| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.0% | - | - |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 16.9% | 15.1% | 47.0% | -13.4% | 16.8% | 12.0% |
Middle Coast Investing delivered strong 2025 performance with 16.9% returns but maintains a cautious outlook entering 2026. The manager emphasizes a bottom-up value investing approach, seeking good companies at fair prices rather than chasing market trends like AI. Key portfolio themes include office furniture companies positioned for return-to-office recovery, with HNI Corporation as a top holding following successful integrations. The firm maintains strict risk management discipline, including rules against buying full positions at once and demanding 50% upside potential. Portfolio positioning has become more defensive with increased cash levels and reduced concentration in top holdings. New international diversification includes PagSeguro, a Brazilian fintech trading cheaply despite growth prospects. The manager acknowledges elevated market valuations and economic uncertainty but focuses on stock-specific opportunities rather than macro predictions. Primary goal remains avoiding portfolio blow-ups while positioning for long-term outperformance through disciplined value investing and selective deployment of capital.
Focus on bottom-up value investing in attractively priced companies with good fundamentals while maintaining defensive positioning and strict risk management to avoid portfolio blow-ups during uncertain market conditions.
Manager enters 2026 with a defensive portfolio approach, acknowledging huge risks while planning to manage those risks and take advantage of emerging opportunities. The primary goal remains to not explode first, then find good stocks to outperform the S&P 500 over the long term.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 9 2026 | 2025 Q4 | AAPL, ABM, AER, AMZN, APOG, ATKR, ATRO, AVGO, BHF, CCK, COF, CPAY, ECG, FG, GOGO, GOOG, HI, HNI, HURC, LULU, LYFT, MLKN, OMAB, PAGS, PGR, PTLO, SCHW, TRIP, WS | Bottom-up, Cash, Defensive, Office Furniture, risk management, value | - | Manager emphasizes bottom-up investing approach, looking for companies that will do better in years ahead when stocks are priced attractively. Seeks good companies at fair… |
| Oct 2 2025 | 2025 Q3 | AL, AVGO, BHF, CPAY, ECG, FILA IM, GOGO, GOOG, HI, LULU, LYFT, PGR, TFSL, TRIP | AI, Alphabet, Automation, Broadcom, M&A |
CORP US GOGO US HI US BHF US TFSL US AL US |
The letter focuses on opportunistic value investing driven by company-specific fundamentals rather than macro forecasts. Mispricing created by fear, forced selling, or neglect is seen… |
| Jul 9 2025 | 2025 Q2 | ABM, BOOM, DECK, HSY, LEVI, LYFT, TRIP, WS | Caution, Hedging, tariffs, uncertainty, valuation |
LYFT DECK ABM TRIP |
The letter frames the market environment as one of elevated uncertainty driven by tariffs, geopolitics, and policy risk. Management emphasizes cautious positioning, selective equity exposure,… |
| Apr 11 2025 | 2025 Q1 | ACLS, ATRO, COF, ECG, GOOG, OMAB, PGR, PTLO, SON, TRIP, TSM, VMEO | - | - | - |
| Jan 8 2025 | 2024 Q4 | CCK, INGM, KRUS, LEVI, MDU, TRIP | - | - | - |
| Oct 4 2024 | 2024 Q3 | ABM, ACLS, APOG, ATKR, ATRO, BOOM, DALN, OMAB, PGR, PTLO, SCHW | - | - | - |
| Jul 8 2024 | 2024 Q2 | ATRO, GOGO, LULU, MTTR, PGR, SJM | - | - | - |
| Apr 2 2024 | 2024 Q1 | ACLS, ADM, DBX, EB, FCNCA, FG, PGR, SNX, SPOT, VMEO, WS | - | - | - |
| Jan 3 2024 | 2023 Q4 | AAPL, ACLS, EB, FCNCA, KBAL, SCS | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Office FurnitureDecade-long investment theme in office furniture companies including Kimball International, Steelcase, and HNI Corporation. Believes return to office theme hasn't played out but might be soon, with order growth showing improvement across major players. |
Return to office HNI Steelcase Orders Recovery |
Risk ManagementPrimary goal is to avoid blowing up and survive through bad times. Uses rules like not buying whole positions at once, demanding 50% upside, watching leverage, and knowing when to double down. Maintains defensive portfolio positioning. |
Defensive Blow-up Discipline Concentration Cash | |
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 |
AIThe extended federal government shutdown added volatility during what was otherwise a risk-on environment, with a mid-quarter shift in market behavior for AI-related equities as the exuberant narrative evolved to one more balanced in assessing the technology's enormous potential against staggering capital spending plans and high expectations. The team initiated a position in Credo Technology as a more diversified way to gain exposure to strong trends in AI-connectivity. |
Connectivity Semiconductors Infrastructure Capital Spending |
M&A |
||
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 | |
| 2025 Q2 |
Caution |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 2, 2025 | Fund Letters | Daniel Shvartsman | HI US | Hillenbrand Inc. | Industrials | Machinery | Bull | NYSE | buyout, dividend, Industrials, M&A, machinery, Plastics, Value | Login |
| Oct 2, 2025 | Fund Letters | Daniel Shvartsman | BHF US | Brighthouse Financial Inc. | Financials | Life Insurance | Neutral | NASDAQ | Annuities, Insurance, M&A, Risk, spin-off, valuation | Login |
| Oct 2, 2025 | Fund Letters | Daniel Shvartsman | TFSL US | TFS Financial Corp. | Financials | Banks | Bull | NASDAQ | banking, defensive, dividend, Interest rates, Mutual-structure, yield | Login |
| Oct 2, 2025 | Fund Letters | Daniel Shvartsman | AL US | Air Lease Corp. | Industrials | Aircraft Leasing | Bull | NYSE | Aircraft, arbitrage, Leasing, M&A, Short-term, Value | Login |
| Jul 9, 2025 | Fund Letters | Daniel Shvartsman | LYFT | Lyft Inc. | Industrials | Ground Transportation | Bull | NASDAQ | cashflow, growth, mobility, Ridesharing, turnaround | Login |
| Jul 9, 2025 | Fund Letters | Daniel Shvartsman | DECK | Deckers Outdoor Corp. | Consumer Discretionary | Footwear | Bull | New York Stock Exchange | Brand, Footwear, growth, tariffs, valuation | Login |
| Jul 9, 2025 | Fund Letters | Daniel Shvartsman | ABM | ABM Industries Inc. | Industrials | Facilities Services | Bull | New York Stock Exchange | energy, Facilities, Microgrid, Recurring, services | Login |
| Jul 9, 2025 | Fund Letters | Daniel Shvartsman | TRIP | TripAdvisor Inc. | Communication Services | Interactive Media | Bull | NASDAQ | Activism, growth, marketplace, Travel, valuation | Login |
| Oct 2, 2025 | Fund Letters | Daniel Shvartsman | CORP US | Corpay Inc. | Other | Payments | Bull | NYSE | Acquisitions, Corporate-payments, diversification, growth, Oil-hedge, Payments, valuation | Login |
| Oct 2, 2025 | Fund Letters | Daniel Shvartsman | GOGO US | Gogo Inc. | Communication Services | Wireless Services | Bull | NASDAQ | 5G, Aviation, Competition, growth, Satellite, turnaround | Login |
| TICKER | COMMENTARY |
|---|---|
| AAPL | AAPL shares rose in 4Q25 following better-than-feared iPhone 17 sell-through trends and stronger Services momentum. The company reported that early adoption of its on-device AI features exceeded internal expectations, particularly in North America and Europe, where attach rates for Pro models remained elevated. Wearables also returned to growth, helped by new health features and improved battery life. |
| AER | Airline leasing business AerCap contributed 1.4% to the Fund's returns |
| AMZN | This quarter, we took profits in our hyperscaler portfolio companies (Amazon and Google) and increased our position in NVIDIA. |
| ATRO | One of the things that works for us is taking ideas we found from other investors – Astronics (ATRO) |
| AVGO | During the quarter, we initiated a below-average weight position in leading semiconductor and infrastructure software company Broadcom. Broadcom's ongoing transformation from a provider of custom ASICs to a full rack-scale solutions vendor, including scale-up networking, marks a significant improvement in its strategic positioning compared to earlier in the year. This strategic evolution has been validated by recent product launches, such as the Scale-up Ethernet solution, and committed orders from major customers like Anthropic. |
| BHF | After years of frustration, the company put itself up for sale, which led to a sale process that culminated in a buyer agreeing to purchase the company. While the valuation at less than two-thirds of book value is not exciting, it does provide us with a reasonable exit from a challenged situation. |
| CCK | I've been curious about beverage can makers as stable businesses, but it took reading through Ball Corporation (the biggest player) to get me to Crown Holdings (CCK). |
| COF | We added to Capital One Financial Corporation, which was a core new addition in the prior quarter. |
| CPAY | Corpay is a US based global technology company focused on corporate payments, expense management, and cross-border transactions with the goal of simplifying and automating business payment flows. Its customers – typically medium and large companies – utilize the Corpay platform to centralize payments, control costs, and streamline administration, all of which are time-consuming and capital-intensive tasks in traditional payment processes. The essence of this business is to replace fragmented, manual, and often nontransparent processes with a digital solution that provides companies better visibility into their cash flows and greater operational discipline. An important component of Corpay's business consists in commercial and fleet payment programs that cover specific expense categories such as those for fuels, travel expenses, tolls, and other operating outlays. These segments are characterized by a high degree of repeatability, long-term customer relationships, and relatively stable margins. Corpay benefits from its scale, data, and ability to offer customers not only payment itself but also analytics, reporting, and control mechanisms that increase their willingness to stay with a single provider. A rapidly growing pillar of the group consists in international payments and currency conversion services, where Corpay helps companies execute cross-border transactions while managing exchange rate risk. This segment benefits from the ongoing globalization of business, the growing complexity of payment flows, and companies' efforts to reduce costs associated with bank transfers. For Corpay, this is an attractive area with higher added value, where the company combines payment infrastructure with FX margins and specialized services. Overall, Corpay's business is built on a combination of recurring transactions, its technology platform, and high costs of switching between suppliers. Once a customer is integrated into the system and has its payment processes set up, switching to a competitor is complicated and unappealing. This enables the company to grow over the long term, increase efficiency, and generate strong cash flows that it can reinvest into further product expansion, acquisitions, and technological leadership. Corpay's management has many years of experience in identifying, integrating, and improving the operations of acquisitions, which, since 2009, have contributed to more than 20% annualized profitability growth. In our view, the present share price does not reflect the company's current financial metrics, efficient asset allocation, and long-term potential, which combines a structural growth trend with high-quality, recurring business and strong capital discipline. |
| ECG | Another is applying things we've learned from past investments to make new investments – Everus Construction Group (ECG) |
| GOOG | Alphabet's Q4 performance marks a significant triumph, characterized by a rare beat and raise narrative across all critical business segments. The company's recent earnings report was driven by a balanced contribution from its legacy Search and YouTube divisions, with Google Cloud emerging as the standout performer. Cloud's revenue growth reached an impressive 34%, and it boasts an extraordinary $155 billion backlog, a nearly double increase compared to the previous quarter. This remarkable transformation has propelled Cloud from a margin drag to a high-octane profit center. |
| HNI | We like HNI at current prices – we bought more at $42.25 / share – because shares have gotten cheaper since the Steelcase deal, and because the return to office theme hasn't really played out, but might be soon. HNI is priced for fairly low growth. It has successfully integrated Kimball into its business, which I suspect means it will have muscle memory in using the merger to cut costs and build earnings growth. I think even with just ~2% annual revenue growth and the forecast synergies, the stock could be worth $100 in the next 5 years. |
| HURC | Hurco is a small industrial company. It makes computer numerical controlled (CNC) machines. I've owned Hurco in the past. It's a fairly illiquid stock. The company depends on a cyclical industrial sector improvement. I don't have a strong opinion on if/when that happens. I do have an opinion that the company trades at half its book value, meaning if it can sell its on the books inventory of machines for close to full price, it will be worth much more as a stock. |
| LULU | This downward pressure was partially mitigated by the 28% increase in Lululemon's stock from our purchase price of $162 per share. |
| LYFT | Another is applying things we've learned from past investments to make new investments – Lyft (LYFT). Falling on Lyft at almost the right time – I was a few months late for its full move – is an example of just following up and reading about things. We still need to be aware that autonomous driving could warp Lyft's business prospects for better or for worse, but at its fundamental level it's very cheap and still growing. |
| PAGS | PagSeguro is a payment and fintech business based in Brazil. It is trying to build a full digital bank business. Brazil is still a large, developing country with more and more people getting into banking. The stock was up in 2025, but still trades very cheap. The company is targeting 16%+ EPS growth, which would be impressive, and is also about to pay out a 8-9% dividend next year which isn't properly being reported. |
| PGR | Cadence, Linde, United Rentals, and Progressive rounded out the top-five detractors in the quarter. |
| PTLO | While we'll miss, as we have so far with Portillo's Inc (PTLO), if it's in the portfolio, our belief is that there's the potential to double our investment. |
| SCHW | We also added to The Charles Schwab Corporation, which is benefiting from positive earnings revisions, expanding margins, and higher capital returns after having repaid nearly all of its high cost funding. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
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