| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 11.9% | 6.8% | 17.6% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 17.6% | 24.5% | 22.9% | 4.3% | 36.5% | 10.8% |
Invesco Small Cap Value Fund delivered strong Q4 2025 performance, returning 6.79% versus 3.26% for the Russell 2000 Value Index, driven primarily by stock selection in information technology. The managers employ an intrinsic value approach, seeking companies significantly undervalued on an absolute basis with long-term capital appreciation potential. During the quarter, market volatility provided opportunities to add new positions across various sectors while eliminating holdings to fund investments with better upside potential. Notable additions included Charles River Laboratories, Globus Medical, and ArcBest, purchased at attractive discounts to intrinsic value estimates. Key contributors included Coherent Corp, which benefited from AI data center demand, and Globus Medical, which reported strong organic growth. The fund maintains greater exposure to economically sensitive stocks compared to peers. Looking forward, the managers see compelling long-term opportunities in small-cap value stocks, which trade at historical discounts to large-cap stocks, with the Russell 2000 Value Index P/E multiple representing attractive relative valuation.
The fund employs an intrinsic value approach to identify significantly undervalued small-cap companies, maintaining a long-term investment horizon to capitalize on the gap between market prices and estimated intrinsic value for attractive capital appreciation potential.
The managers believe small-cap value stocks appear attractive relative to S&P 500 Index stocks, with the Russell 2000 Value Index P/E multiple at a historical discount. They see this valuation as representing a compelling long-term investment opportunity, with greater upside to intrinsic value in many small-caps compared to large-caps.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 30 2026 | 2025 Q4 | ACM, ARCB, COHR, CR, CRL, ENTG, EXPE, GL, GMED, HBM.TO, KBR, LITE, MKSI, NRG, PENN, SAIA, WAL, WBS | AI, Biotech, financials, healthcare, Intrinsic Value, small cap, technology, value |
CRL GMED ARCB GTLB LITE |
The fund employs an intrinsic value approach to stock selection, seeking companies significantly undervalued on an absolute basis. At quarter end, the difference between market… |
| Oct 20 2025 | 2025 Q3 | AL, COHR, DAVA, EPAM, GLOB, LITE, MOH, MP, SAIA | energy, financials, industrials, small caps, Value Investing | - | The fund emphasizes opportunities in financials and industrials as small caps remain undervalued versus large caps. Banks and insurers benefit from stable credit quality and… |
| Aug 7 2025 | 2025 Q2 | BECN, CAKE, COHR, GLOB, IART, LITE, LIVN, NRG, QDEL, TKR | Balance Sheets, cash flow, Mean reversion, small caps, valuation | - | The letter emphasizes historically wide valuation discounts in small-cap equities relative to large caps, driven by years of underperformance and risk aversion. Management argues that… |
| Apr 30 2025 | 2025 Q1 | QDEL | - | - | - |
| Feb 11 2025 | 2024 Q4 | HUN, ICLR, LITE, MSM, MXL, ONTO, TECK, VST | - | - | - |
| Sep 30 2024 | 2024 Q3 | ATGE, BECN, COHR, HSIC, LITE, MXL, NFE, QDEL, RMBS, SPB, WAL | - | - | - |
| Jun 30 2024 | 2024 Q2 | - | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
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 |
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 |
EnergyBHE operates regulated utilities serving 5.4 million customers and natural gas pipelines. The business faces significant investment needs driven by AI computing demand and wildfire risk mitigation, particularly in the Western U.S. |
Regulated Utilities Natural Gas Renewable Energy Grid Infrastructure |
FinancialsEuropean banks have been rehabilitated after years in purgatory, with returns of 77% in 2025. Return on equity has normalized above 12% following exit from ultra-low rates, while capital positions have been rebuilt. However, supportive factors are well-appreciated by markets, reflected in significant valuation re-rating. |
Banks Return On Equity Interest Rates Capital Valuations | |
IndustrialsThe fund increased exposure to high-quality industrial businesses with potential for cyclical upturn. Added Quanta Services for AI data center build-out, Hubbell for electrical grid upgrades, Old Dominion for freight cycle recovery, and Waste Connections for secondary market focus. |
Infrastructure Automation Transportation Electrical Equipment Waste Management | |
| 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 |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 30, 2026 | Fund Letters | Jonathan Edwards | CRL | Charles River Laboratories International | Health Care | Life Sciences Tools & Services | Bull | New York Stock Exchange | Biotech-Spending, Cro, drug development, Outsourcing, valuation discount | Login |
| Jan 30, 2026 | Fund Letters | Jonathan Edwards | GMED | Globus Medical | Health Care | Medical Devices | Bull | New York Stock Exchange | Integration-Risk, Medical devices, Orthopedics, recovery, Spine | Login |
| Jan 30, 2026 | Fund Letters | Jonathan Edwards | ARCB | ArcBest | Industrials | Air Freight & Logistics | Bull | NASDAQ | efficiency, Freight-Cycle, Logistics, Ltl-Shipping, operating leverage | Login |
| Jan 30, 2026 | Fund Letters | Jonathan Edwards | GTLB | Chart Industries | Industrials | Industrial Machinery | Bear | New York Stock Exchange | capital recycling, clean energy, M&A, Opportunity-Cost | Login |
| Jan 30, 2026 | Fund Letters | Jonathan Edwards | LITE | Lumentum Holdings | Information Technology | Optical Components | Bull | NASDAQ | AI infrastructure, data centers, margin expansion, Optical-Components, secular growth | Login |
| TICKER | COMMENTARY |
|---|---|
| ACM | AECOM is the world's largest engineering, design, and construction management firm. Over the past six years, the company has undergone a structural transformation, divesting its construction operations and exiting lower-return emerging markets to focus exclusively on Design Engineering and Project Management. We believe AECOM warrants a valuation multiple of 18x–20x, consistent with other high-quality professional service companies, rather than the 10x–14x typical of construction firms. On this basis, we estimate intrinsic value at $120–$180 per share, representing significant upside from the current price of $97. |
| ARCB | ArcBest is a transportation and logistics company. Based on our view, its diversified operations and strategic investments position it to benefit from a freight cycle recovery. |
| COHR | Copart is the leading global marketplace for damaged and end-of-life vehicles, sitting between insurance companies that need to dispose of total-loss cars and a fragmented, worldwide base of dismantlers, rebuilders, dealers, and exporters. Against that backdrop, the last four quarters have been stronger in the business than in the stock. Revenue and operating income have continued to grow, helped by steady fee-per-unit gains, higher international contribution, and ongoing expansion of yards and services. These concerns about near-term volume and a supposedly resurgent competitor have weighed on sentiment, and the share price has reflected that—Copart is down roughly 30% in 2025. |
| CR | This industrial technology company provides technological solutions to secure, detect and authenticate physical and digital assets. Shares declined amid reignited trade tensions with China. Though the company reported better-than-expected earnings and reduced its earnings outlook for the full year, management reduced its earnings guidance which also sent shares lower. |
| CRL | This leading contract research organization (CRO) supports the discovery, development and safe manufacture of new drugs, biologics, vaccines and medical devices. It has a diversified portfolio with exposure to high growth therapeutic areas. Slower spending on biotech and pharma research and development has been a headwind to the stock, which gave us an opportunity to invest at what we saw as an attractive discount to our estimate of intrinsic value. |
| ENTG | For Entegris (ENTG), margin pressure from expansionary efforts, combined with lackluster demand, helped contribute to lower earnings expectations. |
| EXPE | Expedia, which was a recent purchase, also posted strong results and raised the outlook going forward. We added to our exposure to Expedia and continue to hold both stocks in the Fund. |
| GMED | Globus Medical, Inc. is a medical technology company focused on spine implants and motion preservation solutions. The stock outperformed during the quarter, driven by management's report of a re-acceleration in the core spine business to double-digit growth and evidence of renewed market share gains. Integration and profitability metrics from prior acquisitions are tracking ahead of expectations, and with most integration initiatives substantially complete, the company appears well-positioned to benefit from improved operating leverage in 2026. |
| HBM.TO | Listed as one of the top 5 components of COPX with forward P/E ratio shown in chart |
| LITE | Lumentum is a leading supplier of lasers to the AI ecosystem. The stock rallied due to strong demand for its products in hyperscale and AI data centers, along with general apparent optimism surrounding AI infrastructure stocks. |
| MKSI | MKS shares advanced nicely during the quarter as the business continues to benefit from end markets picking up. Specifically, their Electronics and Packaging business is showing accelerating growth, partly due to AI-related applications. |
| PENN | PENN Entertainment operates physical casinos in the US, a long with a growing digital gaming and sports-betting platform. Shares declined after third quarter earnings missed expectations. The company's announcement ending its partnership with ESPN also seemed to dampen investor sentiment. |
| SAIA | We sold 5 positions to zero in Q4: one in industrials: Saia |
| WAL | We sold our investment in Western Alliance upon finding the company was exposed to the First Brands bankruptcy via a note-on-note lending line to Jeffries/Point Bonita Capital. Our worst-case scenario analysis led us to conclude that there was a small but real probability of needing to raise capital. Credit fears could be an overhang on the shares for an extended period. Despite the recent price weakness, this has been a very successful investment for us. |
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