| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 11.88% | 7.14% | - |
The Forager International Shares Fund returned negative 5.7% for the year ending June 2026, significantly underperforming its benchmark as the AI bubble inflated to extreme levels exemplified by SpaceX's US$2 trillion IPO valuation. The manager deliberately avoided participating in the AI mania, instead selling what little exposure the fund had as valuations became unsustainable. The largest detractor was Fiserv, a 3.9% loss reflecting a process mistake where the manager held on despite deteriorating fundamentals and management instability. Japanese software holdings also suffered as global AI fears drove indiscriminate selling despite strong operating performance and improving corporate governance. Winners included Marex Group, ING Groep, and Linamar Corporation, all benefiting from specific operational catalysts. The manager draws parallels to the 2000 dot-com crash, noting today's hysteria is isolated to AI while other areas offer attractive valuations. The portfolio has been actively repositioned, clearing out fully valued winners and mistakes to concentrate in mispriced opportunities including Japanese software, European banks, and other cash-generative value stocks. The manager expects continued short-term underperformance but is positioned to profit when the bubble bursts.
The current AI boom has evolved into a genuine bubble comparable to history's great manias, driven by transformative technology but facing inevitable collision with economic reality around capital intensity, efficiency, and returns. The manager is positioned as far away from the euphoria as possible, instead concentrating in sensible, cash-generative businesses trading at attractive valuations that have been starved of attention, particularly Japanese software companies and European banks, expecting strong relative and absolute returns when the bubble bursts.
The manager expects continued underperformance as long as the AI bubble continues to inflate, but is positioned to deliver strong relative and potentially absolute returns when the bubble bursts. The extreme dispersion and momentum-driven market shifts have created a fertile hunting ground, with the fund entering the new financial year concentrated in areas of significant mispricing including Japanese software, European banks, and other value opportunities ignored by the market.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 13 2026 | 2026 Q2 | 4194.T, 4733.T, 4811.T, 5038.T, CROX, FISV, FIX, INGA.AS, JD.L, LNR.TO, MRX, MTX.DE, NUTX, SGE.L, TTEK, YETI, ZEG.L | AI Bubble, contrarian, European Banks, Japan, small caps, software, value | - | Forager deliberately sat out the AI bubble, returning negative 5.7% while markets soared on euphoria the manager views as unsustainable. The fund exited AI beneficiaries like Comfort Systems as valuations became too steep and cut the Fiserv mistake after management instability confirmed deeper problems. The portfolio is now concentrated in mispriced opportunities including Japanese software and European banks, positioned to profit when AI mania ends and value reasserts itself. |
| Apr 15 2026 | 2026 Q1 | 3673.T, 4194.T, 5038.T, AUTO.L, BVS.AX, CAR.AX, FIX, SGE.L, XRO.AX | AI, Cash Deployment, disruption, Japan, software, technology, value |
SGE.L AUTO.L |
Forager is aggressively deploying cash into the software sector selloff, targeting high-quality businesses with defensive moats trading at attractive valuations. The 'Saaspocalypse' has created opportunities in companies like Sage Group and Japanese software providers that offer essential services with high switching costs. AI disruption risks are real but overstated for quality incumbents. |
| Jan 19 2026 | 2025 Q4 | AUTO.L, BKNG, CRH, CRM, FISV, FIX, FLUT, G24.DE, INCH.L, INGA.AS, IT, LNR.TO, NUTX, NXT, PSI.TO, REA.AX, SES.MI, WISE.L, XRO.AX, ZEG.L | AI, global, Quality, small caps, technology, Travel, value |
FISV NUTX NXT ZEG LN ARX AU |
Strong 15% annual return despite volatile Q4, driven by AI infrastructure plays and active portfolio management. Major refresh underway targeting smaller-cap opportunities at attractive valuations. Technology selloff creating potential entry points though valuations remain elevated. Australian tourism recovery gaining momentum. Structural tailwinds for active managers continue with record passive inflows creating opportunities for differentiated strategies. |
| Oct 9 2025 | 2025 Q3 | 4194.T, 5038.T, BVS.AX, CAT.AX, CCL.AX, CLH, CRH, CSL.AX, CTD.AX, DMP.AX, EML.AX, FI, FIX, GTK.AX, HPG.AX, IEL.AX, INCH.L, INGA.AS, JHX.AX, LLOY.L, MTX.DE, NUTX, PPE.AX, PPS.AX, REH.AX, RUL.AX, TSCO.L, TSLA, ZEG.L | Australia, Discipline, gold, Japan, small caps, value |
FIX US CRH US ZEG LN FI US VIS JP INCH LN |
Forager's disciplined value approach delivered exceptional returns as small-caps recovered, highlighted by the successful Catapult exit after four years. However, rising valuations and macro warning signs including gold's 45% surge and persistent high bond yields signal caution ahead. The fund is adapting with more conservative positioning while finding new opportunities in reformed Japanese markets. |
| Jul 27 2025 | 2025 Q2 | AMA.AX, BTH.AX, BVS.AX, CAT.AX, CHL.AX, CROX, EML.AX, EXP.AX, FIX, JLG.AX, MTO.AX, NUTX, NZX.NZ, OML.AX, PBH.AX, PPS.AX, PRN.AX, RDY.AX, THL.AX, TYR.AX | Australia, Passive flows, small caps, takeovers, technology, Tourism, value |
PSI CN 3769 JP 4733 JP 4194 CN WISE LN FIX MTX GR FLUT TKO APG ZETA |
Forager delivered 31.1% returns by exploiting passive fund dynamics in small-cap markets. Technology turnarounds led by Catapult and Bravura drove performance, while M&A activity provided additional returns. The fund capitalizes on forced selling when stocks become too small for institutional portfolios, creating opportunities for nimble active managers in an increasingly passive-dominated market. |
| Mar 31 2025 | 2025 Q1 | 4733.T, CAT, CLH, CRH, CROX, FI, FLTR.L, FOUR, INGA.AS, JD.L, LLOY.L, MOTR.L, NUTX, NXT, YETI, ZBRA | Cash, deployment, Europe, healthcare, small cap, tariffs, volatility | NUTX | Trump's tariff chaos triggered major market selloff, but Forager's defensive positioning with reduced US exposure and elevated cash proved prescient. Fund deployed capital selectively into quality opportunities like Nutex Health while European holdings provided resilience. Expecting US recession, manager continues measured deployment strategy with two portfolios of resilient businesses positioned for long-term outperformance despite near-term volatility. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIThe manager views the AI boom as having evolved into a bubble driven by investor euphoria and FOMO, exemplified by the SpaceX IPO valued at over US$2 trillion. While acknowledging AI's transformative nature, the manager actively avoided participation in the mania, selling what little exposure the fund had. The manager expects the bubble to burst as trillions in AI infrastructure spending crashes into physical constraints and economic realities around efficiency and returns on capital. |
Data Centers Semiconductors Cloud Enterprise Software |
SoftwareThe global SaaS sector experienced an indiscriminate sell-off that the manager views as creating opportunity. Japanese small-cap software providers like eWeLL, Visional, and Obic Business Consultants are highly profitable businesses delivering strong double-digit earnings growth whose multiples have been compressed simply due to AI-related fears. The manager has used share price falls to increase investments in some of these businesses, viewing the sector as attractively valued. |
SaaS Enterprise Software Japan Vertical Software | |
ValueThe manager draws parallels to the 2000 dot-com crash, noting that today's environment feels similar with hysteria isolated to AI stocks while other parts of the market offer sensible, cash-generative businesses at attractive valuations. The manager is finding an abundance of opportunities in areas starved of attention, including European banks, US building materials, and the UK market trading at pessimistic multiples despite solid fundamentals. The portfolio is positioned to profit when the AI bubble pops. |
Banks Building Materials Europe United Kingdom | |
JapanDespite significant improvements in corporate governance, Japanese software holdings reversed all of last year's gains due to global investor fears that AI will automate away traditional software products. The manager continues to believe in the Japanese reform story, noting that governance is improving, capital returns are increasing, and the software market is under-penetrated compared to global peers. Share price falls were used to increase investments in these businesses. |
Software Corporate Governance Buybacks Dividends | |
Data CentersThe fund benefited from investments in companies serving the AI-driven data center construction boom, particularly Comfort Systems and Nextpower. However, as euphoria took hold and share prices rose significantly, the manager reduced and ultimately exited these positions entirely. The manager views the current valuations as too steep despite strong underlying demand for data center infrastructure. |
AI Construction HVAC Infrastructure Spending | |
BanksEuropean banks, particularly ING Groep, have performed strongly as the European economy avoided depression and banks are now growing again. ING grew its loan book more than 8% in 2025 and investors are starting to consider multi-year profit growth potential. The manager believes this re-rating process still has more to run, with ING's share price up over 100% since first purchase and contributing 1.7% to annual performance. |
Europe Regional Banks Dividends Buybacks | |
CommoditiesMarex Group, a financial services firm providing liquidity and clearing services in volatile commodities and financial markets, was the fund's top contributor. The business delivered record quarterly results during a year of elevated commodity market volatility. However, the manager has been trimming the investment as it is no longer cheap and earnings are almost certain to decline when volatility normalizes. |
Energy Trading Volatility Capital Markets Financial Services | |
AutosLinamar Corporation, a Canadian auto parts manufacturer, performed strongly as the North American auto industry proved resilient and insulated from fierce Chinese competition affecting Europe, Japan and Korea. Tariff concerns were resolved favorably for Canadian parts producers. The company is generating record profits from its automotive business and remains cheap even after a 55% share price increase. |
Auto Parts Trade Policy Canada Manufacturing | |
| 2026 Q1 |
SaaSThe fund is actively investing in software-as-a-service companies during the 'Saaspocalypse' selloff, focusing on businesses with high value at low cost, structural switching costs, and moats beyond software. Japanese software companies continue to show strong fundamentals despite share price declines. |
Software Subscription Switching costs AI disruption Valuation |
AIArtificial intelligence is viewed as both a disruptive threat and opportunity for software businesses. The fund believes AI will compress margins for some incumbents while creating cost reduction opportunities and new revenue streams for others. |
Disruption Automation Cost reduction Competitive advantage Innovation | |
ValueThe fund is deploying cash into beaten-down opportunities, seeking companies trading at attractive valuations after significant price declines. Focus on businesses that can return substantial portions of market value through cash flows over the next decade. |
Undervalued Cash deployment Contrarian Price declines Duration | |
| 2025 Q4 |
ValuationPrice discipline and margin of safety are emphasized as key investment pillars. The manager focuses on implied real IRR as the best indicator of prospective returns, currently at 11.6% annually. Valuation asymmetry becomes more important during political uncertainty periods. |
Price IRR Margin of Safety Discount Rate |
BrazilBrazilian equity market corrected 34% in 2025 after extreme pessimism in 2024. The manager views the 2026 elections as creating short-term noise but believes price remains more important than political timing for long-term returns. |
Elections Political Risk Bovespa Institutional Risk | |
Risk ManagementTime horizon is essential for capturing asymmetry when price diverges from value. The manager emphasizes constructing multiple scenarios, especially conservative ones, to assess investment resilience and reduce reliance on single favorable outcomes. |
Time Horizon Scenario Analysis Asymmetry | |
| 2025 Q3 |
Small CapsSmall companies are finally showing signs of a strong, broad-based recovery after years of struggling against high interest rates and passive flows into larger companies. The Australian S&P/ASX Small Ordinaries Index is up 22.8% for the calendar year, well in excess of the 11.5% return from the All Ordinaries. This small cap outperformance is supported by global small-cap strength, with the MSCI World Micro Cap Index up 18.8% in Australian dollars. |
Small Caps Outperformance Recovery Value |
GoldGold is having its best annual performance since 1979, surging more than 45% year-to-date to hit record highs above US$3,800 per ounce in September 2025. This surge is linked to the weakness of the US dollar and reflects declining global confidence in US monetary and fiscal policy. Gold's rise can be seen as a loss of trust in the value of government-backed money. |
Gold Dollar Inflation Monetary Policy | |
JapanGovernance reforms, an ageing population and labour shortages are driving long-overdue change in Japan. Companies that once hoarded cash are investing in productivity and returning more to shareholders. Buybacks doubled to ¥20 trillion in 2024, and another ¥14 trillion has already been announced this year. Reform has encouraged activism and mergers and acquisitions, with foreign bidders lodging 157 takeover proposals in the first eight months of 2025. |
Japan Buybacks Reform Demographics Productivity | |
ValueThe transition from a market that offered plenty of value to one where many things are becoming expensive presents new challenges. Forager's excellent performance over the past three-year period has been rooted in exploiting the deep pessimism around small companies that characterised the years prior to 2025, when the asset class traded at historical valuation lows relative to large companies. |
Value Valuation Discipline Process | |
| 2025 Q2 |
Small CapsFund focuses on smaller companies that passive giants cannot efficiently own due to size constraints. Passive flows create opportunities through forced selling when stocks become too small for large portfolios. Fund benefits from being nimble enough to invest in smaller listed companies not accessible to many investment managers. |
Small Cap Passive Flows Liquidity Index Inclusion Market Cap |
TechnologyTechnology businesses delivered strong returns with Catapult tripling in value and Bravura delivering 114% gains. Fund targets unloved and underappreciated technology businesses, particularly those with recurring revenue models and global scale potential. Software businesses with strong margins and subscription models remain attractive. |
Software SaaS Recurring Revenue Technology Digital Transformation | |
BuybacksJapanese corporate governance reforms are driving increased buybacks and capital returns. Buybacks have doubled over the past 12 months in Japan as companies respond to Tokyo Stock Exchange pressure to improve capital efficiency and return capital to shareholders. |
Share Buybacks Capital Returns Corporate Governance Japan Capital Allocation | |
ETFsPassive funds and thematic ETFs create both challenges and opportunities. Thematic ETFs attract money near peaks and lose it at lows, creating buying opportunities. Index inclusion can significantly amplify profits from successful investments as passive funds need their share. |
Passive Investing Index Funds Thematic ETFs Index Inclusion Passive Flows | |
| 2025 Q1 |
Trade PolicyTrump's erratic tariff measures represent the largest upheaval to global trade since the Second World War. The unstructured, ad-hoc calculations behind which country gets whacked with what tariffs have erased confidence that there is a grand strategy in mind. These tariffs represent an enormous tax on already-struggling US consumers and are likely to cause a recession. |
Tariffs Trade Recession Consumer Global |
Small CapsThe Fund maintains a long-term tilt towards small and mid-cap companies—a structural feature that reflects a belief in their potential for long-run outperformance from earnings growth and less efficient pricing. However, this positioning has been a headwind in recent months with small-cap underperformance. |
Small Cap Mid Cap Underperformance Pricing Growth | |
EuropeAfter years of being treated as a global investment backwater, the narrative has shifted with surprising speed. A clear rotation is underway, with capital flowing out of US equities and back into Europe. Economic data has surprised to the upside, and sentiment has improved on growing hopes of an eventual resolution to the war in Ukraine. |
Rotation Capital Economic Sentiment Ukraine |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 15, 2026 | Fund Letters | Forager International Shares Fund | SGE.L | Sage Group PLC | Software - Application | Application Software | Bull | New York Stock Exchange | Accounting Software, AI integration, capital returns, defensive, Mid-market, Mission-Critical, Regulatory Tailwind, SaaS, UK, US | Login |
| Apr 15, 2026 | Fund Letters | Forager International Shares Fund | AUTO.L | Auto Trader Group PLC | Internet Content & Information | Interactive Media & Services | Bull | New York Stock Exchange | Ai Risk, automotive, Capital-light, cash generation, Dominant platform, high margins, network effects, Online Classifieds, UK, value opportunity | Login |
| Jan 19, 2026 | Fund Letters | Steve Johnson | FISV | Fiserv, Inc. | Information Technology | Transaction & Payment Processing Services | Bull | New York Stock Exchange | management, Payments, rerating, turnaround, valuation | Login |
| Jan 19, 2026 | Fund Letters | Steve Johnson | NUTX | Nutex Health, Inc. | Health Care | Health Care Facilities | Bull | NASDAQ | cashflow, Hospitals, Sentiment, Special_Situation, Volatility | Login |
| Jan 19, 2026 | Fund Letters | Steve Johnson | NXT | Nextracker Inc. | Industrials | Electrical Equipment | Bull | NASDAQ | Execution, Policy, renewables, Solar, valuation | Login |
| Jan 19, 2026 | Fund Letters | Steve Johnson | ZEG LN | Zegona Communications plc | Communication Services | Telecommunication Services | Bull | New York Stock Exchange | Asset_Sales, deleveraging, Special_Situation, Telecom, turnaround | Login |
| Jan 19, 2026 | Fund Letters | Steve Johnson | ARX AU | Aroa Biosurgery Limited | Health Care | Medical Devices | Bull | New York Stock Exchange | cashflow, Distribution, growth, Medtech, Operating_Leverage | Login |
| Oct 9, 2025 | Fund Letters | Steve Johnson | FIX US | Comfort Systems USA, Inc. | Industrials | Building Products & Equipment | Bull | NYSE | AI, data centers, FCF, growth, HVAC, infrastructure, Margins, valuation | Login |
| Oct 9, 2025 | Fund Letters | Steve Johnson | CRH US | CRH plc | Materials | Construction Materials | Bull | NYSE | — | Login |
| Oct 9, 2025 | Fund Letters | Steve Johnson | ZEG LN | Zegona Communications plc | Communication Services | Telecommunications | Bull | NYSE | — | Login |
| Oct 9, 2025 | Fund Letters | Steve Johnson | FI US | Fiserv, Inc. | Information Technology | Transaction & Payment Processing Services | Bull | NASDAQ | — | Login |
| Oct 9, 2025 | Fund Letters | Steve Johnson | VIS JP | Visional, Inc. | Other | Professional Services | Bull | NYSE | — | Login |
| Oct 9, 2025 | Fund Letters | Steve Johnson | INCH LN | Inchcape plc | Consumer Discretionary | Distributors | Bull | NYSE | Autos, buybacks, Distribution, diversification, Global, profitability, valuation | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | PSI CN | Pason Systems Inc. | Other | - | Bull | TSX | Automation, cashflow, Cyclicality, Drilling, energy | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | 3769 JP | GMO Payment Gateway, Inc. | Information Technology | Software - Infrastructure | Bull | NYSE | Cashless, ecommerce, growth, Payments, Software | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | 4733 JP | OBIC Business Consultants Co., Ltd. | Information Technology | Information Technology Services | Bull | NYSE | Accounting, Margins, Recurring, SMEs, Software | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | 4194 CN | Visional, Inc. | Communication Services | Internet Content & Information | Bull | NYSE | compounding, growth, HR, Recruitment, Software | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | WISE LN | Wise plc | Other | - | Bull | NYSE | Digital, Fintech, Listings, Margins, Payments | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | FIX | Comfort Systems USA, Inc. | Industrials | Engineering & Construction | Bull | NYSE | backlog, construction, Datacentres, HVAC, Margins | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | MTX GR | MTU Aero Engines AG | Materials | Specialty Chemicals | Bull | - | Aerospace, aftermarket, Engines, growth, valuation | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | FLUT | Flutter Entertainment plc | Consumer Discretionary | Gambling | Bull | NYSE | Betting, Gaming, growth, Online, Regulation | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | TKO | TKO Group Holdings, Inc. | Communication Services | Entertainment | Bull | NYSE | Content, media, rights, sports, synergies | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | APG | APi Group Corporation | Industrials | Engineering & Construction | Bull | NYSE | cashflow, consolidation, Recurring, Safety, services | Login |
| Jul 27, 2025 | Fund Letters | Steve Johnson | ZETA | Zeta Global Holdings Corp. | Information Technology | Software - Infrastructure | Bull | NYSE | Data, Marketing, SaaS, Software, valuation | Login |
| Mar 31, 2025 | Fund Letters | Forager International Shares Fund | NUTX | Nutex Health Inc | Health Care | Health Care Facilities | Bull | NASDAQ | arbitration, Emergency Care, healthcare, Micro-hospitals, No Surprises Act, Reimbursement, turnaround, US | Login |
| TICKER | COMMENTARY |
|---|---|
| INGA.AS | Dutch international bank ING Groep. The Fund acquired the stock absurdly cheaply almost three years ago. All that was needed for a good outcome was for the European economy not to fall into depression. Three years later, and not only are European banks paying out fat dividends and buying back shares, they're actually growing again. Over 2025, ING grew its loan book more than 8% and that carried through to Q1 2026. Investors, rightfully, are starting to consider how much profits can grow over the coming few years. We think that process still has more to run. ING Groep's share price is up more than 100% since the Fund's first purchase and 49% over the past year. Combined with a healthy dividend yield, it added 1.7% to this year's performance. |
| 4194.T | Visional (TSE:4194), OBIC Business Consultants (TSE:4733), eWell (TSE:5038) and DreamArts (TSE:4811) were the main detractors amongst the group, which combined cost the Fund 4.0%. Despite significant improvements in corporate governance, the Japanese software sector has not been immune to global trends. Software stocks globally have fallen this year due to investor fears that AI will rapidly automate away the need for traditional software-as-a-service products. So while the operating performance of each of these businesses has been broadly on track, share prices have tumbled. We continue to believe in the Japanese reform story. Governance is improving, capital returns are increasing and the software market is under penetrated compared to global peers. The share price falls were used to increase the Fund's investment in some of these businesses. |
| 4733.T | Visional (TSE:4194), OBIC Business Consultants (TSE:4733), eWell (TSE:5038) and DreamArts (TSE:4811) were the main detractors amongst the group, which combined cost the Fund 4.0%. Despite significant improvements in corporate governance, the Japanese software sector has not been immune to global trends. Software stocks globally have fallen this year due to investor fears that AI will rapidly automate away the need for traditional software-as-a-service products. So while the operating performance of each of these businesses has been broadly on track, share prices have tumbled. |
| 5038.T | eWell is a good example. The company develops software for the healthcare sector, particularly in home-visit nursing. eWell's share price has fallen 26% over the past year, valuing the business at 20 times next year's earnings. Those earnings are growing quickly though. If growth continues at the rate we expect, it will be 11 times earnings in three years' time and still growing rapidly. Management is also returning cash to shareholders through a combination of dividends and a recently announced share buyback. It's not as much as we'd like, but it's a good start. |
| 4811.T | Visional (TSE:4194), OBIC Business Consultants (TSE:4733), eWell (TSE:5038) and DreamArts (TSE:4811) were the main detractors amongst the group, which combined cost the Fund 4.0%. Despite significant improvements in corporate governance, the Japanese software sector has not been immune to global trends. Software stocks globally have fallen this year due to investor fears that AI will rapidly automate away the need for traditional software-as-a-service products. |
| FIX | Comfort Systems appeared in last year's report as a fresh buy out of the April 2025 selloff, and it continued to deliver handsomely this year before we moved on, contributing 1.7% to returns. This mechanical, electrical and HVAC contractor is a prime beneficiary of the surge in data-centre construction and the reshoring of US manufacturing, where demand for large-scale, technically complex systems is growing rapidly. Few competitors can match its national footprint and execution capacity on mission-critical builds, and through the Fund's holding period the order book grew rapidly, margins kept expanding and the balance sheet carried net cash. The business never stopped executing, but the share price ran up hard. Having bought in the panic, we trimmed into strength and then exited in full in February 2026 at around $1,400 a share, up more than threefold in a year, purely because the valuation got too steep. It is a stock we would happily own again at the right price. |
| FISV | Fiserv (NASDAQ:FISV) was the single largest detractor this year, costing the Fund 3.9%. A loss of that size isn't just bad luck. It reflects a mistake in our process and we owe a clear account of what went wrong. Back in late 2025, we took a fresh look at the company after the price fell 44%. We thought the incoming CEO, Mike Lyons, was clearing out all of the bad news at once. The theory was that a capable new leadership team could rebuild a business that still generated plenty of cash. So we made the decision to hold on, with a strict condition for staying invested: no more bad news and a clear path back to steady growth by 2027. Those conditions have not been met. Over five quarters, sales growth plummeted from 7% down to zero, and finally into negative territory. By early 2026, its core bank-software business was in decline, it was losing customers, and profit margins had collapsed. We noticed these warning signs as they happened. Noticing a problem is not the same as doing something about it, and that is the core of our mistake. The final straw came in June 2026. After just over a year on the job, the new CEO abruptly announced he was leaving for another company. This was the second leadership shakeup in eight months, a clear signal that the company's problems run much deeper than we thought. The one thing we needed—a stable management team executing a plan—vanished. We have now sold the entire position. |
| MRX | Marex Group PLC (NASDAQ:MRX) was the Fund's top contributor, adding 1.9% to returns. The global financial services firm provides liquidity and clearing services in volatile commodities and financial markets. If an oil company wants to hedge the oil price or an investment fund wants to punt on gold futures, Marex is the sort of company you talk to. When we first invested, the business was valued at less than ten times earnings, despite a long track record of growth and a business model far more diversified and resilient than the market gave it credit for. This year market sentiment has changed. Marex delivered a string of record quarterly results and the share price is up 95% from the Fund's October purchase. It's been a year of elevated volatility, particularly in commodity markets, which is great for Marex's market-making and hedging segments. This is a business that we want to own at the Fund's maximum weighting when volatility is low, the valuation is cheap and earnings are, if anything, depressed. This is no longer the case. It is almost certain that earnings will be down year-on-year at some point in a quieter market, and the occasional sharp pullback is expected. We have been trimming the investment. |
| LNR.TO | Linamar Corporation (TSX:LNR) started the financial year with few friends. Linamar's most important business is making parts to go into new cars, right around the world but with a clear bent towards North American-made vehicles. And Donald Trump was ruining the whole industry with his tariff plans, was he not? Fast forward 12 months, the North American auto industry is doing pretty well, insulated from the fierce Chinese competition that's killing automakers in Europe, Japan and Korea. The key question mark from the tariff tantrum—would Canadian parts producers be hit with tariffs or sheltered within the North American ecosystem—has been answered, happily. Linamar is pumping out record profits from its automotive business, more than offsetting a more difficult environment for its industrial business. The stock is up 55% over the year, adding 1.5% to Fund returns. Even at the current share price, it's still cheap. |
| NUTX | Nutex Health (NASDAQ:NUTX) was the Fund's largest contributor last year, and is continuing to add to returns, driving 1.1% of performance this year. The company's share price is up another 37%, as the business keeps rolling out new hospital facilities and generating strong cash flows. The share price has been extremely volatile, providing multiple opportunities to buy and sell and it ended the year closer to its highs than lows. While it's not as cheap as it was, there is more evidence that our thesis is playing out, the balance sheet is stronger and near-term cash flows are higher. The weighting is lower than it was last year, but Nutex remains a meaningful investment for the Fund. |
| YETI | Lifestyle brand Yeti Holdings (NYSE:YETI), at least, turned things around this year. While tariffs are still a drag on the company's margins and consumer sentiment remains woeful, sales keep growing. Growth in markets outside the US is proving the brand's global appeal, and we think there is more runway here. |
| JD.L | The Fund's other consumer discretionary investments, JD Sports (LSE:JD) and Crocs (NASDAQ:CROX), didn't add much to performance over the year but both companies' share prices increased dramatically in recent months as consumer sentiment improved. |
| CROX | The Fund's other consumer discretionary investments, JD Sports (LSE:JD) and Crocs (NASDAQ:CROX), didn't add much to performance over the year but both companies' share prices increased dramatically in recent months as consumer sentiment improved. |
| ZEG.L | Another significant contributor over the year and one that we have written about in previous reports is Zegona Communications (LON:ZEG). The Fund invested in April 2025 as a special situation. The management team, former Virgin Media executives running a private-equity playbook in public markets, had acquired Vodafone Spain at a depressed valuation, mostly using other people's money. Over six months Zegona completed two fibre infrastructure sales to Telefónica and MasOrange, generating €1.8bn of upfront proceeds. Those proceeds fully funded the redemption and cancellation of the funding provided by Vodafone, alongside a substantial return of capital via special dividend and further debt reduction. The balance-sheet reset coincided with genuine operating progress: customer metrics stabilised and returned to growth, margins expanded meaningfully, and cash flow improved faster than expected as management executed decisively on cost, capex discipline and commercial simplification. With the shares up around 130% from the Fund's first purchase in April to December 2025, the financing structure simplified and the turnaround now well recognised by the market, the asymmetry that defined the original investment had largely been realised. The Fund's investment has been sold. If this management team buys something else one day, we would happily invest alongside them again. |
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