| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
O'Keefe Stevens maintained a defensive posture in Q1 2026 with cash as the largest portfolio position, proving prescient as the S&P 500 fell 4.3% in its first negative quarter since Q1 2025. The manager avoided the software sector selloff where the S&P Software Index declined 22.5% amid valuation resets and AI disruption concerns. Key winners included Corning, which secured a $6 billion AI data center deal with Meta and raised guidance, Sphere Entertainment with strong operating results and expansion plans, and Callaway following its Topgolf divestiture. The portfolio added to distressed situations like Perrigo and initiated a position in Baxter International following its kidney care spinoff. Manager views 2026 as the AI implementation year after 2025 focused on understanding capabilities. Risks include oil price pressures from Iran conflict eliminating rate cut prospects and elevated market valuations. The defensive positioning reflects unwillingness to own assets at prices requiring everything to go right, while maintaining optionality to deploy capital when securities offer acceptable returns from ordinary outcomes.
Maintaining defensive positioning with elevated cash levels while selectively deploying capital into specific opportunities where valuations compensate for risks, avoiding overvalued sectors like software while positioning for AI infrastructure beneficiaries and cyclical recoveries in lumber.
Manager expects 2026 to reward active deployment after Q1 rewarded defensive positioning. Maintains discipline around deploying capital only when securities trade at prices requiring ordinary outcomes for acceptable returns. Views current elevated cash position as providing optionality for when attractive opportunities emerge at reasonable valuations.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 24 2026 | 2026 Q1 | BABA, BAX, ELY, GLW, HCC, NVDA, PRGO, SPHR, TPH, WY | AI, Cash, Defensive, Entertainment, healthcare, Lumber, software, Valuations | - | Defensive cash-heavy positioning proved prescient as markets declined 4.3% while software sector collapsed 22.5%. Portfolio benefited from AI infrastructure exposure via Corning's $6 billion Meta deal and Sphere's expansion plans. Added to distressed Perrigo and new position Baxter. Manager views 2026 as AI implementation year while maintaining discipline on valuations and deployment timing. |
| Apr 25 2025 | 2025 Q1 | BGC, BKRIF, BMWKY, CMP, DFIN, FPH, MBGYY, NVDA, QCOM, ROKU | Autos, Buybacks, earnings, risk management, value, volatility |
DFIN FPH BMWKY MBGYY CMP |
Extreme market volatility created both challenges and opportunities in Q1 2025, with earnings reactions far exceeding historical norms. The manager navigated this environment through disciplined position sizing and selective capital deployment, adding quality names like BMW, Mercedes-Benz, and Compass Minerals at attractive valuations while maintaining conviction in existing holdings despite temporary setbacks. |
| Jan 27 2025 | 2024 Q4 | AER, BGC, BKRIF, BYON, DFIN, EAF, FNMA, FNMAS, FPH, GLW, ICLTF, NVDA, QCOM, WBD | AI, Capital markets, E-Commerce, real estate, small caps, technology, value |
BYON DFIN |
Small-cap value manager delivered mixed 2024 results with Nvidia driving performance while several positions underperformed. Strategy focuses on patient capital deployment in underfollowed names facing temporary selling pressure unrelated to fundamentals. 2025 picks Beyond Inc and Donnelley Financial positioned to benefit from improved M&A environment and small-cap rotation under new administration. |
| Oct 10 2024 | 2024 Q3 | ABBV, ABNB, AMAT, AVGO, BMY, CSCO, CVS, ETSY, FDX, FI, HD, HUM, LMT, MCK, PH, QCOM, TMUS, TOL, UNH, WSM | large cap, Quality, risk management, small caps, valuation, value | - | Distillate warns of extreme valuation risk with 40% of S&P 500 trading above 30x P/E, similar to 2000 bubble conditions. The 15 most expensive megacap stocks represent 40% of market cap at 72% premium to rest of market. Strategy focuses on quality companies in less expensive market segments, avoiding megacap concentration entirely while maintaining zero exposure to the biggest names. |
| Jul 19 2024 | 2024 Q2 | AMZN, BABA, GLW, GOOGL, META, MSFT, NVDA, PRGO, QCOM, SWX | AI, China, healthcare, SMID Cap, technology, value |
QCOM GLW BABA PRGO |
SMID cap focused manager initiated positions in deeply discounted Alibaba and Perrigo while maintaining AI beneficiaries Qualcomm and Corning. Portfolio reflects conviction in AI-driven growth and turnaround stories despite acknowledging ROI uncertainty and geopolitical risks. Expects recovery in specific holdings through operational improvements and capacity utilization while maintaining selective approach. |
| May 10 2024 | 2024 Q1 | AER, AMGN, BGC, BKRIF, BLKB, EAF, EXPI, FPH, HCC, NVDA, QCOM, ROKU, WBD | activism, Aviation, materials, small cap, technology, trading, value |
EAF AER BGC |
Concentrated small-cap value fund with NVDA as largest holding at 15%. New position in Aercap offers 40% upside potential. BGC Group thesis executing well with strong trading revenues. Supporting activist at troubled Graftech position. Expects higher rates to create distressed opportunities while benefiting low-leverage portfolio companies. |
| Jan 24 2024 | 2023 Q4 | AER, AMGN, BGC, DFIN, EAF, FPH, HCC, ICLTF, LAZ, LIVE, LL, NVDA, QCOM, TSLA | AI, commodities, Concentration, Predictions, small caps, technology, value |
FPH AER EAF |
Value-focused fund delivered strong 2023 performance led by Nvidia's AI-driven surge. Manager predicts small cap outperformance in 2024 based on cheaper valuations and rate cuts. Top picks Five Point Holdings and Aercap benefit from resolved overhangs. Commodity positions struggled but provide learning opportunities about timing and shareholder dynamics. |
| Oct 26 2023 | 2023 Q3 | AAPL, AMGN, AMZN, DFIN, GOOGL, HCC, HT, META, MSFT, NVDA, QCOM, TSLA | AI, Portfolio Management, rates, real estate, semiconductors, small caps, technology, value |
AAPL|MSFT|NFLX|NVDA|UNH 5HT.SI |
Manager dramatically reduced NVDA position despite excellent fundamentals, citing extreme valuation and inevitable competitive threats in technology. Market concentration in magnificent seven masks carnage in small caps, creating opportunities for patient value investors. Consumer spending weakening with elevated inventories suggesting margin compression ahead. Increased cash position provides flexibility to deploy capital selectively. |
| Jul 14 2023 | 2023 Q2 | BOWL, SPHR | - | - | |
| Mar 31 2023 | 2023 Q1 | BIRG LN, HCC, NVDA | - | - | |
| Oct 26 2022 | 2022 Q3 | LAZ, SRG | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIManager views 2026 as the year of AI implementation after 2025 was about understanding AI capabilities. Discusses how AI is disrupting software companies through cost reduction and potential job displacement. Notes that AI could help companies reduce workforce costs while avoiding negative headlines from traditional layoffs. |
Implementation Software Disruption Workforce Cost |
SoftwareSoftware sector experienced significant selloff with S&P Software Index declining 22.5% in Q1 as valuations reset from peak levels of 10x-15x forward revenue. Manager notes concerns about growth durability, margin sustainability, and AI-related demand questions. Expects volatility but sees potential opportunities when correlations converge. |
Valuations Reset Growth Margins Volatility | |
Data CentersCorning secured multi-year agreement with Meta worth up to $6 billion for optical fiber and connectivity for US AI data centers. This represents a significant catalyst for fiber demand driven by AI infrastructure buildout. Manager views this as a real multi-year setup around AI-driven fiber demand. |
Fiber Infrastructure Connectivity Growth Demand | |
LumberManager believes softwood lumber is nearing the end of a three-plus-year downturn. Canadian supply continues coming offline with mill closures, combined duties of 45.16% on Canadian producers, and lean inventories across the channel. Lumber prices moved higher through the quarter with positive housing starts data. |
Cycle Supply Duties Inventories Recovery | |
EntertainmentSphere Entertainment continues delivering strong operating results with Wizard of Oz crossing 2 million tickets and $260+ million in revenue. Company announced plans for smaller-scale Sphere venues starting with Washington DC location, shifting toward a content-and-royalty model that could be more valuable than single venue approach. |
Innovation Expansion Royalties Content Technology | |
| 2025 Q1 |
VolatilityThe manager extensively discusses heightened market volatility, noting that earnings reactions have significantly exceeded historical norms. Stocks beating expectations outperformed by 248bps vs historical 148bps, while misses underperformed by 362bps vs historical 245bps. The implied versus realized volatility relationship has reversed since Q1 2021, with realized volatility occasionally surpassing implied volatility. |
Earnings Risk Appetite Market Data |
BuybacksThe letter emphasizes the importance of strategic share repurchases during market dislocations. Management teams with strong balance sheets should capitalize on overreactions by opportunistically repurchasing shares during temporary dislocations. The manager criticizes companies that exhausted capital on buybacks at peak valuations and praises companies like Roku that maintain optionality for strategic repurchases. |
Capital Markets Management Valuation | |
AutosThe fund initiated new positions in BMW and Mercedes-Benz, viewing them as attractive opportunities despite headwinds from heightened competition and softer demand. Both companies trade at highly attractive valuations with low leverage, offering robust dividend yields and ongoing share repurchase programs at discounted prices. |
Value Dividends Competition | |
| 2024 Q4 |
AINvidia continues to face strong product demand that significantly outpaces supply, with competitive advantages widening through advanced GPU and data center infrastructure launches. The Blackwell GPU architecture introduced B100 and B200 data center accelerators with substantial performance gains for AI workloads, featuring enhanced tensor cores and memory bandwidth for faster AI model training and inference. |
GPUs Data Centers Blackwell Tensor Training |
E-commerceBeyond Inc operates as an asset-light e-commerce company managing retail brands including Overstock, Bed Bath & Beyond, and Zulily. The company's capital-light approach minimizes fixed costs and facilitates high free cash flow conversion, positioning the business for profitable growth as revenue scales with incremental return on invested capital near 100%. |
Asset-light Retail Brands FCF ROIC | |
Capital MarketsDonnelley Financial Solutions provides compliance, regulatory, and transaction-related solutions to corporations and investment companies. The company benefits from recurring software revenue growth and event-driven business recovery tied to M&A and IPO activity, with first-mover advantage in regulatory solutions like Tailored Shareholder Reports platform. |
Compliance Regulatory M&A IPO Software | |
Small CapsSmall caps continue to lag substantially behind large caps, with companies driving large-cap performance being the familiar Magnificent 7 names. However, from July 10th through year-end 2024, the S&P SmallCap 600 index delivered 9.6% total return compared to the S&P 500's 5.1% return, creating a promising setup as small caps are underfollowed and cheap. |
Russell 2000 Underfollowed Valuation Outperformance Setup | |
| 2024 Q3 |
ValuationThe market shows extreme valuation risk with the S&P 500 trading at expensive levels historically. Over 40% of the S&P 500 trades at NTM P/E over 30x, similar to 2000 bubble conditions. The most expensive 15 megacap stocks trade at a 72% premium to the rest of the market and account for almost 40% of total market cap. |
Value Quality Risk Appetite |
QualityFocus on quality companies with stable cash flows and low leverage as protection against valuation risk. The strategy emphasizes fundamental stability and avoids highly leveraged or unprofitable stocks, particularly in small cap space where many stocks have high debt loads. |
Quality Value Small Caps | |
Small CapsSmall cap indexes include many unprofitable and highly leveraged stocks, creating dispersion opportunities. The strategy's small/mid cap portfolio has much lower leverage and higher free cash flow yields than benchmarks while avoiding quality concerns in the broader small cap market. |
Small Caps Quality Value | |
| 2024 Q2 |
AIAI rally broadened beyond obvious players with Qualcomm gaining recognition for mobile AI capabilities and Corning benefiting from optical connectivity for Generative AI. While AI use cases appear endless, ROI on spending remains unclear, creating uncertainty about the duration of the ongoing capex boom. |
Mobile AI Generative AI Capex ROI Machine Learning |
E-commerceAlibaba represents the largest e-commerce player in China with 40% GMV market share through Taobao and T-mall. The company faces market share decline from 78% in 2015 to 40% in 2023 due to competition from Pinduoduo, JD.com, and others, requiring reinvestment to stabilize positioning. |
China E-commerce Market Share Competition Reinvestment | |
ChinaInvestment in Alibaba reflects exposure to Chinese market despite multiple risks including geopolitical tensions, VIE structure concerns, and economic slowdown from housing market downturn. The company trades at attractive valuation of 6-7x earnings after accounting for net cash position. |
Geopolitical Risk VIE Structure Valuation Housing Market | |
| 2024 Q1 |
SemiconductorsNVDA represents almost 15% of the portfolio as the top holding. The manager sold NVDA call options that expire in June and are deep in the money, planning to deploy cash from covered calls over time as opportunities arise. |
AI Technology Growth |
Aircraft LeasingInitiated new position in Aercap (AER) in Q1, adding to the position several times. Despite the stock being up 20% in Q1, the manager believes it has 40% near-term upside as the market continues to underappreciate the duration of the leasing hard market. |
Aviation Leasing Cyclical | |
Capital MarketsBGC Group thesis playing out with Fenics revenues increasing 20% year-over-year, led by Rates and Credit trading rising 25% and 42.6% respectively. FMX Futures Exchange received CFTC approval to compete with CME. BGC was included in S&P 600 Small Cap index, leading to purchase of 46 million shares. |
Trading Exchanges Rates | |
GraphiteGraftech (EAF) declined 39% in January due to indiscriminate selling by Brookfield Asset Management. Activist investor Nilesh Undavia filed 13D with 5.7% stake. Manager recommends voting for Undavia and remains optimistic that business cycle bottomed early in 2024 with electrode prices recovering. |
Steel Materials Activist | |
| 2023 Q4 |
AIAI became mainstream in 2023 with Nvidia appreciating over 200% as the fund's largest position. The manager notes AI's significant impact on technology sector performance despite cautious analyst commentaries. |
Nvidia Technology Semiconductors Growth Performance |
Small CapsManager predicts Russell 2000 will be the top performing index in 2024. Small caps have underperformed the S&P 500 in 8 of the last 12 years, but cheaper starting valuations and expected rate cuts should drive outperformance. |
Russell 2000 Valuation Rates Outperformance Opportunity | |
CommoditiesPortfolio includes significant commodity exposure through Warrior Met Coal, Graftech, and Greenfirst Forest Products. Manager acknowledges commodity investing is more challenging than durable compounding businesses due to wider outcome ranges and competitor dependency. |
Coal Steel Lumber Cyclical Volatility | |
ValueManager focuses on finding bargains across market caps, maintaining positions trading below replacement cost. Emphasizes acting differently than the market and finding undervalued opportunities with significant overhangs resolved. |
Undervalued Replacement Cost Contrarian Bargains Mispriced | |
| 2023 Q3 |
AIManager discusses AI as being in early stages despite decades of existence. Notes current valuation of NVDA implies maintaining dominant market position for foreseeable future. Acknowledges AI growth potential while expressing concern about excessive optimism in valuations. |
Artificial Intelligence GPU Technology Growth Valuation |
SemiconductorsExtensive discussion of NVDA's dominant GPU market position with competition years behind. Notes gross margins expected to exceed 70% in 2024. Discusses technology companies aging in dog years and competitive threats from companies like AMD, Qualcomm entering CPU/GPU markets. |
GPU Technology Competition Market Share Margins | |
ValueManager actively reduced NVDA position due to extreme valuation despite excellent business fundamentals. Seeks bargains in out-of-favor small and micro-cap areas where uncertainty and pessimism are high. Notes pain creates opportunity in underperforming segments. |
Valuation Bargains Small Cap Opportunity Contrarian | |
Small CapsManager notes small and micro-cap space getting decimated with Russell Microcap down 8% and Russell 2000 down 5% in Q3. Individual small-cap stocks routinely down 10%+ from earnings misses. Views this as opportunity despite economic sensitivity and rate pressures. |
Russell 2000 Microcap Opportunity Underperformance Economic Sensitivity |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 25, 2025 | Fund Letters | O'Keefe Stevens Advisory, Inc | DFIN | Donnelley Financial Solutions | Commercial & Professional Services | Commercial Printing | Bull | NYSE | Capital markets, Digital transformation, Earnings miss, financial services, mispricing, recurring revenue, software solutions | Login |
| Apr 25, 2025 | Fund Letters | O'Keefe Stevens Advisory, Inc | CMP | Compass Minerals International | Materials | Fertilizers & Agricultural Chemicals | Bull | NYSE | Essential Materials, infrastructure, new management, Normalized Earnings, Road Deicing, Salt, Value, Weather Dependent | Login |
| Apr 25, 2025 | Fund Letters | O'Keefe Stevens Advisory, Inc | MBGYY | Mercedes-Benz Group | Consumer Discretionary | Automobile Manufacturers | Bull | OTC | attractive valuation, Cyclical, dividend yield, German, low leverage, luxury automobiles, share repurchases | Login |
| Apr 25, 2025 | Fund Letters | O'Keefe Stevens Advisory, Inc | BMWKY | BMW Group | Consumer Discretionary | Automobile Manufacturers | Bull | OTC | attractive valuation, Cyclical, dividend yield, German, low leverage, luxury automobiles, share repurchases | Login |
| Apr 25, 2025 | Fund Letters | O'Keefe Stevens Advisory, Inc | FPH | Five Point Holdings | Real Estate | Real Estate Development | Bull | NYSE | California, Free Cash Flow, Master-Planned Communities, net cash, real estate development, turnaround, Value | Login |
| Jul 19, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | PRGO | Perrigo Company plc | Health Care | Pharmaceuticals | Bull | NYSE | Birth Control, Consumer-health, cost savings, debt reduction, healthcare, Infant Formula, OTC Pharmaceuticals, turnaround | Login |
| Jul 19, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | QCOM | Qualcomm Inc | Information Technology | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | AI, growth, Mobile Technology, On-device AI, semiconductors, Smartphones, technology | Login |
| Jul 19, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | GLW | Corning Incorporated | Information Technology | Electronic Equipment, Instruments & Components | Bull | NYSE | AI infrastructure, Capacity utilization, margin expansion, operating leverage, Optical Connectivity, technology, turnaround | Login |
| Jul 19, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | BABA | Alibaba Group Holding Limited | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NYSE | AI, China, Cloud computing, e-commerce, Free Cash Flow, geopolitical risk, market share, Value | Login |
| Apr 25, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | AER | AerCap Holdings N.V. | Industrials | Trading Companies & Distributors | Bull | NYSE | Aircraft Leasing, Aviation, Cyclical, Hard Market, Industrials, Leasing, Transportation | Login |
| Apr 25, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | BGC | BGC Group Inc. | Financials | Capital Markets | Bull | NASDAQ | Capital markets, Electronic Trading, Exchange Launch, Financial Brokerage, Fintech, index inclusion, Interest Rate Normalization | Login |
| Apr 25, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | EAF | Graftech International Ltd. | Materials | Steel | Bull | NYSE | activist investor, Cyclical, Electric Arc Furnace, Graphite Electrodes, materials, Proxy Fight, Steel, turnaround, Value | Login |
| Jan 27, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | DFIN | Donnelley Financial Solutions | Industrials | Commercial Services & Supplies | Bull | NYSE | B2B software, Compliance software, financial technology, IPO support, M&A services, market leader, recurring revenue, Regulatory solutions, SaaS transformation, SEC filings | Login |
| Jan 27, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | BYON | Beyond Inc | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | asset-light, distressed valuation, e-commerce, Free Cash Flow, furniture, Home goods, Private equity investments, Retail brands, Strategic Partnerships, turnaround | Login |
| Jan 24, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | EAF | Graftech International | Materials | Steel | Bear | NYSE | Commodity Cyclical, Electric Arc Furnace, European Exposure, Graphite Electrodes, Needle Coke, Steel, Value trap | Login |
| Jan 24, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | - | Greenfirst Forest Products | Materials | Forest Products | Bull | TSX | Asset Optimization, Canada, Duty Recovery, Forest Products, Lumber, Management alignment, Paper Mills, Takeout Target | Login |
| Jan 24, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | FPH | Five Point Holdings | Real Estate | Real Estate Development | Bull | NYSE | cash generation, debt restructuring, Maturity Extension, new management, real estate development, turnaround | Login |
| Jan 24, 2024 | Fund Letters | O'Keefe Stevens Advisory, Inc | AER | Aercap Holdings | Financials | Specialized Finance | Bull | NYSE | Aircraft Leasing, book value discount, Hard Market, Insurance Recovery, share repurchase, supply constraints | Login |
| Oct 26, 2023 | Fund Letters | O'Keefe Stevens Advisory, Inc | 5HT.SI | Hersha Hospitality Trust | Real Estate | Hotel & Resort REITs | Neutral | NYSE | acquisition, asset sales, balance sheet, debt refinancing, hospitality, Hotel, Interest rates, REIT | Login |
| Oct 26, 2023 | Fund Letters | O'Keefe Stevens Advisory, Inc | AAPL|MSFT|NFLX|NVDA|UNH | Nvidia Corporation | Information Technology | Semiconductors & Semiconductor Equipment | Neutral | NASDAQ | Artificial Intelligence, Gpu, Management Quality, market leader, Position Reduction, semiconductors, technology, valuation concerns | Login |
| TICKER | COMMENTARY |
|---|---|
| GLW | Corning continued to do what we described in our Q3 2025 letter. On January 27, Corning and Meta announced a multi-year agreement worth up to $6 billion for optical fiber, cable, and connectivity for U.S. Al data centers, anchored at the Hickory, North Carolina, plant that Corning says will become the world's largest fiber-optic cable facility. The stock jumped 16% on the news. The next day, on its Q4 2025 earnings call, management raised the Springboard plan's incremental annualized sales target to $11 billion by end-2028 (from $8 billion), with $5.75 billion now at high confidence by end-2026 (from $4 billion). Core EPS grew 26% year over year in Q4 to $0.72. Free cash flow for the full year nearly doubled versus 2023. On virtually every metric that matters, Corning executed. On the one metric that worries us, the valuation. At quarter-end levels, Corning trades in the mid-60s on TTM core EPS, versus the ~36x we flagged in Q3 when the stock was ~$80. The company is meaningfully better than it was six months ago. It is not twice as good. |
| SPHR | Sphere's operating results continue to surprise us to the upside. On January 19, The Wizard of Oz crossed 2 million tickets sold and more than $260 million in ticket revenue; by late February, cumulative ticket revenue had moved toward $290 million, and management announced an enhanced 2.0 version of the show for later in 2026 with new scenes and 4D effects. The December quarter delivered $308 million of revenue and $33 million of adjusted operating income. Per-show Sphere revenue was up mid-single digits year over year. On January 18, Sphere, the State of Maryland, Prince George's County, and Peterson Companies announced their intent to develop the first smaller-scale Sphere at National Harbor near Washington, D.C., with 6,000 seats, a 16K x 16K LED interior, roughly $200 million in state, local, and private incentives, and a projected $1 billion in annual economic impact. |
| ELY | Our Q4 letter introduced the thesis: MODG's sale of its 60% stake in Topgolf was the catalyst for transitioning from a levered conglomerate to a clean, pure-play golf OEM. On January 1, the sale closed, and Leonard Green & Partners paid a $1.1 billion valuation for Topgolf, generating roughly $770 million in net proceeds to Callaway. On January 16, the ticker changed from MODG to CALY. Management used $1.0 billion of those proceeds to retire its Term Loan B; the balance sheet now carries approximately $680 million of cash against $480 million of gross debt. The board authorized a $200 million share repurchase. At quarter-end levels, we estimate the stock trades at ~12x 2027e earnings and expect management to continue paying down debt and repurchasing shares. |
| PRGO | Perrigo was our biggest loser in 2025 at -46%, and the pain continued into Q1. On February 26, Perrigo reported Q4 2025 results, missed EPS, recorded a $1.3 billion goodwill impairment, and guided 2026 All-In adjusted EPS to $2.00–$2.30, down from 2025's $2.75. Infant formula revenue fell 25% in the fourth quarter, driven by weakness in the Good Start contract-manufacturing arrangement; the segment contributed roughly $21 million in negative operating income. We added to Perrigo during the quarter. The stock trades at approximately 4.8x forward earnings, 8.6x EV/EBITDA, and 0.4x sales. Free cash flow conversion should improve from here as severance payments wind down. |
| BAX | We initiated a position in Baxter during the quarter in the high teens. Baxter spun off its kidney care business as Vantive, closing the sale to Carlyle on January 31, 2025, for approximately $3.8 billion gross and $3.3–$3.4 billion net of taxes. The RemainCo is a focused hospital-products company generating roughly $11.2 billion in 2025 revenue across three segments: Medical Products & Therapies, Healthcare Systems & Technologies, and Pharmaceuticals. Baxter trades near 11x forward earnings on what we believe are well below normalized levels. New CEO Andrew Hider is a ten-year Danaher alumnus who most recently ran ATS Corporation, where he drove significant value creation, with revenue roughly doubling and shares more than tripling during his tenure from 2017 to 2024. |
| WY | We also added to Weyerhaeuser during the quarter. Our Q4 letter argued that softwood lumber was nearing the end of a three-plus-year downturn: Canadian supply continues to come offline, Canadian producers now face combined landed duties of 45.16%, and inventories are lean across the channel. Lumber prices moved higher through the quarter, and January 2026 housing starts surprised to the upside at 1.487 million SAAR. Weyerhaeuser gives us the liquid way to express it, along with 10.4 million acres of timberland, an investment-grade balance sheet, a REIT structure, and a 2030 plan targeting $1.5 billion of incremental adjusted EBITDA. |
| TPH | We exited Tri Pointe Homes during the quarter. On February 13, Sumitomo Forestry announced a definitive agreement to acquire TPH for $47.00 per share in cash, a roughly 29% premium to the prior close and above Tri Pointe's all-time closing high. The deal values the company at approximately $4.3 billion, requires no financing, and is expected to close in Q2 2026. This outcome represents exactly what we seek when we invest in a well-run homebuilder. |
| BABA | During the quarter, we exited our Alibaba position after a roughly two-year holding period. We initially purchased the stock near the peak of U.S.-China relationship tensions, when we believed the market was underappreciating the value of Alibaba's cloud and emerging AI capabilities. Over our holding period, two things changed. First, the market began to recognize Alibaba's positioning in Al and cloud infrastructure. Second, geopolitical tensions between the U.S. and China moderated, removing a key overhang on the stock. As the thesis evolved, so did the capital allocation profile. Alibaba transitioned from a business generating significant free cash flow, returning capital through dividends and buybacks, to one prioritizing heavy reinvestment to fund its Al buildout. |
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