| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Grandeur Peak delivered a challenging 2025 as markets increasingly rewarded speculation over fundamentals, with the lowest-quality funds outperforming high-quality peers by 10.3% annually over five years. Despite headwinds, the firm's Global Reach portfolio achieved 16.4% earnings growth on a reasonable 18.8x P/E ratio, with ROA double that of the index. Foreign equities led with 32.0% returns versus 12.7% for the U.S., while smaller companies globally outperformed with micro-caps gaining 30.8%. The firm observed significant disconnects between index and fund category returns, particularly in value versus growth, suggesting index returns may understate true opportunity sets. Portfolio changes included reducing name counts for deeper analysis and shifting sector allocations, notably reducing Financial Services exposure while adding Insurance. Looking ahead, they estimate 21.4% earnings growth for 2026 and believe potential mean reversion across quality, value, and active management dimensions could create favorable conditions for their strategy.
Grandeur Peak maintains focus on constructing portfolios of high-quality businesses with attractive earnings growth trading at reasonable valuations, aiming for 12-15% average annual earnings growth that should translate into 10-12% average annual returns over the long term.
The firm continues to ask for patience while waiting for the market to appropriately value attractive metrics, believing earnings growth remains a north star that has historically been highly correlated with stock price over time. They estimate earnings growth for Global Reach will be 21.4% in 2026, even higher than the 16.4% achieved in 2025.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 28 2026 | 2025 Q4 | - | earnings growth, Foreign, Quality, small caps, SMID, value | - | The market has increasingly rewarded companies with weaker fundamentals, with the lowest-quality funds outperforming higher-quality peers by 10.3% annually over the past five years. Grandeur Peak continues to focus on high-quality businesses despite this headwind, maintaining their quality-focused investment style. Foreign SMID value significantly outperformed growth, with value funds returning 37.2% versus 20.0% for growth funds. The five-year value outperformance has been substantial, with index data showing value beating growth by 35.4% while fund categories show a 68.4% advantage. Globally, smaller companies outperformed with micro-caps gaining 30.8% ahead of large caps. However, small cap performance varied dramatically by geography, with Foreign Developed Small Cap returning 34.1% versus only 11.6% for U.S. Small Cap. |
| Oct 28 2025 | 2025 Q3 | - | Artificial Intelligence, earnings growth, Governance, Japan, Quality Investing | - | The firm criticized speculative rallies in low-quality, AI-linked stocks and reaffirmed its focus on fundamentals and earnings-driven investing. Managers emphasized opportunities in Japan, where governance reforms and improved capital efficiency are driving shareholder returns amid slow AI adoption. Despite short-term underperformance, Grandeur Peak expects quality and disciplined valuation to prevail as market fundamentals reassert leadership. |
| Jul 21 2025 | 2025 Q2 | - | diversification, Global Equities, innovation, long-term, productivity | - | The letter discusses global diversification as a structural advantage amid uneven economic growth and geopolitical fragmentation. Management highlights that innovation, productivity gains, and rising middle classes outside the U.S. support long-term global equity returns. A bottom-up approach is emphasized to exploit regional and sector-specific inefficiencies. |
| 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 |
AIAI has been integrated into RGA's research process through tools like NotebookLM, Gems in Gemini, and Claude Code. The firm views AI as a force multiplier for human judgment rather than a replacement, emphasizing the Kasparov Law principle. They believe the market narrative around AI displacement is swinging to unhelpful extremes, creating investment opportunities. |
Machine Learning Automation Software Productivity Innovation |
JapanJapan offers tremendous value opportunities with one-third of companies trading below book value. Corporate governance reforms, record shareholder returns, and structural changes like unwinding cross-holdings are unlocking value. The investment opportunity is in early innings and could last several years. |
Corporate Governance Value Reforms Shareholder Returns Cross Holdings | |
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 | |
| 2025 Q2 |
GlobalInternational and emerging market equities dominated performance with annual returns above 30%, reinforcing the case for global diversification. Non-US developed markets gained 31.9% while emerging markets gained 33.6% for 2025. |
Diversification International Emerging Markets Outperformance Currency |
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