| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.46% | 0.3% | 5.1% |
| 2025 | 2024 |
|---|---|
| 5.1% | 4.8% |
The Smead Value Fund returned 0.30% in Q4 2025 versus 2.66% for the S&P 500, with healthcare stocks like Merck and Amgen leading performance as sector valuations recovered from earlier discounts. Homebuilders remained the primary detractors due to higher rates and increased inventory, though the managers view their capacity to maintain construction activity as a competitive advantage during cyclical downturns. The fund maintains a concentrated value approach designed for long-term returns, positioning as contrarians who are fearful when others are greedy. The managers believe current market conditions mirror historical extremes, with the Wilshire 5000 trading at 220% of GDP and 40-year S&P 500 returns at record highs. They expect the passive index to deliver negative returns over the next decade, similar to 1998-2009, while deeply discounted sectors like healthcare, energy, and homebuilders benefit from capital rotation away from overvalued growth stocks. Despite headwinds, the strategy delivered positive absolute returns in 2025.
The fund maintains a concentrated value approach, positioning as contrarians who are fearful when others are greedy, believing current market extremes mirror historical bubbles and that deeply discounted sectors like healthcare, energy, and homebuilders will outperform as capital rotates away from overvalued growth stocks.
The managers expect the cap-weighted S&P 500 will go from the easiest money in U.S. history over the last 15 years to a ticket to miserable returns over the next ten years. They believe their returns will be relatively strong compared to the S&P 500 Index as money flows out of growth stocks into value opportunities.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 21 2026 | 2025 Q4 | AMGN, APA, AXP, CVE, DHI, EBAY, FANG, HD, LEN, MAC, MRK, OXY, SPG, UHAL | contrarian, energy, healthcare, Homebuilders, long-term, Market Extremes, S&P 500, value | - | Smead Value Fund's concentrated contrarian approach delivered positive returns despite Q4 underperformance versus the S&P 500. Healthcare stocks recovered while homebuilders remained pressured by rates. The managers believe current market extremes mirror historical bubbles and position for outperformance as capital rotates from overvalued growth stocks into deeply discounted value sectors over the next decade. |
| Oct 19 2025 | 2025 Q3 | AMGN, APA, AXP, CACC, COP, CSCO, CVE, DHI, FANG, INTC, LEN, MAC, MRK, MSFT, NVR, OXY, SPG, TGT, UHAL, UNH | AI, commodities, energy, Homebuilders, technology, value |
APA DHI SPG MRK |
Smead Value Fund outperformed with 10.72% quarterly returns driven by energy and homebuilder positions. The manager sees current AI spending as a speculative bubble similar to historical technology manias, maintaining value positions in out-of-favor sectors. Expects capital rotation from AI speculation to value opportunities as the tortoise ultimately beats the hare. |
| Jul 15 2025 | 2025 Q2 | AMGN, AXP, BRK-A, CSCO, CVE, DHI, DVN, EBAY, INTC, JPM, LEN, MAC, MRK, MSFT, NVR, OXY, SPG | energy, Homebuilders, Long Term, underperformance, value | - | Smead Value Fund underperformed significantly in Q2 2025 with a -2.42% return versus 10.94% for the S&P 500. The managers maintain conviction in their value approach, drawing parallels to Buffett's dot-com era underperformance. They remain overweight neglected energy, homebuilder, and pharma stocks while avoiding popular Magnificent Seven names, expecting long-term outperformance as cycles favor value investing. |
| Apr 14 2025 | 2025 Q1 | AMGN, APA, AXP, DHI, DVN, EBAY, LEN, MAC, MRK, NVR, OVV, OXY, SPG, TGT | energy, Homebuilders, Overvaluation, Quality, REITs, Scarcity, value | - | Smead Value Fund outperformed the S&P 500 in Q1 2025 despite a -3.05% decline, maintaining focus on quality companies at attractive valuations. Core positions in homebuilders and energy benefit from scarcity economics and demographic tailwinds. While tariff uncertainty and rising rates create near-term headwinds, the manager expects patient capital in undervalued, wide-moat businesses to generate superior long-term returns. |
| Jan 14 2025 | 2024 Q4 | AMGN, APA, AXP, BAC, DHI, JPM, LEN, MAC, MRK, NVR, OVV, OXY, SPG | AI, banks, contrarian, energy, Euphoria, Housing, REITs, value | - | Smead Value Fund's contrarian approach lagged in 2024's AI-driven growth rally, returning 4.78% versus S&P 500's 25.02%. Banks and mall REITs outperformed while housing stocks struggled with rising yields. Portfolio trades at 13x earnings versus market's 22.75x, positioned for eventual rotation when current euphoria ends and market reasonableness returns. |
| Oct 15 2024 | 2024 Q3 | AMGN, APA, AXP, BAC, DHI, LEN, MAC, MRK, NVR, OVV, OXY, SPG, WBD | commodities, contrarian, Euphoria, Homebuilders, oil, value | - | Smead Value Fund gained 5.10% in Q3 as homebuilders surged on Fed rate cuts while energy holdings declined on oil price weakness. Managers view current energy correction as normal within a 10-15 year commodity super cycle and maintain contrarian stance against S&P 500 euphoria, drawing parallels to 2011 BRIC bubble. |
| Jul 15 2024 | 2024 Q2 | AMGN, APA, AXP, BAC, DHI, JPM, LEN, MAC, MRK, OVV, OXY, QCOM, SPG, WBD | Concentration, energy, Euphoria, financials, Homebuilders, value | - | Smead Value Fund underperformed in Q2 as market euphoria continued favoring popular tech stocks over the fund's concentrated value holdings in energy, financials, and homebuilders. With household stock exposure at 47% and extreme market concentration reminiscent of historical bubbles, the manager maintains disciplined value approach, expecting eventual reward when euphoria breaks. |
| Apr 30 2024 | 2024 Q1 | AMGN, APA, AXP, DHI, JPM, LEN, MAC, MRK, OVV, OXY, SPG, UHAL, WBD | energy, Euphoria, Homebuilders, large cap, Psychology, value | - | Smead Value Fund gained 10.79% in Q1 2024 but warns of dangerous market euphoria exceeding 2000 bubble levels. The fund avoids overcrowded growth sectors, instead focusing on undervalued energy and homebuilder stocks. With American equity ownership at historic highs and extreme valuations in popular stocks, they advocate caution and contrarian positioning. |
| Jan 16 2024 | 2023 Q4 | APA, AXP, BAC, COP, DHI, DVN, FITB, HD, JPM, LEN, MAC, MTB, NVR, OVV, OXY, PFE, SPG, TGT, UHAL, WAL | banks, consumer, energy, Homebuilders, inflation, value | - | Smead Value Fund returned 14.40% in Q4 2023, outperforming the S&P 500's 11.69% gain, led by homebuilders that overcame mortgage rate fears through supply-demand focus. The managers warn of dangerous market conditions with high investor involvement and insider selling, positioning defensively for inflation through energy, homebuilders, banks, and consumer stocks while maintaining their concentrated, long-term value approach. |
| Oct 16 2023 | 2023 Q3 | AMGN, AXP, BAC, COP, DHI, LEN, MRK, NVR, OVV, OXY, PFE, PXD, SPG, TGT, UHAL, XOM | Bear Market, commodities, Financial Euphoria, Homebuilders, Millennials, oil, value | - | Smead Value Fund outperformed in Q3's market decline, positioning for the end of a financial euphoria episode while capitalizing on a commodity super-cycle and Millennial demographic trends. The fund trades at 11.47 P/E versus S&P 500's 17.40 P/E, owning oil and gas stocks and homebuilders at significant valuation discounts during market concentration extremes. |
| Jul 15 2023 | 2023 Q2 | - | - | - | |
| Mar 31 2023 | 2023 Q1 | - | - | - | |
| Oct 25 2022 | 2022 Q3 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
E-commerceCarvana was the top performer as a vertically integrated e-commerce platform for used cars. The company eliminates traditional dealerships and provides a haggle-free experience with vast nationwide inventory. With less than 2% market share, Carvana has a long runway of profitable growth ahead. |
Used Cars Digital Platform Market Share |
EnergyTalen Energy was a major contributor for the third consecutive year as an independent power producer owning nuclear facilities. The company expanded its relationship with Amazon Web Services for data center power and acquired gas-fired power plants. Future benefits expected from rising electricity demand but public backlash over utility bills poses risks. |
Nuclear Data Centers Power Generation | |
AIAI boom benefited South Korea's semiconductor industry with the KOSPI Index surging 76%. Big tech led markets with AI as a central theme, though the letter notes market crowding around the tech/AI theme as a challenge for active managers. |
Semiconductors Technology Market Leadership | |
Data CentersTalen Energy expanded its relationship with Amazon Web Services to provide carbon-free energy for data centers. This represents a growing demand driver for electricity as data center infrastructure expands to support cloud computing and AI applications. |
Cloud Infrastructure Energy Demand Carbon-free | |
| 2025 Q3 |
OilEnergy positions delivered meaningful contributions despite WTI crude oil averaging around $65 per barrel. At current levels near $60 WTI, few bullish factors are reflected in market pricing while companies make disciplined acquisitions and maintain strong balance sheets. |
WTI Crude Producers Acquisitions Balance Sheets |
HomebuildersFederal Reserve rate cuts and resilient consumer spending provided tailwinds for homebuilders. D.R. Horton was among the best-performing stocks in the quarter, benefiting from these favorable conditions. |
Rate Cuts Consumer Construction Housing Fed | |
AIThe artificial intelligence boom has ushered in one of the costliest building sprees in world history. Leading tech firms have committed more toward AI data centers, chips and energy than it cost to build the interstate highway system, creating a mega-speculative bet on technology transformation. |
Data Centers Chips Speculation Technology Infrastructure | |
ValueThe fund continues to own meritorious companies with repeatable products, solid balance sheets and defendable market positions. The tortoise and hare analogy emphasizes slow and steady value investing over speculative growth, with hope that money will flow from maniacal sectors to out-of-favor industries. |
Tortoise Steady Meritorious Defendable Out-of-favor | |
| 2025 Q2 |
ValueThe fund positions itself as a value-oriented strategy, drawing parallels to Warren Buffett's underperformance during the dot-com bubble. The managers emphasize their focus on neglected companies while money flows into popular growth stocks and the Magnificent Seven. |
Value Undervalued Neglected |
OilThe fund is overweight oil and gas stocks despite current administration pressure to lower oil prices. OPEC+ announcements regarding increased production have pressured prices, but the managers believe energy stocks will perform well going forward based on historical patterns. |
Oil Energy OPEC | |
HomebuildersThe portfolio includes homebuilder positions as part of their strategy to own wonderful companies that have been neglected while capital flows into more popular investments. |
Homebuilders Housing Construction | |
| 2025 Q1 |
ValueThe fund emphasizes buying quality, well-selected common stocks at attractive valuations during a period when stocks are historically overpriced and overly popular. The manager believes investors are expecting what worked for the last ten years will work for the next ten years, creating opportunities for value-oriented approaches. |
Value Quality Overpriced Popular Meritorious |
HomebuildersThe fund maintains conviction in homebuilders despite short-term headwinds from tariff concerns and rising mortgage rates. D.R. Horton builds homes at ~$260,000 cost with ~$350,000 average selling price, providing 25% gross margins and ability to pass through price increases or take market share through margin compression. |
Homebuilders Housing Affordability Scale Demographics | |
OilThe fund believes in the economics of scarcity in oil and gas, driven by secular underinvestment in new supply and rising global demand. Management teams only reinvest discretionary profits in value-creating projects or return money to shareholders via buybacks and dividends, with mid-cycle prices expected to be higher than historically. |
Oil Scarcity Underinvestment Energy Buybacks | |
Commercial Real EstateThe fund owns mall REITs Simon Property Group and Macerich despite near-term consumer spending concerns. Simon's Class-A and outlet assets represent evergreen shopping real estate, while Macerich continues repairing its balance sheet and upgrading portfolio quality under CEO Jackson Hsieh's leadership. |
REITs Malls Real Estate Balance Sheet Portfolio | |
| 2024 Q4 |
ValueThe fund practices contrarian value investing, with their portfolio trading at 13-times earnings versus 22.75-times on the S&P 500. They believe the market will eventually reestablish reasonableness and favor their undervalued positions over the current growth momentum. |
Value Contrarian Earnings Undervalued Reasonableness |
Commercial Real EstateMall REITs were among the fund's best performers for the year, with Macerich and Simon Property Group being significant winners. These positions were out of favor 18 months ago but have recovered strongly. |
REITs Malls Commercial Real Estate Recovery | |
AIThe manager acknowledges AI as the legitimate development driving the current financial euphoria, similar to radio in 1929 and the internet in 1999. Charlie Munger called this the biggest financial euphoria episode of his career due to the totality of it. |
AI Euphoria Bubble Technology | |
| 2024 Q3 |
HomebuildersHome builders continued to show they are meeting an economic need and aren't the heavily cyclical companies they were in the past. D.R. Horton, Lennar and NVR rose sharply as the Federal Reserve cut interest rates. |
Housing Interest Rates Construction Cyclical |
OilOil and gas stocks got pounded as oil prices pulled back below $70 per barrel. The manager believes this is a normal correction in a 10 to 15 year bull market in commodities, driven by powerful labor unions getting massive pay raises and $12 trillion of Federal Government monetized debt. |
Energy Commodities Inflation Cyclical | |
ValueThe manager positions against what they view as a financial euphoria episode in the S&P 500 Index, focusing on value investing principles while avoiding extremely popular stocks in extremely popular industries that get over-invested. |
Contrarian Euphoria Undervalued Discipline | |
| 2024 Q2 |
ValueThe fund maintains its value discipline and eight criteria despite underperformance against popular growth stocks. The manager expects to be well rewarded when the current euphoria episode ends, as has happened following other difficult popular markets. |
Value Discipline Criteria Undervalued Contrarian |
OilThe fund remains very bullish on oil and gas stocks despite Apache Petroleum remaining in the doghouse despite a big uptick in oil prices. Oil and gas holdings include Apache Petroleum, Occidental Petroleum, and Ovintiv. |
Oil Energy Petroleum Bullish Commodity | |
| 2024 Q1 |
ValueThe fund focuses on investing at much lower P/E multiples in industries that have avoided euphoria. They believe caution is warranted when euphoric greed is dominant in the stock market, making this a good reason to fear stock market failure and seek value opportunities. |
Value P/E Multiples Contrarian Undervalued Euphoria |
OilEnergy represents 3.9% of the S&P while oil and gas stocks are 3.5% of the index, yet oil and gas companies generate 7.9% of the free cash flow. The manager views these companies as providing the addictive legal drug (fossil fuels) that powers the world. |
Oil Energy Free Cash Flow Fossil Fuels Underweight | |
HomebuildersThe fund believes a movement away from common stocks could cause Millennials and Gen Z to become more enamored with home ownership. Their homebuilders exist to meet that economic need, and their market share of newly built homes could be a blessing for the next decade. |
Homebuilders Millennials Gen Z Home Ownership Demographics | |
| 2023 Q4 |
HomebuildersHome builders were weighed down by rapidly rising mortgage rates and recessionary fears that reemerged fears of a 2008-like housing crisis. The fund focused on supply demand dynamics rather than emotional fears and was handsomely rewarded with strong performance from D.R. Horton, Lennar, and NVR. |
Housing Mortgage Construction Supply Demand |
OilEnergy had a difficult second half with headwinds from recessionary fears and potential demand reduction. The fund believes supply constraints remain intact for oil prices well above current trading levels and maintains positions in oil and gas production companies. |
Energy Production Supply Constraints Pricing | |
InflationThe fund believes the stock market has misconstrued the incoming tide of inflation, with assumptions that inflation is licked similar to 1973 and 1977. They position for inflation possibilities through oil and gas production holdings. |
Inflation Monetary Pricing Historical Cycles | |
| 2023 Q3 |
OilThe fund sees a once-in-a-lifetime opportunity in oil and gas shares, believing they are in the early stages of a commodity super-cycle. Oil and gas stocks have dramatically underperformed the price of oil this year, creating an excellent short-term buying opportunity. The fund expects consolidation in the industry with 40% of existing companies potentially merging into larger entities within 10 years. |
Oil Natural Gas Commodities Energy Consolidation |
HomebuildersThe fund likes home builders as beneficiaries of Millennial demographic dominance, with 40% more Millennials in the 27-42 age group than Gen Xers. Despite third quarter weakness, home builders were the best performers year-to-date. The fund sees opportunity as economic contraction bringing lower interest rates would kick in strong economic activity from this powerhouse population group. |
Homebuilders Demographics Millennials Housing Interest Rates | |
ValueThe fund's portfolio trades at a P/E ratio of 11.47 versus the S&P 500's 17.40 P/E based on 2024 analyst estimates. This era provides opportunity to own high return-on-equity companies trading at very depressed prices relative to the average stock and at a huge discount to shares dominating the S&P 500 Index. |
Value P/E Ratio Discount ROE Valuation |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 19, 2025 | Fund Letters | Bill Smead | APA | APA Corp. | Energy | Oil & Gas Exploration & Production | Bull | NASDAQ | cash flow, consolidation, energy, Margins, oil, value investing | Login |
| Oct 19, 2025 | Fund Letters | Bill Smead | DHI | D.R. Horton Inc. | Consumer Discretionary | Homebuilding | Bull | NYSE | construction, growth, Housing, Real Estate, Value | Login |
| Oct 19, 2025 | Fund Letters | Bill Smead | SPG | Simon Property Group Inc. | Real Estate | REITs—Retail | Bull | NYSE | dividend, Real Estate, REITs, retail, Value | Login |
| Oct 19, 2025 | Fund Letters | Bill Smead | MRK | Merck & Co. Inc. | Health Care | Pharmaceuticals | Bull | NYSE | defensive, dividends, healthcare, Oncology, pharmaceuticals | Login |
| TICKER | COMMENTARY |
|---|---|
| AMGN | Our best-performing stocks in the quarter were Merck (MRK), Amgen (AMGN), and American Express (AXP). For the 2025 full year the best-performing stocks were eBay (EBAY), Amgen Inc (AMGN), and American Express (AXP). |
| AXP | American Express Company represents 22.1% of company owned with cost basis of $1,287 million and market value of $56,088 million, providing $479 million in 2025 dividends. |
| CVE | In November, we sold Canadian producer Cenovus (CVE), reinvesting proceeds in US midstream company ONEOK (OKE), which has underperformed recently. While we remain bullish on Canada, should Venezuelan supply return, it is a type of crude that directly competes with Canadian production. |
| DHI | Conversely, our biggest detractors this quarter were DR Horton (DHI), Lennar Corp (LEN), Home Depot (HD). |
| EBAY | For the 2025 full year the best-performing stocks were eBay (EBAY), Amgen Inc (AMGN), and American Express (AXP). |
| HD | Conversely, our biggest detractors this quarter were DR Horton (DHI), Lennar Corp (LEN), Home Depot (HD). |
| LEN | LEN: $5B authorized January 2024; $4B completed |
| MRK | Top gainers in the Fund this quarter included Merck (+26%) |
| OXY | We also hold equity method investments, principally Kraft Heinz and Occidental. We recorded a pre-tax impairment loss of approximately $5.7 billion on our investment in Occidental common stock in the fourth quarter of 2025. |
| UHAL | The largest detractors were Lennar Corp (LEN), U-Haul Holdings (UHAL/B), and Occidental Petroleum (OXY). |
| 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 | |||
