| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
The Sustainable Value Strategy underperformed its Russell 2500 Value benchmark in Q4 2025 and for the full year, driven entirely by stock selection while sector allocation contributed positively. The manager describes this as one of the most challenging environments for quality-focused investors in over 25 years, comparable to the internet bubble of 1999-2000, with speculative assets leading markets. Top contributors included Haemonetics Corporation, which recovered strongly after adding to the position based on confidence in plasma market recovery, and Ciena Corporation, which delivered 176% returns benefiting from AI datacenter network deployment. Key detractors included Grand Canyon Education, pressured by peer enrollment concerns and government shutdown fears, and Limoneira Company, affected by strategic review cessation and citrus business reorganization. The strategy initiated positions in Adeia and Synovus while exiting Cinemark due to box office underperformance and streaming industry disruption. Looking ahead to 2026, the manager expects a rotation back toward fundamentals, with quality small-cap stocks outperforming lower-quality peers supported by more favorable macro and earnings dynamics.
Focus on identifying high-quality companies with strong fundamentals including profitability, strong returns on capital, solid balance sheets at reasonable valuations, believing quality factors will generate superior returns over the long term despite current challenging environment.
Looking ahead to 2026, we are increasingly constructive on both small-cap equities broadly and high-quality small-cap businesses in particular. We believe 2026 will mark a rotation back toward fundamentals, with quality small-cap stocks outperforming not only lower-quality peers but also large-cap equities, supported by more favorable macro and earnings dynamics.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 14 2026 | 2025 Q4 | ADEA, CIEN, CNK, DGX, EXEL, HAE, JLL, LMNR, LOPE, MDU, SNV, TGLS | AI, Banking, Quality, semiconductors, small caps, technology, value |
HAE CIEN LOPE LMNR SNV ADEA CNK MRX |
The manager emphasizes focus on quality factors including profitability, strong returns on capital, solid balance sheets, and attractive valuations. Notes this has been one of the most challenging environments for quality-focused investors, with quality factors underperforming similar to the internet bubble period of 1999-2000. Strategy focuses on identifying high-quality companies at reasonable valuations. The manager notes periods favoring low-quality assets typically last only a few quarters and expects quality will ultimately reassert itself. The strategy targets small-cap equities with the Russell 2500 Value Index as benchmark. Manager is increasingly constructive on small-cap equities broadly for 2026, expecting a rotation back toward fundamentals with quality small-cap stocks outperforming lower-quality peers. CIEN benefited from AI datacenter network deployment as networking became a key bottleneck for deploying AI widely. ADEA's media IP portfolio includes AI technologies and computer vision capabilities. |
| Jun 30 2025 | 2025 Q2 | COOP, ECG, GFF, LMNR, MSA | Governance, Resilience, responsibility, stakeholders, sustainability |
ECG LMNR GFF MSA |
The letter positions responsible investing as a source of competitive advantage rather than constraint. Management links stakeholder-focused behavior to better long-term financial outcomes and resilience. Sustainability is framed as integral to quality and risk management. |
| Mar 31 2025 | 2025 Q1 | COOP, LMNR, NPS, PNFP | - | - | |
| Dec 31 2024 | 2024 Q4 | ATKR, COOP, CPRI, DAR, EVR, EXEL, IDCC, MOD, NCMI | - | - | |
| Jun 30 2024 | 2024 Q2 | AMKR, ATKR, LMNR, VECO | - | - | |
| Apr 15 2024 | 2024 Q1 | ATKR, IRDM, MOD, NYCB, QCOM | - | - |
| 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 |
QualityThe company emphasizes investing in businesses with excellent economics, durable competitive advantages, and high-integrity management. This quality focus is evident in concentrated equity holdings and operating business acquisitions. |
Durable Advantages Management Quality Economic Moats Competitive Position | |
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 Q2 |
Responsibility |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 14, 2026 | Fund Letters | Adam Peck | MRX | Marex Group PLC | Financials | Capital Markets | Bear | New York Stock Exchange | Capitalmarkets, Sentiment, Shortinterest, valuation, Volatility | Login |
| Jun 30, 2025 | Fund Letters | Adam Peck | ECG | Everus Construction Group Inc. | Industrials | Construction & Engineering | Bull | New York Stock Exchange | backlog, construction, datacenters, infrastructure, tariffs | Login |
| Jun 30, 2025 | Fund Letters | Adam Peck | LMNR | Limoneira Company | Consumer Staples | Food Products | Bull | NASDAQ | Agribusiness, Citrus, Farmland, realestate, Water | Login |
| Jun 30, 2025 | Fund Letters | Adam Peck | GFF | Griffon Corporation | Industrials | Building Products | Bull | New York Stock Exchange | brands, Building, Doors, Homecenter, Margins | Login |
| Jun 30, 2025 | Fund Letters | Adam Peck | MSA | MSA Safety Incorporated | Industrials | Industrial Machinery | Bull | New York Stock Exchange | Detection, Fire, Industrial, PPE, Safety | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | HAE | Haemonetics Corporation | Health Care | Health Care Equipment | Bull | New York Stock Exchange | growth, Hospitals, Medicaldevices, Plasma, recovery | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | CIEN | Ciena Corporation | Information Technology | Communications Equipment | Bull | New York Stock Exchange | AI, backlog, datacenters, Networking, Optical | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | LOPE | Grand Canyon Education, Inc. | Consumer Discretionary | Education Services | Bull | NASDAQ | compounder, Education, Enrollment, Regulation, ROIC | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | LMNR | Limoneira Company | Consumer Staples | Agricultural Products | Bull | NASDAQ | agriculture, Assetvalue, land, restructuring, Water | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | SNV | Synovus Financial Corp. | Financials | Regional Banks | Bull | New York Stock Exchange | Accretion, banking, merger, rerating, valuation | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | ADEA | Adeia Inc. | Information Technology | Semiconductor IP | Bull | NASDAQ | Hybridbonding, Ip, Licensing, royalties, semiconductors | Login |
| Jan 14, 2026 | Fund Letters | Adam Peck | CNK | Cinemark Holdings, Inc. | Communication Services | Movies & Entertainment | Bear | New York Stock Exchange | Boxoffice, disruption, Risk, Streaming, Theaters | Login |
| TICKER | COMMENTARY |
|---|---|
| ADEA | We initiated a position in Adeia, Inc. (ADEA) in the fourth quarter. ADEA licenses intellectual property (IP) to its customers for use in their media and semiconductor products and services. Spun out of Xperi Inc. (XPER) in 2022, ADEA has a broad range of media customers as licensees. Additionally, hybrid bonding is becoming a key technology used by semiconductor manufacturers as complexity increases. ADEA's IP is currently licensed by the major memory players, with several logic players also interested. |
| CIEN | Ciena, a networking systems company, saw shares increase meaningfully during the quarter amid optimism around hyperscaler and AI-related demand. The company has also benefited from growing cloud spending, which has supported its pluggables and data interconnect business. |
| CNK | Cinemark Holdings, Inc. (CNK) was originally purchased on the view that normalized box office trends, improving studio release slates, and disciplined cost control would drive meaningful free cash flow inflection and balance sheet deleveraging. However, we exited the position as fourth-quarter box office results materially underperformed expectations. In addition, increasing strategic uncertainty, specifically the prospect of Netflix acquiring Warner Bros., represents a potential structural overhang for the exhibition industry by accelerating direct-to-consumer distribution and weakening the long-term negotiating position of theaters. While Cinemark remains a well-run operator, these factors materially reduced our conviction in the medium-term earnings power and risk-adjusted return profile of the stock. |
| DGX | and in lab and diagnostics services (Quest Diagnostics). We see good value in these holdings based on the view that healthcare spend in the U.S. is likely to continue expanding, increasing the addressable market opportunity for our healthcare names. |
| HAE | HAE entered the quarter with very low expectations, which helped drive a strong stock reaction following earnings. Guidance increased due to improving margins from initiatives. HAE will likely reach its long-term margin targets outlined at its prior investor day. While some parts of the business are still improving, strength in other areas has helped offset those challenges. Buybacks increased at these depressed valuation prices, enhancing shareholder value. Overall, we believe the setup remains attractive, supported by the company's underlying quality. |
| JLL | Leading commercial real estate service company Jones Lang LaSalle Incorporated contributed positively to performance during the fourth quarter, aided by the company's beat and raise third quarter financial report, coupled with broad-based strength across the business. We expect the company to continue benefiting from structural and secular tailwinds: the outsourcing of commercial real estate, the institutionalization of commercial real estate, and opportunities to increase market share in a highly fragmented market. |
| LMNR | Limoneira Company (LMNR) declined 14% in the quarter and was our largest detractor for the full year. The agricultural company's stock has been pressured by the cessation of a strategic alternatives review and by weaker cash flows stemming from a reorganization of its citrus business. Despite the disappointing price action, we continue to believe the company's land and water rights are significantly undervalued relative to the current stock price. We expect non-core asset sales in 2026 as well as improved cash flows from its citrus operations. |
| LOPE | Grand Canyon Education was the top detractor with 4.53% ending weight and -1.45% contribution. |
| MDU | 3Q earnings were in-line, and the low end of FY25 guidance was raised. There is continued discussion of the $1bn+ FERC-regulated Bakken East pipeline, which is expected to begin binding open season in 1Q2026 and is anticipated to be a significant driver of EPS growth. |
| SNV | Our bullish thesis for Synovus (SNV) rests on the view that the recent selloff reflects generalized market skepticism toward 'merger of equals' bank transactions rather than deal-specific fundamentals. The Pinnacle–Synovus combination creates a top-tier Southeast regional bank with meaningful scale, strong capital, and projected 21% EPS accretion by 2027E alongside a reasonable tangible book value earnback of roughly 2.6 years, metrics that compare favorably to historical regional bank M&A outcomes. Importantly, this skepticism overlooks the fact that management teams at both institutions are widely regarded by Wall Street as best-in-class, with long track records of disciplined growth, strong risk management, and peer-leading profitability. The transaction structure preserves cultural alignment, limits operational overlap, and targets conservative, high-conviction cost synergies. With execution milestones met and earnings accretion emerging, SNV shares appear poised to re-rate, offering attractive upside as merger uncertainty fades. The bank currently trades at a significant discount to its historical multiples on both P/E and P/TBV. |
| 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 |
|---|---|---|---|
| No industry data available | |||
