The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
Longleaf Partners Small-Cap Fund returned -2.47% in Q2 2026 versus +21.49% for the Russell 2000, bringing YTD performance to -5.12% versus +22.57% for the index. The manager describes an increasingly speculative market where Russell 2000 IT P/E multiples rose over 25% in the quarter, with Value IT multiples up over 40%, driven by AI-related euphoria rather than fundamentals. This marks the first time in history that both earnings and price multiples have disconnected so far from long-run averages, creating dangerous market dynamics. The fund's 16 holdings trade at mid-50s% P/V with 11.7% cash, positioned in real estate, energy, and consumer businesses with strong free cash flow generation. The manager increased shareholder activism, achieving successful outcomes at Tripadvisor (+29% after asset sale announcement), Alexander's, and Empire State Realty Trust. They trimmed overvalued positions and added back at better prices, maintaining conviction that returns have been deferred, not foregone. Key holdings include CNX Resources, Boston Beer, and Liberty Capital Corp, with ongoing engagement efforts at Mattel and others to accelerate value realization.
Southeastern maintains a concentrated value approach in small cap equities, investing in 16 businesses trading at mid-50s% of intrinsic value with strong free cash flow characteristics, while actively avoiding the speculative excesses in AI and technology that have driven the Russell 2000 to bubble-level valuations with both earnings and multiples disconnected from historical averages.
The manager expresses high conviction that their portfolio will outperform going forward, stating that absolute and relative returns have been deferred, not foregone, with considerably less risk. They believe their investments are now more attractive on both P/V and P/FCF metrics while market winners have gone higher beyond fair values. They expect things will turn in their favor and could do so rapidly, though they acknowledge the current market environment remains challenging. The tone is resolute and patient, with disappointment about trailing 12-month performance outweighed by conviction in the portfolio's prospects.
As of Jul 11, 2026
Co-portfolio managers Ross Glotzbach (CEO and Head of Research since May 1, 2014) and Mason Hawkins (Chairman and founder, managing the fund since inception December 31, 1989) bring over 35 years of combined experience managing this concentrated value strategy. Mason Hawkins founded Southeastern Asset Management in 1975 and has built a reputation as a patient, long-term value investor with significant personal capital invested alongside fund shareholders.
The Longleaf Partners Small-Cap Fund seeks to generate superior long-term investment returns and minimize the risk of permanent capital loss by investing primarily in a concentrated number of small-cap US companies. The fund employs a three-to-five-year investment horizon focusing on high-quality businesses with capable management, buying stocks trading at temporary discounts according to their Business, People, and Price investment criteria.
Lead Portfolio Manager
Moderate Conviction Bullish
Market Conviction
A score of 0.72 reflects a concentrated 16-holding portfolio with top positions explicitly weighted between 4.8% and 7.8% of assets. The manager actively engages with management teams and demonstrates willingness to hold through severe short-term relative underperformance. It falls short of higher tiers due to zero portfolio additions or exits during the period and hedged market framing.
Growth Outlook
A score of 0.20 indicates a decidedly cautious-to-bearish perspective on broad market dynamics. The commentary explicitly characterizes market conditions as a speculative bubble where both earnings and CAPE multiples are historically stretched and dangerous market structure dynamics prevail.
Risk Appetite
A score of 0.45 reflects balanced yet defensive capital preservation with an 11.7% cash buffer. While the fund is not shorting or using leverage, it trimmed holdings during previous runups, refrained from chasing momentum winners, and selectively added back only to existing high-conviction detractors on price weakness.
Capital Deployment
A score of 0.50 denotes a net neutral stance over the quarter. Portfolio cash stands at 11.7% with no new positions initiated or completely liquidated, as selective rebalancing and trims were offset by opportunistic additions to existing holdings.
Forward Guidance
A score of 0.60 reflects a selective readiness to deploy capital once broader market conditions normalize. The manager notes that their on-deck list remains solid and explicitly expects to put their 11.7% cash balance to work when the speculative market environment shifts.
Language Signal
A score of 0.28 captures directional vocabulary dominated by warning terms such as 'speculative,' 'bubble,' 'dangerous,' 'disconnect,' and 'runaway train.' Although positive vocabulary like 'accretive,' 'attractive,' and 'strong balance sheet' is applied to portfolio holdings, the overarching commentary emphasizes market peril.
Perceived Risk
A score of 0.82 denotes acute macro and structural risk perception. The manager highlights unprecedented divergence in earnings and CAPE multiples, structural liquidity issues from quantitative trading firms, artificial intelligence exuberance, and impending regulatory interventions.
Opportunity Density
A score of 0.38 reflects scarce broad market opportunities due to widespread speculative multiple expansion across small-cap sectors. Although the manager maintains a solid on-deck list of ideas, zero new purchases were executed in the quarter, underscoring severe market selectivity.
Time Horizon
A score of 0.80 indicates a multi-year investment horizon centered on fundamental compounding. The manager reiterates a patient Business, People, Price approach, emphasizing that absolute and relative returns have merely been deferred rather than foregone as long-term value realization plays out.
Top Conviction Themes
Key Catalysts
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