| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.6% | -0.4% | 13.4% |
| 2025 | 2024 |
|---|---|
| 13.4% | 10.8% |
The FPA Queens Road Small Cap Value Fund returned -0.36% in Q4 2025 versus 3.26% for the Russell 2000 Value Index, finishing the year up 13.36% versus 12.59% for the benchmark. The fund's quality and value-focused approach led to underperformance in speculative markets that favored momentum, beta, and growth factors over quality and low volatility. However, this is consistent with expectations as the fund is designed to protect capital in down markets while trailing in frothy conditions. The managers highlight three key arguments: quality small caps outperform when controlling for quality, they are relatively cheap compared to large caps, and they are overlooked due to capital outflows from small value strategies. The fund sees growing opportunities in strong franchises trading at attractive valuations, including longtime holdings like TD Synnex, RLI, and New Jersey Resources whose multiples have compressed despite business improvements. Portfolio changes included adding ePlus and increasing positions in Sprouts and New Jersey Resources while trimming the expensive Fabrinet position. Cash remains at 10.1%.
Quality small cap companies are overlooked, disdained, and cheap relative to large caps, creating an attractive opportunity set for patient, disciplined investors focused on balance sheet strength, earnings consistency, and high returns on capital.
The managers feel good about the Fund's long-term prospects and are pleased when they perform as expected with limited downside capture. They see a growing opportunity set as many quality small cap companies work through their funnel, including strong franchises in boring industries whose valuations have declined and companies that have missed earnings but are very cheap.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 10 2026 | 2025 Q4 | AAP, CSGS, FN, IDCC, NJR, OSK, PLUS, PVH, REVG, RLI, SFBS, SFM, SNX, UGI, UPBD | insurance, Quality, small cap, technology, Utilities, value |
SNX RLI NJR FN IDCC UGI PVH UPBD SFBS AAP |
Small caps are overlooked, disdained and cheap relative to large caps. Quality small caps are trading at significant discounts to quality large caps while historically… |
| Nov 8 2025 | 2025 Q3 | FN, IAC, IDCC, REVG, RLI, SAIC, SFM, SNX, THS, VSH | Discipline, fundamentals, Quality, returns on capital, small caps | - | The fund underscores its four-pillar quality disciplinebalance sheet strength, earnings consistency, returns on capital, and strong managementamid a junky rally in speculative small caps. Q3… |
| Aug 4 2025 | 2025 Q2 | AAP, CSGS, IDCC, IMKTA, NNI, PVH, REVG, SCHL, SFM, THS, UGI, VSH | Balance Sheets, Quality, returns, small caps, Valuation gap |
IMKTA NNI |
The letter highlights generationally attractive valuations in small-cap equities, particularly among high-quality businesses. Management argues that balance sheet strength, earnings consistency, and returns on capital… |
| Mar 31 2025 | 2025 Q1 | ALTM, CNO, CSWI, IDCC, MDU, OSK, PVH, REVG, SCHL, SFM, UGI, VSH | - | - | - |
| Dec 31 2024 | 2024 Q4 | CNXC, CSWI, DECK, IDCC, MSM, SCHL, SFBS, SFM, SYNA, VSH | - | - | - |
| Oct 30 2024 | 2024 Q3 | AAN, AAP, ALTM, AZO, CNXC, CSWI, DAR, DECK, FN, HMN, IDCC, ORLY, SFM, VSH | - | - | - |
| Jul 31 2024 | 2024 Q2 | ALTM, DAR, DECK, FN, IAC, MTZ, SFBS, SFM, SNX, VSH | - | - | - |
| Apr 15 2024 | 2024 Q1 | ALTM, CNXC, DECK, IDCC, JBT, MTZ, PVH, SFM, UGI, UNFI | - | - | - |
| Jan 31 2024 | 2023 Q4 | - | - | - | - |
| Sep 30 2023 | 2023 Q3 | - | - | - | - |
| Aug 19 2023 | 2023 Q2 | AMZN, META | - | - | - |
| Apr 14 2023 | 2023 Q1 | DECK, FN, GIII, IDCC, NJR, OMI, RLI, SFBS, SYNA, UNFI | - | - | - |
| Nov 2 2023 | 2022 Q4 | AEL, FN, GIII, IDCC, NJR, OMI, RLI, SJIJ, SYNA | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position |
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 | |
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 |
ChinaChina's economic rebalancing appears to be moving forward. Market liquidity, anti-involution and a measured consumer policy are likely to drive a sustained market performance in 4Q. Fiscal support and ongoing reforms in China is supportive of a stronger currency. |
Growth Policy Currency |
| 2025 Q2 |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Aug 4, 2025 | Fund Letters | Steve Scruggs | IMKTA | Ingles Markets, Incorporated | Consumer Staples | Grocery Stores | Bull | NASDAQ | Groceries, Real Estate, Rural, supermarkets, valuation | Login |
| Aug 4, 2025 | Fund Letters | Steve Scruggs | NNI | Nelnet, Inc. | Financials | Credit Services | Bull | NYSE | Book Value, capital allocation, Fintech, Servicing, Student loans | Login |
| Feb 10, 2026 | Fund Letters | Steve Scruggs | SNX | TD SYNNEX Corporation | Information Technology | Technology Distributors | Bull | New York Stock Exchange | AI, cloud, consolidation, Distribution, Margins, scale, valuation, working capital | Login |
| Feb 10, 2026 | Fund Letters | Steve Scruggs | RLI | RLI Corp. | Financials | Property & Casualty Insurance | Bull | New York Stock Exchange | combined ratio, Discipline, Insurance, Quality, ROE, underwriting, valuation | Login |
| Feb 10, 2026 | Fund Letters | Steve Scruggs | NJR | New Jersey Resources Corporation | Utilities | Gas Utilities | Bull | New York Stock Exchange | dividend, Gas, infrastructure, Regulation, ROE, utility, valuation | Login |
| Feb 10, 2026 | Fund Letters | Steve Scruggs | FN | Fabrinet | Information Technology | Electronic Components | Bull | New York Stock Exchange | cable, CapEx, compounding, Concentration, datacenter, manufacturing, Optics, semiconductors, Telecom | Login |
| Feb 10, 2026 | Fund Letters | Steve Scruggs | IDCC | InterDigital, Inc. | Information Technology | Application Software | Bull | NASDAQ | automotive, buybacks, dividend, IoT, Licensing, margin, patents, royalties, Wireless | Login |
| Feb 10, 2026 | Fund Letters | Steve Scruggs | UGI | UGI Corporation | Utilities | Gas Utilities | Bull | New York Stock Exchange | balance sheet, cashflow, deleveraging, Eps, pipeline, Propane, Regulation, utility, yield | Login |
| Feb 10, 2026 | Fund Letters | Steve Scruggs | PVH | PVH Corp. | Consumer Discretionary | Apparel, Accessories & Luxury Goods | Bull | New York Stock Exchange | Apparel, brands, buybacks, cashflow, China, Inventory, Pricing, tariffs, valuation | Login |
| Feb 10, 2026 | Fund Letters | Steve Scruggs | UPBD | Upbound Group, Inc. | Financials | Consumer Finance | Bull | NASDAQ | acquisition, Credit, Default, Lending, leverage, Regulation, Subprime, turnaround, Volatility | Login |
| Feb 10, 2026 | Fund Letters | Steve Scruggs | SFBS | ServisFirst Bancshares, Inc. | Financials | Regional Banks | Bull | New York Stock Exchange | banking, Credit, Deposits, efficiency, NIM, Nonaccrual, realestate, ROE, underwriting | Login |
| Feb 10, 2026 | Fund Letters | Steve Scruggs | AAP | Advance Auto Parts, Inc. | Consumer Discretionary | Automotive Retail | Bull | New York Stock Exchange | aftermarket, Competition, Distribution, Execution, Inventory, Margins, merchandising, restructuring, turnaround | Login |
| TICKER | COMMENTARY |
|---|---|
| AAP | At the individual name level, the largest detractor during the quarter was Consumer Discretionary holding Advance Auto Parts Inc. (AAP). AAP is undertaking a significant turnaround under new leadership. Although we are seeing ROIC enhancing decisions and actions, earnings have yet to inflect. As we have discussed in the past, the current market continues to view only real-time results as those that deserve credit. AAP remains one of our highest convictions long-term ROIC opportunity holdings, but the timing of a larger inflection has been slightly pushed out by inflation dynamics and consumer behavior. |
| CSGS | CSG Systems (CSGS) makes software that manages customer relationships and billing for telecom companies. Under CEO Brian Shephard, the company has done an admirable job adding geographic and customer diversification. On October 29, NEC Corp, the parent of competitor Netcracker, announced that it was acquiring CSGS for $80.70 per share. |
| FN | Fabrinet Information Technology 1.6 |
| IDCC | InterDigital (IDCC) is a R&D organization that develops and acquires wireless communication and video patents. The company has a history of strong financial performance, opportunistically buys back shares, and pays a modest dividend. InterDigital has been successfully renewing its wireless licensing agreements (Apple in 2022, Samsung in 2023) and has a growing stream of recurring licensing revenues across consumer electronics, internet of things (IoT), and automotive customers. CEO Liren Chen joined the company in 2021 from Qualcomm and has been hiring other former Qualcomm managers. The company's share price has increased over the past year due to growing revenue, profitability, and buybacks. |
| NJR | New Jersey Resources (NJR) is a regulated gas utility serving Morris, Ocean and Monmouth counties in New Jersey. New Jersey has a favorable utility regulation environment – NJR gets a 9.6% allowed ROE and realizes practical cost reimbursement mechanisms that show up in the GAAP financials. The company has a culture of disciplined but ambitious capital allocation at the holding company level and has diversified into clean energy, FERC-regulated storage and pipelines and energy services and trading. NJR earns a mid-double digit ROE, strong for a utility holding company. Incredibly, the Fund has owned shares in NJR since inception in 2002. Yet its forward P/E multiple has declined from 20x to 15x. |
| OSK | Oshkosh Corporation (OSK) was added to the SMID strategy in the fourth quarter. OSK is a global manufacturer of specialized vehicles and equipment used in essential and mission-critical applications. The company operates across three primary segments: Access equipment, Vocational vehicles, and Transport, serving customers in construction, airport and municipal services, fire and emergency response, defense, and delivery markets. |
| PLUS | In Q4, we added a new position in ePlus (PLUS). ePlus is a value-added reseller (VAR) and consultant that helps businesses manage their IT spending. The company is well run in our opinion and scores highly on our quality dashboard. Adjusting for ePlus' significant cash holdings, we think the company is inexpensive for its growth and quality profile. |
| PVH | Branded apparel company PVH was a detractor for the quarter and the year. The company's shares experienced considerable price fluctuations, while our appraisal stayed flattish, which was disappointing. This is a company that will likely always have more quarterly earnings volatility than others. The good news is that the long-run earnings per share power remains intact at over $10 per share. |
| REVG | REV Group (REVG) is a specialty vehicle manufacturer. Most of the company's value is in its municipal business where REV Group makes fire trucks and ambulances. The company has been reporting significant backlog and pricing growth in concert with Pierce Manufacturing (owned by Osh Kosh (OSK), another Fund holding), their primary competitor in the fire truck business. CEO Mark Skonieczny has led a significant operational restructuring, sold off the less profitable bus business, and used the proceeds to buy back stock at attractive prices. |
| RLI | We bought specialty insurance company, RLI Corp. (RLI) during the quarter. We believe RLI is differentiated by their expertise in niche areas of the market and their disciplined underwriting focus. They are one of the best underwriters in the U.S., having generated direct underwriting profits for 29 consecutive years across different economic environments. Currently, earned premiums for their Property segment are falling as RLI walks away from unprofitable business in a softening market. Combined ratios in their Casualty business have also increased due to inflationary pressures. While these factors are near-term headwinds, we believe RLI's disciplined underwriting approach positions the company to successfully navigate this cycle and sustain healthy earnings growth over the long term. |
| SFBS | ServisFirst Bancshares (SFBS) is a conservatively run lending franchise helmed by Tom Broughton. Tom hires local bankers but doesn't build branches – this allows for best-in-class efficiency metrics while maintaining a strong and conservative lending culture. Return on equity (ROE) and average earnings per share growth were near 20% for the 10 years through 2024 – very attractive for a conservative, plain vanilla commercial lender. We think that SFBS trailed the regional bank indices in 2025 because of its concentrated exposure to South-Eastern real estate, a large Q3 non-accrual for which the bank obtained additional collateral and disappointing Q3 loan growth. |
| SFM | The biggest detractor for the portfolio was Sprouts Farmers Market, which declined 45% in 2025 (in EUR). While the company has continued to grow, it has done so at a slower pace, which led the market to react sharply, with a one-day correction of 27%. To be honest, the previous valuation of $170 per share was likely excessive, and part of the correction reflects that. However, this remains a high-quality business. Sprouts has some of the best operating margins in its sector and continues to repurchase shares aggressively. Moreover, the company has ambitious expansion plans, aiming to triple its footprint from 450 to 1,400 stores nationwide. CEO Jack Sinclair has emphasised that the health-focused grocer plans to expand "from sea to shining sea," while maintaining its fresh-first mission. It is a steadily growing business with opportunities to open more stores and launch its own products, which should help better control costs and improve margins. The stock currently trades at approximately 15x earnings and 9x EBITDA, with a free cash flow yield of around 6%. The company benefits from expanding margins, a clean balance sheet, solid cash flow, and strong management—qualities that make it a compelling player in the grocery sector. The business still has strong long-term prospects, and we may see its stock return to around $150 per share. |
| SNX | TD Synnex (SNX) is the world's largest IT distributor. The company was formed by the merger of Tech Data and Synnex in 2021 – we first bought TD in 2010 (it was taken private in 2020) and SNX in 2012. SNX evolved with the times selling increasing amounts of software, security, cloud and now AI products. SNX trades at roughly 10x forward earnings, towards the low end of its historical range. The business continues to evolve but the basics are roughly the same as they were ten years ago. If anything, the business has gotten incrementally better – higher margins, higher returns on capital, more scale, consolidation among the large players and more international opportunity. |
| UGI | UGI Corporation is a Pennsylvania-based energy infrastructure company operating regulated natural gas utilities, midstream and marketing assets, AmeriGas retail propane distribution and international LPG services. Under the leadership of a new, highly experienced and highly respected CEO, UGI is implementing an operational reset at AmeriGas while executing a strategic pivot toward its stable utility footprint and underappreciated Midstream assets that we believe are well positioned to capitalize on regional demand. This management-led transformation, coupled with non-core divestitures and an improving balance sheet, should drive greater predictability and support a more durable long-term earnings growth profile. |
| UPBD | Upbound Group (UPBD) is a sub-prime lender that employs a rent-to-own model. The company has two primary segments: Rent-a-Center, which focuses on furniture and appliances through physical stores; and Acima, which offers last look financing through associated retailers including electronics and tire shops. Sub-prime consumers have struggled this year and Upbound's operating results have ticked down. The company has been slow to de-lever after purchasing Acima in 2021 and made another incremental acquisition on Jan. 31, when it bought Brigit, an app which charges subscription fees to access payday lending. UPBD stock is cheap at less than five times forward earnings. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| Industry | Prev Quarter % | Current Quarter % | Change |
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