| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | 7.0% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 7.0% | 40.3% | 28.4% | 10.3% | 32.4% | 9.0% |
Legacy Ridge Capital returned 7% net in 2025, underperforming broader markets due to high cash allocation and concentrated value approach. The fund maintains 30% cash as defensive positioning against stretched market valuations, particularly in large tech stocks where the Magnificent 7 average only 1.9% free cash flow yields. Core holdings include energy companies Mach Natural Resources and Kimbell Royalty Partners, which exemplify the firm's business-owner mentality through disciplined capital allocation and high dividend yields of 19.3% and 10.8% respectively. The portfolio's 6% dividend yield provides steady cash flow for redeployment opportunities. Management acknowledges the opportunity cost of high cash levels but views current positioning as prudent given expensive market conditions. The investment philosophy centers on buying businesses at discounts to intrinsic value based on discounted cash flows, contrasting with speculative growth stocks like Palantir trading at extreme valuations. The firm expects market corrections to create attractive buying opportunities for patient capital.
Maintain significant cash reserves to capitalize on market dislocations while focusing on undervalued dividend-paying businesses, particularly in energy sector, that demonstrate disciplined capital allocation and strong cash flow generation.
Cautiously optimistic with significant cash reserves positioned for opportunistic deployment when attractive valuations emerge. Expects continued focus on dividend-paying businesses with strong capital allocation policies while avoiding expensive growth stocks.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 30 2026 | 2025 Q4 | AAPL, AMZN, GOOGL, KRP, META, MNR, MSFT, NVDA, PII, PLTR, TSLA | Capital Allocation, Cash, dividends, energy, Exploration & Production, value | MNR | Fund maintains 30% cash position as defensive measure against expensive market valuations. Cash provides optionality for opportunistic deployment when attractive opportunities arise. Management views current… |
| Jul 21 2025 | 2025 Q2 | PII | Balance Sheets, cash flow, dispersion, Intrinsic Value, value | PII | The letter focuses on value investing in underappreciated companies trading below intrinsic worth. Management highlights balance sheet strength, cash flow durability, and conservative capital allocation… |
| Jan 31 2025 | 2024 Q4 | - | - | - | - |
| Jul 29 2024 | 2024 Q2 | EQT, ETRN, NRG, SMLP, VST | - | - | - |
| Jan 31 2024 | 2023 Q4 | ENGH, ETRN, VST | - | - | - |
| Jul 28 2023 | 2023 Q2 | ETRN | - | - | - |
| Jan 31 2023 | 2022 Q4 | DCP, EPD, NRG, SMLP, VST | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
CashFund maintains 30% cash position as defensive measure against expensive market valuations. Cash provides optionality for opportunistic deployment when attractive opportunities arise. Management views current cash levels as necessary given stretched valuations across broader markets. |
Cash Management Liquidity Defensive Positioning Opportunity Cost Capital Allocation |
DividendsJapanese companies paid record dividends of ¥18 trillion for fiscal year ending March 2025, a 13.8% year-over-year increase. Many major firms have adopted progressive dividend policies guaranteeing dividends will never be cut, only maintained or increased. |
Progressive Dividend Record Payouts Shareholder Returns Yield Growth | |
Exploration & ProductionSignificant allocation to energy sector through Mach Natural Resources and Kimbell Royalty Partners. Focus on companies with disciplined capital allocation, low leverage, and high distribution yields. Both companies emphasize acquiring cash-flowing assets and returning capital to shareholders. |
Energy Oil Production Natural Gas Royalties Asset Acquisition | |
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 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 |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 21, 2025 | Fund Letters | Kris Kelley | PII | Polaris Inc. | Consumer Discretionary | Leisure Products | Bull | New York Stock Exchange | buybacks, capital allocation, Powersports, Sum-of-the-Parts, turnaround | Login |
| Jan 30, 2026 | Fund Letters | Kris Kelley | MNR | Mach Natural Resources LP | Energy | Oil & Gas Exploration & Production | Bull | New York Stock Exchange | capital allocation, cashflow, dividends, energy, Pdp | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | Apple Inc. represents 1.6% of company owned with cost basis of $6,255 million and market value of $61,962 million, providing $280 million in 2025 dividends. |
| AMZN | One company we own that we think has unique positioning to benefit from both the infrastructure and application layers is Amazon. Amazon's logistical prowess is one of the foremost moats in business today and it can and will be enhanced with AI. The company will do this in multiple ways, with better orchestration of its logistics assets and underlying cargo, as well as the buildout of more capable, sophisticated and robust robotics. Amazon is singularly well positioned to dominate the coordination layer, with AI's help, across its entire logistics network. |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| KRP | Kimbell owns mineral rights. That means they don't own land, they don't have an obligation to drill, they don't even have to put up capital to benefit from the assets they own. KRP owns approximately 158K net royalty acres, an interest in over 131,000 wells, 68 million barrels of oil equivalent (BOE) of reserves, and produces 25,530 BOE per day. KRP has more than 14 years of drilling inventory, and a production decline rate of ~14%. Lastly, next year's dividend is expected to be $1.43/share, or a 10.8% yield. KRP's capital allocation policy stipulates that 75% of distributable cash flow be distributed to shareholders. |
| META | On January 9, Meta Platforms unveiled a new agreement with Vistra—the largest generator of competitive electricity in the United States—as well as with TerraPower and Oklo. The announcement builds on Meta's agreement last year with Constellation Energy and positions the company to become one of the largest corporate purchasers of nuclear-generated electricity in the United States. |
| MNR | Mach is different from KRP in the sense that MNR is a non-traditional exploration and production (E&P) company. The company buys or leases producing acreage and then drills additional wells when and where they think they have a knowledge or operational advantage. MNR has an interest in 12,600 operating wells, 653 million BOE of reserves, and produces 151,000 BOE/d. And finally, consensus estimates for next year's dividend are $2.20/share, or a 19.3% yield. MNR goes a few steps farther in defining four operating pillars: Maintain low leverage - 1.0x or less; Acquire cash flowing properties - Buy PDP assets at less than PV10, then focus on reducing costs; Disciplined reinvestment rate - Less than 50% of cash flow is used for drilling wells and paying down debt. The balance goes toward shareholder distributions; Maximize distributions – This pillar drives all other decisions. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| NVDA | AI bellwether NVIDIA's very strong set of earnings in late November helped the AI theme re-assert its dominance when investors breathed a sigh of relief following the results. |
| PII | Our investment in Polaris (PII) last summer is a great example. Deploying 22% of our cash balance, we purchased a 7% position when the stock had over a 7% dividend yield and was trading at multi-year lows. |
| PLTR | The top three contributors to this outperformance came from Palantir Technologies (US Defense) |
| TSLA | Under the previous system, companies that produced only electric vehicles—most notably Tesla—generated large quantities of credits that could then be sold to manufacturers falling short of their EV production targets, allowing them to avoid regulatory penalties. |
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