| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.8% | 6.07% | 6.07% |
The FPA Queens Road Small Cap Value Fund returned 6.07% in Q1 2026, outperforming the Russell 2000 Value Index's 4.96% return. The managers continue their disciplined approach of rebalancing toward higher quality holdings, emphasizing balance sheet strength, earnings consistency, and returns on capital. They added two new positions in First American Financial and Dorman Products while making a significant addition to ePlus. The fund sold positions in Qorvo, VSE Corp, and Deckers, and substantially reduced Everus Construction due to valuation concerns. Key contributors included Fabinet, which benefits from data center demand despite valuation concerns, REV Group before its acquisition by Terex, and TD Synnex following strong earnings. The managers maintain their thesis that small-caps are relatively cheap compared to large-caps and reasonably valued absolutely, with quality small companies trading at attractive valuations. They believe reduced investor competition in small-caps creates opportunities for patient, fundamental investors willing to look three-to-five years ahead.
The fund focuses on quality small-cap value companies with strong balance sheets, earnings consistency, and high returns on capital, believing that small-caps are relatively cheap compared to large-caps and that reduced competition in the space creates opportunities for long-term fundamental investors.
We are diligently focused on the long-term fundamental performance of our investments but can't control short-term performance. We never make predictions about market direction, but we feel good about the Fund's long-term prospects.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 31 2026 | 2026 Q1 | CNXC, DECK, DORM, ECG, FAF, FN, GPK, LFUS, PLUS, QRVO, REVG, RLI, SFM, SKWS, SNX, UPBD, VSEC | long-term, Quality, rebalancing, small caps, value |
FAF DORM FN SNX LFUS SFM RLI |
FPA Queens Road outperformed in Q1 2026 while continuing to upgrade portfolio quality through disciplined stock selection. The managers added positions in title insurer First American Financial and auto parts manufacturer Dorman Products, both trading at attractive valuations with strong fundamentals. They maintain conviction that small-caps offer compelling opportunities for patient value investors focused on balance sheet strength and earnings consistency. |
| 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 |
FPA Queens Road Small Cap Value Fund delivered 13.36% returns in 2025, outperforming its benchmark despite Q4 underperformance in speculative markets. The fund's quality-focused approach targets overlooked small caps trading at significant discounts to large caps. With capital fleeing small value strategies, the managers see expanding opportunities in strong franchises with compressed valuations, maintaining disciplined positioning with 10.1% cash. |
| Nov 8 2025 | 2025 Q3 | AAPL, ESGR, FN, IAC, IDCC, IMKTA, MGM, NNI, NVDA, OSK, REVG, RLI, SAIC, SFM, SNX, THS, VSH | Defensive, Disciplined, downside protection, Quality, small cap, value | - | FPA Queens Road Small Cap Value Fund's Q3 underperformance reflects its disciplined quality-focused approach during a speculative rally favoring momentum and low-quality stocks. The fund's defensive positioning and four-pillar investment process targeting resilient compounders with strong balance sheets continues to deliver on its mandate of outperforming in down markets while building long-term value through disciplined stock selection. |
| Aug 4 2025 | 2025 Q2 | AAP, ANGI, CNXC, CSGS, DAR, FN, GIII, IAC, IDCC, IMKTA, LFUS, NNI, PVH, REVG, SCHL, SFM, SYNA, THS, UGI, VSH | Passive investing, Quality, small caps, tariffs, technology, value |
IMKTA NNI |
Small caps are generationally cheap versus large caps, with quality small companies trading at modest premiums unlike expensive large caps. The fund outperformed significantly in Q2 2025 through diversified holdings of quality companies at reasonable valuations. Tariff volatility created deployment opportunities while passive investing distortions continue creating inefficiencies in the small-cap market for active managers to exploit. |
| Mar 31 2025 | 2025 Q1 | AAP, ARW, AX, BAM, CNO, CNXC, CSWI, IDCC, LFUS, MDU, NJR, OSK, PVH, REVG, SCHL, SFM, SYNA, UGI, UPBD, VSH | consumer, Electronics, Quality, small caps, tariffs, Utilities, value | - | Fund outperformed Russell 2000 Value by 520 basis points in Q1 amid tariff-driven volatility, maintaining defensive positioning with 10.3% cash. Manager sees small-caps as extremely cheap versus large-caps but emphasizes quality focus given index junkiness. Adding to utilities and electronics companies as valuations improve, remaining patient and disciplined while expressing confidence in three-to-five year prospects. |
| Dec 31 2024 | 2024 Q4 | AAP, AGCO, ALTM, ARW, CNXC, CSGS, CSWI, DAR, DECK, FN, IDCC, JBTM, LEVI, LFUS, MATV, MDU, OSK, QRVO, SAIC, SCHL, SFM, SYNA, UGI, UPBD, VSH | active management, compounders, Quality, Russell 2000, small cap, value | - | FPA Queens Road Small Cap Value outperformed in Q4 with a focus on quality compounders at reasonable valuations. The fund trimmed top performers that reached position limits while adding to cyclically weak names. Despite expensive markets and difficulty finding quality at reasonable prices, the manager believes quality small-caps offer attractive diversification when large-cap indices are expensive and concentrated. |
| Oct 30 2024 | 2024 Q3 | AAN, AAP, ALTM, AZO, CNXC, CSWI, DAR, DECK, FN, HMN, IDCC, ORLY, SFM, VSH | - | - | |
| Jul 31 2024 | 2024 Q2 | AAN, AGCO, ALTM, ARW, AX, BAM, CNO, CNXC, CSGS, CSWI, DAR, DCO, DECK, EQC, ESGR, FN, FSTR, GGG, GIII, GPK | active management, earnings, Quality, small caps, value | - | Small-cap value fund outperformed benchmark despite negative quarter, emphasizing active management to avoid 'junky' index constituents. Focus on quality companies with consistent earnings trading at discounts to large-cap peers. Key winners included AI-beneficiary Fabrinet and expanding grocer Sprouts. Maintains disciplined approach with 10% cash, seeking quality compounders over 3-5 year horizons. |
| Apr 15 2024 | 2024 Q1 | AAN, AEL, AGCO, ALTM, ARW, AX, CNO, CNXC, CSGS, CSWI, DAR, DCO, DECK, ESGR, FN, GGG, GIII, JBT, LEVI, MDU | Balance Sheet, compounders, Quality, small cap, valuation, value | - | FPA Queens Road Small Cap Value Fund outperformed the Russell 2000 Value Index in Q1 2024, returning 3.36% versus 2.90%. The fund trimmed expensive high-quality compounders and redeployed into cheaper opportunities while maintaining focus on balance sheet strength and quality. Cash position at 9.6% reflects disciplined approach in challenging environment for finding quality small-cap investments. |
| Jan 31 2024 | 2023 Q4 | AX, CHD, CNCR, DECK, DLG, FN, GIII, HMN, IDCC, MSTX, PVH, SFBS, TGHS, UNFI, VSHY | Cash, Margin Of Safety, Quality, small caps, value | - | FPA Queens Road delivered strong Q4 performance with disciplined value investing in quality small-caps. The fund maintains 9.5% cash while selectively adding to existing positions rather than compromising standards. Management expresses increased confidence in long-term prospects despite macro uncertainty, believing current holdings will appreciate significantly over the next three to five years. |
| Sep 30 2023 | 2023 Q3 | AAN, AEL, CNXC, DAR, DECK, FN, GIII, HNI, IAC, IDCC, LTHM, MTZ, SFBS, SFM, SNX, UGI, UNFI | long-term, Margin Of Safety, Quality, small caps, value | - | Small-cap value fund outperformed benchmark despite negative Q3 returns. Added Aaron's position while maintaining 9.7% cash due to selective investment criteria. Manager optimistic about long-term prospects despite macro uncertainty, citing attractive valuations and quality management teams. Disciplined approach prioritizes margin of safety over full capital deployment. |
| 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 |
|---|---|---|
| 2026 Q1 |
Small CapsSmall-caps as an asset class are relatively cheap compared to large-caps and reasonably valued from an absolute perspective. There are significant differences in the quality of small public companies, with shares of quality small companies selling at very reasonable valuations. Small-caps are out of favor and the number of investors looking at small-caps through a long-term, fundamental lens has declined. |
Value Quality Opportunity |
Data CentersFabinet dominates its niche in optical networking equipment for data centers, especially those used to train artificial intelligence models. The company's highest bandwidth products are finding increasing demand in data centers. However, data center spending expectations may have gotten ahead of itself in stock prices. |
AI Networking Infrastructure | |
QualityThe fund continues to rebalance towards higher quality holdings, with the three most important elements being balance sheet strength, earnings consistency, and returns on capital. Balance sheet strength helps companies overcome challenges and protects on the downside, while earnings consistency indicates continued profitability and high returns on capital suggest efficient resource use. |
Balance Sheet Earnings Returns | |
| 2025 Q4 |
AfricaFund delivered exceptional performance with 67.21% returns in 2025, significantly outperforming the 44.7% benchmark. Portfolio companies show strong fundamentals with forward PE of 6.1x, dividend yield of 8.0%, and expected EPS growth of 19.2%. Manager emphasizes that valuations remain attractive despite strong performance, with no multiple expansion driving returns. |
Frontier Markets Emerging Markets Equities Value Growth |
LiquidityManager provides detailed analysis of liquidity challenges in African frontier markets, noting structural factors including foreign investor participation, local retail involvement, and institutional buy-and-hold behavior. Acknowledges liquidity constraints but expects improvement in current bull market environment with increased investor interest. |
Market Structure Trading Redemptions Volatility | |
CurrenciesComprehensive review of currency performance across African markets shows mixed results, with West African Franc gaining 0.6% while Ghanaian Cedi and Nigerian Naira declined significantly. Manager actively times investments to buy when currencies are weak, citing Kenya as successful example and Nigeria as potential opportunity. |
Foreign Exchange Depreciation Timing Risk | |
| 2025 Q3 |
QualityThe fund follows a disciplined four-pillar process focusing on quality companies with strong balance sheets, valuation discipline, strong management teams, and growing industries with stable competitive dynamics. Quality is defined by steady operating margins and high returns on capital, allowing companies to compound value over time. |
Balance Sheets Returns On Capital Operating Margins Compounders Downside Protection |
ValueThe fund practices valuation discipline, believing their stocks hold up better when disappointing things happen and investor expectations come down. They avoid value traps where fundamentals are deteriorating and focus on companies trading below intrinsic value with margin of safety. |
Valuation Discipline Margin Of Safety Value Traps Intrinsic Value Downside Protection | |
Small CapsThe fund invests exclusively in small-capitalization U.S. companies, defined as those with market capitalization no greater than the largest company in the Russell 2000 Index. Performance is expected to outperform in down markets and trail in speculative markets due to their disciplined process. |
Russell 2000 Small Cap Value Downside Capture Market Cycles Defensive Positioning | |
| 2025 Q2 |
Small CapsSmall caps are generationally cheap compared to large caps, trading at the widest discount to the S&P 500 since the tech bubble 25 years ago. High-quality small companies command only a modest premium over lower-quality small companies, unlike large caps where quality commands significant premiums. |
Small Caps Value Quality Discount |
QualityThe fund focuses on quality companies defined by balance sheet strength, earnings consistency, and returns on capital. Quality small companies are trading at very modest price premiums compared to lower-quality small companies, creating attractive opportunities for selective investors. |
Quality Balance Sheet Earnings Returns | |
ValueThe fund's portfolio P/E has trended modestly down over ten years and is currently cheap relative to its own history. The manager emphasizes buying quality companies at reasonable valuations with a three-to-five year investment horizon. |
Value Valuation P/E Discount | |
| 2025 Q1 |
Small CapsManager emphasizes that small-caps are extremely cheap relative to large-caps but warns of the relative junkiness of small-cap indices. Quality small companies are still expensive but becoming more attractive from a valuation perspective as the market declines. |
Quality Value Junkiness Valuation Outperformance |
ValueFund follows a disciplined value approach focusing on companies with strong balance sheets, reasonable valuations, quality management, and favorable industry economics. Manager continues to be conservative when allocating capital and buying new positions. |
Discipline Balance Sheet Management Industry Economics Conservative | |
Trade PolicyPresident Trump announced tariffs on April 2nd, sending equity markets down and volatility up. Manager discusses how extremely high tariffs hurt small businesses that lack working capital to pay tariffs, with small businesses accounting for over 80% of US employment. |
Tariffs Volatility Small Business Employment Working Capital | |
| 2024 Q4 |
QualityThe fund focuses on high quality compounders with strong returns on capital, consistent earnings, and prudent balance sheets. The manager emphasizes that small-cap indices are generally 'junkier' with fewer quality companies than large-cap indices, making active management essential to find quality small companies trading at reasonable valuations. |
ROIC Earnings Balance Sheet Compounders Active Management |
ValueThe fund seeks companies trading within a 'range of reasonableness' for valuations, accepting that stocks are generally expensive but finding opportunities in quality small-caps that trade at significant discounts to large-caps. The manager trims positions when they reach the high end of reasonable valuations. |
Valuation Discount Reasonable Expensive Trim | |
Small CapsThe fund invests exclusively in small-capitalization companies, noting that while small-caps generally trade at discounts to large-caps, the indices contain many lower-quality companies. The manager believes quality small companies outperform when controlling for quality factors, citing AQR research showing consistent outperformance. |
Russell 2000 Market Cap Outperformance Discount Index | |
| 2024 Q2 |
QualityThe fund emphasizes quality companies with consistent earnings and high returns on capital. They analyze earnings consistency as a key quality metric, showing that quality small-cap companies trade at lower valuations than large-cap peers with similar quality characteristics. |
Earnings Value Small Caps |
ValueSmall-cap stocks are significantly cheaper than large-cap stocks on a price-to-earnings basis when controlling for quality metrics. The fund finds selective opportunities in quality small companies at reasonable valuations despite the broader small-cap index being 'junky'. |
Small Caps Quality Earnings | |
| 2024 Q1 |
QualityThe fund emphasizes high-quality compounders with strong balance sheets, high returns on capital, and steady margins. Quality has been a large contributor to outperformance during market downturns. The manager prefers companies where earnings will be higher in three to five years. |
Compounders Balance Sheet Returns Margins Outperformance |
ValueSmall caps remain cheap relative to large caps on a headline basis, though the discrepancy is largely compositional. The fund uses free cash-flow discount valuation models and demands a margin of safety while being willing to pay reasonable prices for quality. |
Valuation Margin of Safety Discount Free Cash Flow Cheap | |
Small CapsThe fund focuses exclusively on small-cap companies defined as those with market capitalization no greater than the largest company in the Russell 2000 Index. Small caps have underperformed substantially over the last 10 years but small value has outperformed over longer periods. |
Russell 2000 Market Cap Underperformance Long Term Small Value | |
| 2023 Q4 |
ValueThe fund focuses on acquiring quality companies at reasonable prices with a margin of safety. Current valuations, competitive positions, and experienced management teams at the fund's holdings give confidence they will be worth more in three to five years than today. |
Value Margin of safety Quality Reasonable prices Undervalued |
| 2023 Q3 |
ValueThe fund focuses on acquiring quality companies at reasonable prices with a margin of safety. Current valuations, competitive positions, and experienced management teams give confidence that holdings will be worth more in three to five years than today. |
Value Quality Margin of Safety Undervalued Reasonable Prices |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31, 2026 | Fund Letters | FPA Queens Road Small Cap Value Fund | SFM | Sprouts Farmers Market | Grocery Stores | Food & Staples Retailing | Neutral | NASDAQ | growth deceleration, Natural Organic Grocery, New Store Economics, retail, Returns on Capital, Strong Margins, Value Multiple | Login |
| Mar 31, 2026 | Fund Letters | FPA Queens Road Small Cap Value Fund | RLI | RLI Corp | Insurance - Property & Casualty | Insurance | Bull | New York Stock Exchange | combined ratio, Long-term holding, Niche markets, premium valuation, ROE, specialty insurance, underwriting discipline | Login |
| Mar 31, 2026 | Fund Letters | FPA Queens Road Small Cap Value Fund | FAF | First American Financial | Insurance - Specialty | Insurance | Bull | New York Stock Exchange | Cyclical Recovery, Data Moat, dividend yield, housing market, Real Estate Services, Share Buybacks, title insurance | Login |
| Mar 31, 2026 | Fund Letters | FPA Queens Road Small Cap Value Fund | DORM | Dorman Products | Auto Parts | Auto Components | Bull | NASDAQ | Aftermarket Auto Parts, defensive, High Returns on Capital, Non-cyclical, Quality Growth, Share Buybacks, tariff impact | Login |
| Mar 31, 2026 | Fund Letters | FPA Queens Road Small Cap Value Fund | FN | Fabrinet | Electronic Components | Electronic Manufacturing Services | Bull | New York Stock Exchange | AI infrastructure, compounder, contract manufacturing, data centers, Niche Dominance, Nvidia Customer, optical networking | Login |
| Mar 31, 2026 | Fund Letters | FPA Queens Road Small Cap Value Fund | SNX | TD SYNNEX | Electronics & Computer Distribution | Technology Distributors | Bull | New York Stock Exchange | business transformation, GDP growth, IT distribution, market leader, Scale Advantages, Software Services, Value Multiple | Login |
| Mar 31, 2026 | Fund Letters | FPA Queens Road Small Cap Value Fund | LFUS | Littelfuse | Electronic Components | Electronic Components | Bull | NASDAQ | Cyclical Recovery, data centers, Electronic Components, high margins, Niche Manufacturing, Returns on Capital, Tariff Navigation | 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 |
| 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 |
| 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 |
| TICKER | COMMENTARY |
|---|---|
| FAF | First American Financial is a title insurer that also facilitates escrow and closing services. Title insurance is relatively consolidated and, crucially, First American also owns a leading data repository of transactions called the title plant. Revenues are currently depressed with residential existing home sales averaging about 4m vs. a more normal rate of about 5.5m. FAF is currently overcapitalized, pays a ~4% dividend yield and has historically, opportunistically bought back shares. |
| DORM | Dorman Products manufactures and sells aftermarket car parts. The company scores well on our dashboard, having grown historically at a consistent mid-single digit rate, with high returns on capital in a non-cyclical industry. Debt to EBITDA is less than 1x, and DORM uses its cash flow to buy back stock. 2026 earnings will tick down as the company laps an accounting treatment that allowed Dorman to put lower cost, pre-tariff inventory through its cost of goods sold. Dorman is currently trading at a discount to its historical earnings multiple and we believe its shares are attractively priced. |
| PLUS | We made a significant addition to our holding in ePlus. We added ePlus to the portfolio in the second half of 2025 and a discussion of the company can be found in the 25Q4 letter. |
| QRVO | Qorvo manufactures radio frequency chips, primarily for cell phones, and is being acquired in a cash and stock deal by competitor Skyworks. |
| VSEC | VSE Corp services the commercial aero aftermarket and has performed exceptionally well in a cyclically hot market. We had been trimming and the Fund's position was small going into Q1. |
| DECK | Deckers, owner of the UGG and Hoka shoe brands, was another long-time winner for the Fund. Similarly, we had already substantially trimmed our position in DECK before our full exit in Q1. |
| ECG | We substantially reduced our position in Everus Construction, an electrical contractor that has benefitted from its exposure to data center construction and has gotten quite expensive in our view. |
| REVG | RevGroup was acquired by Terex in a stock and cash deal. We continue to hold shares in the combined company, Terex. REV Group 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, their primary competitor in the fire truck market. 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. |
| FN | Fabinet is a contract manufacturer specializing in optical networking equipment and modules. This is complex work at small scales, and Fabinet dominates its niche. The company has experienced impressive historical revenue growth and growing operating margins. Fabinet's highest bandwidth products are finding increasing demand in data centers, especially those data centers used to train artificial intelligence models. In 2023, Fabinet disclosed that Nvidia is a 10% customer. FN's stock price has more than doubled since April of last year on rising expectations for data center spending. We believe such spending, as capitalized in FN's stock price, may have gotten ahead of itself and have been trimming. But the need for high bandwidth networking will continue, Fabinet dominates its core telecom and data center markets and has prudently diversified into a handful of other niches that reward precise assembly at small scale. We believe Fabinet will be a compounder for many years, and we continue to hold a position. |
| SNX | TD Synnex is the largest IT distributor globally. The company has done a good job diversifying away from its historical position in hardware (PCs, peripherals, servers, networking equipment, etc.) and into software, security and services. TD Synnex is modestly levered and uses its cash flow to repurchase shares and pay dividends. The company reported blow-out earnings on Mar 31, which caused the stock price to jump. We think that TD Synnex is exceptionally well run, has scale and scope advantages against smaller competitors and that profits will continue to grow with IT spending at a GDP+ rate. SNX trades at roughly 11x forward earnings and continues to be a top 5 holding for the Fund. |
| LFUS | Littelfuse manufactures niche electrical components including fuses, sensors, passives and semiconductors that are sold into a broad array of end markets. Mid-single digit growth is supplemented by tuck in applications and the company has high teens operating margins and strong returns on capital. We significantly added to our position in April 2025 when the stock sold off on tariff fears. Since then, the LFUS share price has more than doubled as the company demonstrated it could navigate tariffs, sales and orders accelerated out of their post-Covid trough, and the company recorded incremental sales into data centers. |
| SFM | Sprouts Farmers Market is a supermarket chain focusing on fresh, natural, and organic products. The company has strong operating margins, attractive returns on capital, and excellent new store economics. Through April 2025, SFM's stock performed extremely well in concert with strong revenue growth and rising earnings estimates. As SFM's valuation increased, we trimmed our position in late 2024 and early 2025. Then, when growth slowed in the second half of 2025, SFM's share price collapsed. Today, SFM trades at a low-teens multiple of forward earnings and we are comfortable holding a mid-sized position. |
| RLI | RLI Corp is a specialty property and casualty insurer. The company is extremely selective in writing business. Its diversified lines include niche-y areas such as school buses, Hawaii homeowners, and surety. RLI's unique culture, incentive structures and willingness to walk away from unprofitable business have historically led to exceptional financial performance. From 2015 through 2024, the company's combined ratio has averaged 89.3% and its ROE has averaged 16.6% despite being weighed down by excess capital. We have owned RLI since 2011 and the stock usually commands a premium valuation – we were pleased to be able to add to our position at roughly 20x this year's earnings. |
| GPK | Graphic Packaging is a vertically integrated paper packaging manufacturer with plants in the U.S. and Europe. The company is suffering from a combination of weak industry fundamentals, massive cost overruns at its new Waco, TX recycled paperboard plant, and too much debt. In October, CFO Stephen Scherger left to join Amcor and then in December, long-time CEO Mike Doss left under acrimonious circumstances. We are not enthused about the current situation and currently hold a less than 50 bp position in GPK. |
| CNXC | Concentrix is one of two top customer experience (CX) vendors globally. The company began by managing call centers but has since evolved into a high-tech business process outsourcer (BPO) that also designs and runs customer-facing websites and apps, integrates the data, and optimizes a client's customer interactions. The March, 2023 acquisition of WebHelp helped consolidate the industry but left the company with roughly three turns of debt. Over the past two years, growth and margins have declined, and the market is concerned that Concentrix's core businesses are being disrupted by AI. The company trades at very low valuation multiples, but we share the market's concern and currently hold less than 50 bps of CNXC. |
| UPBD | Upbound Group lends to sub-prime consumers in 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 are struggling but Upbound's operating results have hung in there. The company has been slow to de-lever after purchasing Acima in 2021 and made another incremental acquisition on Jan. 31, 2025 when it bought Brigit, an app that charges subscription fees to access payday lending. UPBD stock is cheap at less than five times earnings. But we have been slow to add given the company's leverage and questions about its business model. |
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|---|---|---|---|---|---|
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