5x earnings and cutting their bloated costs alongside layering in synergies at each step. |
| GTX | We initiated a position in Garrett Motion, an automotive parts and equipment company in the Consumer Discretionary sector. The company designs, manufactures, and sells turbocharger and electric boosting technologies for commercial vehicles. Garrett ranks high on multiple cash flow and forecast earnings measures on our model. The company typically pays a dividend and has been aggressively buying back stock, which we view positively. |
| IFOS | We also began a position in Itafos Inc., a small producer of phosphate fertilizers. Today, Itafos is extremely profitable, has nearly zero net debt, and has multiple options on the table to increase production and extend its mine life by decades. Itafos is trading at around 4 times operating cash flow based on 10-year average phosphate prices, and its cost structure should allow it to remain profitable even if phosphate prices suffer a severe correction. |
| MBR.L | McBride plc was a strong contributor to this year's returns, even if the company caused some heartburn along the way. Rather than leave its valuation in the hands of melancholy UK investors, McBride management took action, choosing to reward shareholders with an aggressive share repurchase plan and by reinitiating its dividend. Even after this appreciation, McBride shares change hands at less than 7 times this fiscal year's estimated earnings. |
| MDR | In our last letter, I mentioned I was buying shares of a post-bankruptcy energy engineering and construction business. Alluvial has continued buying shares, and McDermott is now a core position for the fund. 2026 will be a watershed year for McDermott. The company's 2025 adjusted EBITDA should exceed $400 million, up more than 70% from 2024. However, if the company can maintain its current strong trajectory, improving margins and growing its project backlog, I see upside to $60 or higher versus current trading in the mid-$20s. |
| NLOP | Net Lease Office Properties, our largest portfolio position, advanced their liquidation plan and yet the stock had minimal price appreciation in 2025. NLOP and AIV continued to sell properties and move toward full liquidation. NLOP has now declared $12.30 of dividends per share in 2025 and should be able to return another $10/share in early 2026 once pending sales close. We expect dividends in FY26 to fully cover our cost basis on both names. NLOP and AIV expect to return substantial capital to shareholders as property sales finalize. We anticipate receiving dividends equal to or exceeding our entire cost basis in both positions during H1 2026. |
| SLVM | In the fourth quarter, Alluvial Fund purchased shares of Sylvamo Corp, a manufacturer of uncoated freesheet paper—think printer paper. In Sylvamo, I see an opportunity to buy a fundamentally sound company facing short-term headwinds. Sylvamo expects that its South Carolina investment program will yield a 30%+ internal rate of return, and that the company can return to producing $300 million in free cash flow annually in 2027 and beyond. |
| TLN | Our power basket performed well with Talen Energy doubling. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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