| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9% | -3.9% | 4.5% |
SouthernSun Asset Management's 4Q2025 commentary draws parallels between today's AI-driven market environment and the 2014-15 oil collapse, emphasizing how dominant narratives can distort perception and create valuation risk. The manager notes that artificial intelligence has become a macroeconomic assumption embedded across capital expenditure plans and valuation models, yet faces significant physical constraints including energy intensity, grid limitations, and regulatory scrutiny. Many AI-exposed companies trade at multiples assuming flawless execution, creating vulnerability to repricing. The portfolio returned -3.89% net in Q4 versus Russell 2500's +2.22%, with strong performance from Darling Ingredients and APi Group offset by weakness in Crane NXT and Generac. The manager initiated positions in Oshkosh, Live Oak Bancshares, and Extreme Networks while exiting Dycom, Timken, and Trex. Looking ahead, they see plausible scenarios of valuation compression and overcapacity periods, maintaining discipline while finding opportunities in areas overlooked by prevailing narratives. The approach remains grounded in intrinsic value, balance sheet strength, and humility in late-cycle environments.
Long-term value creation through disciplined investing in fundamentally strong businesses trading below intrinsic value, while avoiding the market's tendency to overpay for perceived certainty in late-cycle environments.
The manager does not see inevitability of either collapse or uninterrupted progress, but rather a landscape shaped by plausible scenarios including valuation compression, overcapacity periods, and macroeconomic crosswinds. They remain optimistic about the future yet mindful of historical lessons, continuing to find interesting places to allocate capital often in areas overlooked amid prevailing narratives.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 25 2026 | 2025 Q4 | APG, BOOT, CXT, DAR, DY, EXTR, FND, GNRC, LOB, MUSA, OSK, TKR, TREX, WSO | AI, energy, infrastructure, Late-cycle, SMID Cap, valuation, value |
DAR APG CXT GNRC OSK LOB EXTR DY TKR TREX |
SouthernSun draws parallels between today's AI euphoria and 2014-15 oil collapse, warning that AI's physical constraints and elevated valuations create repricing risk. Q4 underperformed with -3.89% net returns, but the manager sees compelling opportunities in overlooked areas while maintaining discipline around intrinsic value and balance sheet strength in this late-cycle environment. |
| Oct 30 2025 | 2025 Q3 | BCO, CXT, DAR, FND, GNRC, MOD, MUSA, NGVT, SEIC, VMI, WSO | active management, fundamentals, Quality, SMID Cap, Stewardship, value |
MOD BCO DAR WSO CXT MOD BCO DAR WSO CXT |
SouthernSun's SMID Cap strategy returned 7.96% net in Q3 2025, driven by Modine Manufacturing and Brinks Company while Darling Ingredients detracted. The firm champions active management over passive indexing, focusing on quality companies with strong balance sheets and niche dominance. Despite geopolitical risks and market concentration concerns, they maintain disciplined value investing with cautious optimism. |
| Jul 17 2025 | 2025 Q2 | APG, BOOT, DAR, DY, LPX, MOD, MSA, MUSA, SAM, TREX, WSO | Agriculture, Building Products, Resilience, Safety, SMID Cap, tariffs, technology, value |
APG BOOT WSO SAM MSA APG BOOT WSO SAM MSA |
SouthernSun's SMID Cap strategy outperformed in Q2 2025 with 10.34% net returns, driven by companies demonstrating operational resilience and capital discipline. Portfolio benefits from share buyback acceleration, tariff adaptation strategies, and market share gains through innovation. Housing and agriculture face rate-driven headwinds while safety and specialty retail show strength. M&A activity expected to increase. |
| Apr 25 2025 | 2025 Q1 | AEIS, AGCO, AWI, BDC, BOOT, BR, DHR, GNRC, IEX, MOD, PII, SAM, TKR, USPH, WSO | fundamentals, Quality, Resilience, small caps, SMID Cap, tariffs, Trade Policy, value |
BR WSO BOOT USPH PII MOD |
SouthernSun sees small-cap opportunity as markets shift from speculative excess to fundamentals-focused investing. Their SMID strategy targets resilient U.S. companies with strong balance sheets and pricing power. While tariffs create near-term volatility, potential trade policy shifts toward domestic production and growth-to-value rotation could benefit quality small caps. Current dislocation offers compelling entry points for patient investors. |
| Dec 31 2024 | 2024 Q4 | APG, AWI, BCO, BR, DY, MGPI, PII, SEIC, TKR, USPH | Balance Sheet, Cyclical, management, Patience, Research, SMID Cap, value |
SEIC AWI MGPI BCO |
SouthernSun's SMID Cap strategy underperformed in Q4 2024 but demonstrated disciplined capital allocation by exiting deteriorating positions like MGPI while benefiting from strong performers like SEI and Armstrong. The firm maintains cautious optimism for 2025, focusing on durable businesses with strong management teams while navigating policy uncertainty and market speculation through fundamental research and patient capital deployment. |
| Sep 30 2024 | 2024 Q3 | APG, BOOT, GNRC, IDXX, LPX, NGVT, USPH | - | - | |
| Jul 20 2024 | 2024 Q2 | AGCO, BCO, BOOT, DAR, DY, MUSA, PII, TREX, USPH, VMI | fundamentals, long-term, Patience, Research, small cap, SMID Cap, value |
BOOT DY DAR USPH |
SouthernSun's SMID cap strategy outperformed benchmarks in Q2 2024 despite a challenging environment. The firm believes economic weakness is priced into small caps, creating attractive opportunities for patient investors. They focus on secular growth areas like broadband infrastructure and depressed sectors like chemicals, emphasizing deep research and long-term value creation through fundamental analysis. |
| May 17 2024 | 2024 Q1 | AWI, BDC, BOOT, BR, DAR, DY, MGPI, SAM, THO, USPH | Concentration, long-term, Quality, small cap, SMID Cap, value |
DY BOOT MGPI SAM |
SouthernSun sees opportunity in marginalized small and SMID-cap equities despite sector headwinds from peak margins and debt burdens. Their concentrated portfolio approach focuses on quality businesses like fiber infrastructure provider Dycom and western retailer Boot Barn. The firm believes current market dislocations create attractive entry points for patient capital with long-term perspective. |
| Feb 15 2024 | 2023 Q4 | AWI, BCO, BDC, BOOT, BR, DY, FND, LPX, MGPI, PII, SAM | Construction, consumer, industrials, Onshoring, SMID Cap, Telecommunications, value |
ABDY.L AER|AWI|MUSA|NEU|SAIA|WTM BBDC4.SA SAM ADI|BDX|FI|FND|HAS|META|MSFT|MSI|ORCL|TMO |
SouthernSun's SMID Cap strategy outperformed in 2023 despite macro volatility, with strong contributions from fiber infrastructure and building materials companies. The managers see portfolio businesses as fundamentally underappreciated and favor companies with strong balance sheets and adaptive management teams positioned to benefit from onshoring trends and infrastructure spending while navigating 2024's geopolitical uncertainties. |
| Sep 30 2023 | 2023 Q3 | BCO, BDC, BR, DAR, DY, LPX, MUSA, SAM, TKR, USPH | Biofuels, Convenience Stores, self-help, SMID Cap, Telecommunications, value |
SAM AER|AWI|MUSA|NEU|SAIA|WTM ABDY.L ALDAR.AD |
SouthernSun's SMID Cap strategy delivered -6.05% in Q3 but maintains strong trailing performance. The firm completed leadership transition to employee ownership while focusing on self-help stories like Boston Beer and Murphy USA. Despite macro headwinds including elevated cash yields and small cap underperformance, management sees opportunity in market dislocation for patient fundamental investors. |
| Feb 8 2023 | 2023 Q2 | AGCO, DY, IEX, MGPI, MUSA, NGVT, SAM, THO, TREX, UNVR, USPH, WRK | Chemicals, concentrated, healthcare, SMID Cap, Spirits, Telecommunications, value | - | SouthernSun's concentrated SMID cap strategy delivered 11.04% net returns in Q2 2023, outperforming benchmarks through disciplined focus on financial flexibility, management adaptability, and niche dominance. Key positions include Dycom benefiting from fiber infrastructure runway and new additions in physical therapy and premium spirits markets with strong demographic and generational tailwinds. |
| Apr 30 2023 | 2023 Q1 | AGCO, BCO, BOOT, CLH, CR, DAR, LPX, MUSA, TKR, TREX, WRK, WSO | Building Products, HVAC, Industrial, M&A, packaging, SMID Cap, value |
WSO BCO ALDAR.AD WRK LPX |
SouthernSun outperformed in Q1 despite banking volatility and economic uncertainty. Strong contributors in HVAC distribution and cash management services offset weakness in packaging. The team rotated capital from mature positions into Louisiana-Pacific's building products transformation story. Manager remains selective on valuations while finding overlooked opportunities with strong fundamentals and competitive advantages. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIAI occupies a central role similar to oil in 2014-15, with markets extrapolating favorable environments too far. AI infrastructure is profoundly energy-intensive with rising electricity prices and grid constraints challenging assumptions of frictionless scalability. Valuation multiples assume near-flawless execution while physical and regulatory constraints complicate the path forward. |
Artificial Intelligence Data Centers Energy Infrastructure Valuations Technology |
EnergyEnergy plays a crucial role in AI infrastructure economics, with data centers becoming massive electricity consumers. Rising power costs compress margins while grid constraints and regulatory scrutiny introduce deployment delays and uncertainty that challenge AI scalability assumptions. |
Electricity Power Pricing Grid Infrastructure Data Centers Utilities | |
ValuationsMany AI-exposed companies trade at multiples assuming near-flawless execution, creating conditions reminiscent of late-cycle environments. Markets forgive delays and cost overruns when confidence is high, but these same factors can catalyze abrupt repricing when confidence wanes. |
Multiples Execution Risk Market Confidence Repricing Late Cycle | |
| 2025 Q3 |
Active ManagementSouthernSun emphasizes the enduring value of active management in an increasingly passive world, arguing that active investing restores balance by engaging directly with management, questioning assumptions, and allocating capital purposefully rather than automatically. They view active management as essential stewardship that combines analytical rigor with human judgment. |
Active Management Stewardship Capital Allocation Engagement Discovery |
ValueThe firm maintains its disciplined approach to valuation, seeking companies with genuine margins of safety and focusing on long-term value creation over short-term market movements. They emphasize that value, properly understood and patiently pursued, remains constant despite market volatility. |
Value Valuation Discipline Margin of Safety Long-term Fundamentals | |
QualitySouthernSun's investment philosophy centers on four pillars including financial flexibility, management adaptability, niche dominance, and valuation discipline. They seek companies with strong balance sheets, aligned management teams, transparent governance, and enduring competitive moats that can weather cycles of ambiguity. |
Quality Financial Flexibility Management Competitive Moats Balance Sheets | |
| 2025 Q2 |
ResilienceCompanies demonstrated operational discipline through cost consciousness, margin stewardship, and capital discipline. Management teams acknowledged macroeconomic uncertainties while maintaining steady execution and preparing deliberately for challenges. |
Operational discipline Cost management Margin preservation Capital allocation Adaptability |
BuybacksVolatility year to date provided opportunities for several companies to more aggressively utilize existing and initiate new share repurchase programs. Cash is king again with companies focusing on shareholder return through repurchase programs. |
Share repurchases Capital allocation Shareholder returns Cash deployment Volatility opportunity | |
Trade PolicyTariffs re-emerged as a significant cost driver, prompting companies to explore reshoring, leaner inventories, and domestic sourcing. The Big Beautiful Bill adds complexity particularly touching manufacturing, infrastructure, and corporate tax policies. |
Tariffs Reshoring Domestic sourcing Supply chain Policy impact | |
Building ProductsHousing sector continues to feel the bite of higher rates, especially residential new construction. Several building products businesses are taking share from smaller competitors through innovation, new product introductions and expanded distribution. |
Housing Construction Market share Innovation Distribution | |
AgricultureFarmers pressured by commodity prices and rates as well as trade policies are breaking even and not in a position to invest meaningfully in equipment or infrastructure. This dynamic is weighing on many Ag-related businesses. |
Commodity prices Equipment Infrastructure Trade policies Investment pressure | |
| 2025 Q1 |
Small CapsThe manager believes small- to mid-cap U.S. companies with strong fundamentals are poised to shine as the market transitions from speculative excess to substance-focused investing. They see this as a shift from a sugar high to a carnivore diet - stripped of fluff and rooted in what's healthy and enduring. |
SMID Cap Russell 2000 Russell 2500 Fundamentals Quality |
ValueThe firm anticipates a potential growth-to-value rotation that could spotlight small and mid caps, similar to the post-2002 period. They believe the market's sugar high is waning and entering a leaner era focused on substance over speculation. |
Value Rotation Fundamentals Substance Quality Valuation | |
Trade PolicyTariffs, particularly with China, present both near-term risks and longer-term opportunities. While tariffs could hit margins in the next 6-18 months, a reordered marketplace with trade tilting back to U.S. domestic production could be transformative for small caps with pricing power. |
Tariffs China Domestic Production Supply Chains Reshoring | |
OnshoringThe manager sees potential for a decade where small caps become linchpins in a reshored economy. Trade flows reorienting toward U.S. shores could drive M&A activity and benefit companies with operational flexibility and strong balance sheets. |
Reshoring Domestic Production Manufacturing Supply Chains M&A | |
ResilienceThe investment philosophy centers on companies with financial backbone, market strongholds, and leadership to endure through storms and seasons. The firm seeks businesses that can flex rather than fracture during difficult periods. |
Balance Sheets Cash Flow Durability Operational Excellence Leadership | |
| 2024 Q4 |
Trade PolicyThe U.S. presidential election outcome led to market anticipation of policy shifts towards tax extensions and deregulation, viewed as pro-growth. However, potential new trade policies, particularly tariffs, introduced elements of uncertainty that the firm closely monitored. Global trade adjustments, particularly with major economies like China, continue to shape investment decisions. |
Tariffs Deregulation Tax China Policy |
RatesThe Federal Reserve cut interest rates again during Q4, signaling a cautious yet proactive stance against slowing economic growth. This move influenced both credit and equity markets, which have been volatile as markets speculate about Fed actions in 2025. The firm is preparing for a nuanced environment where inflation could either spike or stabilize. |
Fed Interest Rates Inflation Credit Volatility | |
| 2024 Q2 |
BroadbandStrong demand outlook for fiber construction in urban areas as carriers generate good returns on fiber investments. Public funding through ARPA, RDOF, and BEAD programs provides additional significant demand, with the $40 billion BEAD program being the largest federal broadband program ever in the U.S. Deployment expected to start in 2025. |
Fiber Infrastructure BEAD Telecommunications Construction |
Energy TransitionDarling Ingredients is constructing sustainable aviation fuel (SAF) capacity expected to come online in Q4 2024 and evaluating further SAF expansion. Growth and incentives in the SAF market provide significant margin expansion and return on investment opportunities. |
Sustainable Aviation Fuel Renewable Energy Biofuels Energy Storage Clean Technology | |
SemiconductorsSemiconductor industry identified as a focus area with secular tailwinds expected to benefit from long-term structural trends. The sector represents one of the key growth opportunities in the current market environment. |
Chips Technology Electronics Manufacturing Innovation | |
Infrastructure SpendingPower infrastructure identified as having secular tailwinds and expected to benefit from long-term structural trends. HVAC industries also highlighted as benefiting from infrastructure-related growth opportunities. |
Power Construction Utilities Government Investment | |
| 2024 Q1 |
TelecommunicationsFiber construction demand remains bright with private equity investment and public funding through ARPA, RDOF, and BEAD programs. The $40 billion BEAD program is expected to begin deployments in 2025, providing multi-year tailwinds. With only 43% of US homes passed with fiber, there is a long runway for penetration. |
Fiber Infrastructure BEAD Telecommunications Construction |
RetailWestern and work-related retail shows expansion potential with Boot Barn planning to grow from 380 stores to approximately 900 stores over several years. Management demonstrates ability to increase gross margins through higher-margin proprietary brands while maintaining balance sheet discipline. |
Western Retail Store Expansion Proprietary Brands Gross Margin Retail | |
Distilled SpiritsThe distilled spirits industry shows shift toward new distillate sales which provide greater cash flow visibility despite lower margins. Premium and ultra-premium branded spirits segments offer growth opportunities with margin expansion potential as companies build out their portfolios. |
Distilled Spirits Premium Brands Cash Flow Margin Expansion Branded Spirits | |
| 2023 Q4 |
OnshoringCompanies continue to adapt to security of supply, labor, and technology adoption issues through on-shoring, re-shoring, and near-shoring strategies. With escalation of armed regional conflicts impacting shipping and supply chains, companies are aggressively evaluating and adjusting their strategies to ensure competitive advantages. |
Supply Chain Manufacturing Security Geopolitical |
Infrastructure SpendingDycom Industries benefits from fiber deployment with only 43% of US homes passed with fiber, creating a long runway for penetration. Government funding from the $40 billion BEAD program is expected to start deployment, with customers increasing their pace of fiber deployment. |
Fiber Telecommunications Government Funding BEAD | |
AutomationBelden continues to benefit from growth in industrial automation, 5G deployment, and environments increasingly dependent on high quality, reliable networks. The company showcased meaningful interest from global partners including Amazon Web Services and automobile manufacturers. |
Industrial 5G Networks Manufacturing | |
| 2023 Q3 |
Convenience StoresMurphy USA benefits from its position as a low-cost, high-volume fuel retailer with advantaged locations on Walmart outparcels. The company continues to grow same-store sales and sees opportunities for new store additions while maintaining capital discipline through share repurchases. |
Fuel Retail Walmart Margins Growth |
Telecommunications InfrastructureDycom Industries provides engineering and construction services for telecommunications and utility industries. Despite near-term moderation from large customers, the company expects strong 2024 demand driven by unprecedented government funding through ARPA, RDOF, and BEAD programs for fiber network expansion. |
Fiber Construction Government Infrastructure 5G | |
Sustainable Aviation FuelDarling Ingredients is constructing SAF capacity expected online in Q4 2024 and evaluating further expansion. The company sees significant margin expansion and return on investment opportunities in the SAF market as growth and incentives provide attractive economics. |
Biofuels Aviation Renewable Capacity Margins | |
| 2023 Q2 |
Telecommunications InfrastructureFiber penetration has significant runway with only 43% of US homes passed by high-speed fiber cable. Government funding through ARPA, RDOF, and BEAD programs is making previously uneconomical rural and low-income areas viable for fiber deployment. Industry capacity remains tight with strong demand from smaller customers. |
Fiber Telecommunications Infrastructure Government Funding Rural Broadband |
Specialty ChemicalsRaw material cost pressures from elevated crude tall oil prices due to increased biodiesel demand. Companies developing alternative fatty acid capabilities and opportunities to shift products into growing biodiesel markets. Automotive activated carbon products expected to benefit from global production recovery. |
Crude Tall Oil Biodiesel Activated Carbon Automotive Raw Materials | |
Physical TherapyHighly fragmented $30+ billion US market expected to grow as population becomes more active and ages. Medical providers and insurers recognizing benefits of physical therapy for better outcomes and lower costs. Multiple growth opportunities through increased visits per clinic, new clinics, and acquisitions. |
Healthcare Aging Population Fragmented Market Outpatient Rehabilitation | |
Distilled SpiritsUS spirits gaining significant share of total beverage alcohol over the last decade. American whiskey volumes experiencing strong growth driven by craft brands. Generational consumption trends suggest sustainable demand. Time and capital required for aging creates barriers and unique market positioning opportunities. |
Bourbon Whiskey Craft Spirits Aging Distribution | |
| 2023 Q1 |
Building ProductsManager initiated position in Louisiana-Pacific Corporation, a leading producer of oriented strand board and siding. The company has transformed from commodity OSB focus to value-add building solutions with superior growth profile and barriers to entry in siding business. |
OSB Siding Construction Housing Materials |
HVACWatsco was top contributor, delivering record sales and earnings growth. The business is 80% repair and replace driven, providing stability. Management continues investing in proprietary technology solutions despite near-term profitability burden. |
Air Conditioning Heating Distribution Technology | |
Industrial ServicesBrink's delivered strong organic growth in cash management and digital retail solutions. The company is expanding higher-margin services globally while the manager believes cash will remain relevant long-term despite market skepticism. |
Cash Management Digital Solutions ATM Services | |
Renewable ComponentsDarling Ingredients was top detractor despite record EBITDA. The company is investing heavily in sustainable aviation fuel and renewable diesel production, strengthening vertical integration while increasing debt levels to over 3x. |
Renewable Diesel Aviation Fuel Sustainability | |
PackagingWestRock reported below-expectations results with weakness in global paper segment due to poor export demand. However, the manager believes the company operates a resilient business model with diverse end market exposure and strong free cash flow generation. |
Corrugated Consumer Packaging Paper |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Feb 25, 2026 | Fund Letters | Michael Cook | DAR | Darling Ingredients Inc. | Industrials | Agricultural Products & Services | Bull | New York Stock Exchange | cash flow, Cyclical Recovery, Margin Inflection, regulatory support, Renewable diesel, vertical integration | Login |
| Feb 25, 2026 | Fund Letters | Michael Cook | APG | APi Group Corporation | Industrials | Building Products | Bull | New York Stock Exchange | backlog, Bolt-on Acquisitions, Inspection Growth, leverage, margin expansion, recurring revenue | Login |
| Feb 25, 2026 | Fund Letters | Michael Cook | CXT | Crane NXT Co. | Industrials | Electronic Equipment & Instruments | Bull | New York Stock Exchange | acquisition, Authentication, Free Cash Flow, Margin Resilience, Payment Innovation, Traceability | Login |
| Feb 25, 2026 | Fund Letters | Michael Cook | GNRC | Generac Holdings Inc. | Industrials | Electrical Components & Equipment | Bull | New York Stock Exchange | Automation, backup power, cyclical demand, data centers, Margins, market leadership | Login |
| Feb 25, 2026 | Fund Letters | Michael Cook | OSK | Oshkosh Corporation | Industrials | Construction Machinery & Heavy Transportation Equipment | Bull | New York Stock Exchange | backlog, defense contracts, Fleet Replacement, Mission-Critical, Rental Recovery, valuation discount | Login |
| Feb 25, 2026 | Fund Letters | Michael Cook | LOB | Live Oak Bancshares Inc. | Financials | Regional Banks | Bull | NASDAQ | AI automation, Credit cycle, deposit growth, Fintech Integration, SBA lending, underwriting discipline | Login |
| Feb 25, 2026 | Fund Letters | Michael Cook | EXTR | Extreme Networks Inc. | Information Technology | Communications Equipment | Bull | NASDAQ | Enterprise Networking, IT Spending, market share, Product Differentiation, recurring revenue, valuation | Login |
| Feb 25, 2026 | Fund Letters | Michael Cook | DY | Dycom Industries, Inc. | Industrials | Construction & Engineering | Bear | New York Stock Exchange | Acquisition Risk, AI Exuberance, capital allocation, data centers, Fiber Deployment, valuation expansion | Login |
| Feb 25, 2026 | Fund Letters | Michael Cook | TKR | Timken Company | Industrials | Industrial Machinery | Bear | New York Stock Exchange | Capital Redeployment, CEO transition, execution risk, Industrial Bearings, M&A Skepticism, strategy | Login |
| Feb 25, 2026 | Fund Letters | Michael Cook | TREX | Trex Company, Inc. | Industrials | Building Products | Bear | New York Stock Exchange | Brand moat, competitive dynamics, Distribution, Outdoor Living, Pricing pressure, risk/reward | Login |
| Oct 30, 2025 | Fund Letters | Michael Cook | MOD | Modine Manufacturing Company | Consumer Discretionary | Electrical Components & Equipment | Bull | NYSE | AI, cash flow, data centers, growth, leadership, Margins, Reinvestment, thermal management | Login |
| Oct 30, 2025 | Fund Letters | Michael Cook | BCO | Brink’s Company | Industrials | Security & Protection Services | Bull | NYSE | buybacks, capital allocation, Cash management, growth, Outsourcing, recurring revenue, Security | Login |
| Oct 30, 2025 | Fund Letters | Michael Cook | BCO | Brink’s Company | Industrials | Security & Protection Services | Bull | NYSE | buybacks, capital allocation, Cash management, growth, Outsourcing, recurring revenue, Security | Login |
| Oct 30, 2025 | Fund Letters | Michael Cook | DAR | Darling Ingredients Inc. | Consumer Staples | Renewable Fuels | Bull | NYSE | cash flow, Feedstock, Fuels, Margin recovery, Regulatory, renewables, vertical integration | Login |
| Oct 30, 2025 | Fund Letters | Michael Cook | DAR | Darling Ingredients Inc. | Consumer Staples | Renewable Fuels | Bull | NYSE | cash flow, Feedstock, Fuels, Margin recovery, Regulatory, renewables, vertical integration | Login |
| Oct 30, 2025 | Fund Letters | Michael Cook | WSO | Watsco Inc. | Industrials | Trading Companies & Distributors | Bull | NYSE | cash flow, construction, Distribution, growth, HVAC, M&A, market share | Login |
| Oct 30, 2025 | Fund Letters | Michael Cook | CXT | Crane NXT Co. | Industrials | Electronic Equipment & Instruments | Bull | NYSE | Authentication, Brand protection, cash flow, Ip, M&A, Margins, Payment systems, Security | Login |
| Oct 30, 2025 | Fund Letters | Michael Cook | WSO | Watsco Inc. | Industrials | Trading Companies & Distributors | Bull | NYSE | cash flow, construction, Distribution, growth, HVAC, M&A, market share | Login |
| Oct 30, 2025 | Fund Letters | Michael Cook | CXT | Crane NXT Co. | Industrials | Electronic Equipment & Instruments | Bull | NYSE | Authentication, Brand protection, cash flow, Ip, M&A, Margins, Payment systems, Security | Login |
| Oct 30, 2025 | Fund Letters | Michael Cook | MOD | Modine Manufacturing Company | Consumer Discretionary | Electrical Components & Equipment | Bull | NYSE | AI, cash flow, data centers, growth, leadership, Margins, Reinvestment, thermal management | Login |
| Jul 17, 2025 | Fund Letters | Michael Cook | BOOT | Boot Barn Holdings, Inc. | Consumer Discretionary | Apparel Retail | Bull | New York Stock Exchange | Apparel, Balance_Sheet, Margins, retail, Storegrowth | Login |
| Jul 17, 2025 | Fund Letters | Michael Cook | WSO | Watsco, Inc. | Industrials | Industrial Distribution | Bull | New York Stock Exchange | Acquisitions, Distribution, HVAC, Margins, scale | Login |
| Jul 17, 2025 | Fund Letters | Michael Cook | SAM | The Boston Beer Company, Inc. | Consumer Staples | Beverages | Bull | New York Stock Exchange | Beverages, brands, cashflow, innovation, Margins | Login |
| Jul 17, 2025 | Fund Letters | Michael Cook | MSA | MSA Safety, Inc. | Industrials | Safety Equipment | Bull | New York Stock Exchange | Connectedtech, Industrials, Recurringrevenue, Safety, valuation | Login |
| Jul 17, 2025 | Fund Letters | Michael Cook | APG | APi Group Corporation | Industrials | Specialty Services | Bull | New York Stock Exchange | Acquisitions, Inspections, Margins, Safety, services | Login |
| Jun 30, 2025 | Fund Letters | SouthernSun SMID Cap | SAM | The Boston Beer Company, Inc. | Consumer Staples | Beverages | Bull | NASDAQ | Alcohol Beverages, Beyond Beer, brand portfolio, craft beer, Hard Seltzer, Innovation Pipeline, margin expansion, Twisted Tea | Login |
| Jun 30, 2025 | Fund Letters | SouthernSun SMID Cap | MSA | MSA Safety, Inc. | Industrials | Machinery | Bull | NYSE | Connected Technology, Fall Protection, Firefighter Equipment, Gas Detection, Industrial Safety, M&A Opportunities, recurring revenue, Safety Equipment, SCBA | Login |
| Jun 30, 2025 | Fund Letters | SouthernSun SMID Cap | WSO | Watsco, Inc. | Industrials | Trading Companies & Distributors | Bull | NYSE | A2L refrigerants, Acquisitions, Air Conditioning, Distribution, HVAC Distribution, market consolidation, Refrigeration, Residential Replacement | Login |
| Jun 30, 2025 | Fund Letters | SouthernSun SMID Cap | APG | APi Group Corporation | Industrials | Commercial Services & Supplies | Bull | NYSE | Commercial Services, Elevator Services, Fire Safety, inspection services, Life Safety, recurring revenue, Safety Equipment, security services | Login |
| Jun 30, 2025 | Fund Letters | SouthernSun SMID Cap | BOOT | Boot Barn Holdings, Inc. | Consumer Discretionary | Specialty Retail | Bull | NYSE | Consumer Discretionary, Proprietary Brands, Retail Growth, same-store sales, Specialty retail, store expansion, supply chain, Western Wear | Login |
| Apr 30, 2025 | Fund Letters | SouthernSun SMID Cap | BR | Broadridge Financial Solutions, Inc. | Information Technology | Data Processing & Outsourced Services | Bull | NYSE | asset-light, financial services, M&A, Proxy Processing, recurring revenue, SaaS, technology | Login |
| Apr 30, 2025 | Fund Letters | SouthernSun SMID Cap | USPH | U.S. Physical Therapy, Inc. | Health Care | Health Care Services | Bull | NYSE | competitive moat, Healthcare services, Industrial Injury Prevention, market consolidation, Medicare Reimbursement, Physical Therapy, wage inflation | Login |
| Apr 30, 2025 | Fund Letters | SouthernSun SMID Cap | PII | Polaris Industries, Inc. | Consumer Discretionary | Leisure Products | Bear | NYSE | Balance Sheet Constraints, Channel Inventory, Consumer Discretionary, Exit Position, Mexican Manufacturing, Powersports, Tariff risk | Login |
| Apr 30, 2025 | Fund Letters | SouthernSun SMID Cap | MOD | Modine Manufacturing Company | Industrials | Industrial Machinery | Bull | NYSE | 80/20 Implementation, CEO change, data center, Electric Vehicles, Heat Exchangers, HVAC, thermal management, turnaround | Login |
| Apr 30, 2025 | Fund Letters | SouthernSun SMID Cap | WSO | Watsco, Inc. | Industrials | Trading Companies & Distributors | Bull | NYSE | A2L Refrigerant, cash-rich, Digital transformation, Distribution, Fragmented Market, HVAC, Scale Advantages | Login |
| Apr 30, 2025 | Fund Letters | SouthernSun SMID Cap | BOOT | Boot Barn Holdings, Inc. | Consumer Discretionary | Specialty Retail | Bull | NYSE | clean balance sheet, margin expansion, Pricing power, Specialty retail, store expansion, tariff impact, Western Lifestyle | Login |
| Dec 31, 2024 | Fund Letters | SouthernSun SMID Cap | BCO | Brink's Company | Industrials | Security & Alarm Services | Bull | NYSE | Cash management, Digital Solutions, margin expansion, operational excellence, organic growth, recurring revenue, security services | Login |
| Dec 31, 2024 | Fund Letters | SouthernSun SMID Cap | AWI | Armstrong World Industries, Inc. | Materials | Building Products | Bull | NYSE | Building Products, capital allocation, energy efficiency, market leader, Pricing power, product innovation, strategic acquisitions | Login |
| Dec 31, 2024 | Fund Letters | SouthernSun SMID Cap | MGPI | MGP Ingredients, Inc. | Consumer Staples | Distillers & Vintners | Bear | NASDAQ | Demand Decline, Distillers, Exit Position, Leadership Turnover, market visibility, Whiskey | Login |
| Dec 31, 2024 | Fund Letters | SouthernSun SMID Cap | SEIC | SEI Investments Company | Financials | Asset Management & Custody Banks | Bull | NASDAQ | asset management, Bull market, financial services, leadership transition, operational efficiency | Login |
| Jun 30, 2024 | Fund Letters | SouthernSun SMID Cap | DAR | Darling Ingredients Inc | Consumer Staples | Food Products | Bull | NYSE | Brazil Operations, Food waste, industry consolidation, renewable energy, Sustainable aviation fuel, sustainable products, vertical integration | Login |
| Jun 30, 2024 | Fund Letters | SouthernSun SMID Cap | USPH | U.S. Physical Therapy, Inc | Health Care | Health Care Services | Bull | NYSE | Bolt-on Acquisitions, Commercial Insurance, Healthcare services, Industrial Injury Prevention, Medicare Reimbursement, Outpatient Clinics, Physical Therapy | Login |
| Jun 30, 2024 | Fund Letters | SouthernSun SMID Cap | BOOT | Boot Barn Holdings, Inc | Consumer Discretionary | Specialty Retail | Bull | NYSE | conservative leverage, Footwear, organic growth, same-store sales, Specialty retail, store expansion, Western Wear | Login |
| Jun 30, 2024 | Fund Letters | SouthernSun SMID Cap | DY | Dycom Industries, Inc | Industrials | Construction & Engineering | Bull | NYSE | BEAD Program, CEO Succession, Federal Broadband Programs, Fiber Construction, M&A Opportunities, margin expansion, telecommunications infrastructure | Login |
| Mar 31, 2024 | Fund Letters | SouthernSun SMID Cap | MGPI | MGP Ingredients Inc. | Consumer Staples | Food Products | Bull | NASDAQ | Branded Spirits, capacity expansion, Cash Flow Visibility, contract manufacturing, Distilled Spirits, Food Ingredients, premium spirits, Specialty Proteins | Login |
| Mar 31, 2024 | Fund Letters | SouthernSun SMID Cap | SAM | The Boston Beer Company, Inc. | Consumer Staples | Beverages | Bull | NYSE | alcoholic beverages, brand portfolio, Hard Seltzer, leadership transition, margin expansion, operational efficiency, Truly, Twisted Tea | Login |
| Mar 31, 2024 | Fund Letters | SouthernSun SMID Cap | BOOT | Boot Barn Holdings, Inc. | Consumer Discretionary | Specialty Retail | Bull | NYSE | e-commerce, margin expansion, niche market, Omnichannel, Proprietary Brands, Specialty retail, store expansion, Western Apparel | Login |
| Mar 31, 2024 | Fund Letters | SouthernSun SMID Cap | DY | Dycom Industries, Inc. | Industrials | Construction & Engineering | Bull | NYSE | construction, Engineering services, Fiber Construction, government contracts, infrastructure, private equity, telecommunications infrastructure, utilities | Login |
| Dec 31, 2023 | Fund Letters | SouthernSun SMID Cap | ABDY.L | Dycom Industries, Inc. | Industrials | Construction & Engineering | Bull | NYSE | BEAD Program, Construction services, engineering, Equity, Fiber networks, government funding, telecommunications infrastructure, Utility Services | Login |
| Dec 31, 2023 | Fund Letters | SouthernSun SMID Cap | AER|AWI|MUSA|NEU|SAIA|WTM | Armstrong World Industries, Inc. | Materials | Building Products | Bull | NYSE | Building Products, Ceiling Systems, Commercial Construction, defensive, Diversified End Markets, Equity, market leader, Pricing power | Login |
| Dec 31, 2023 | Fund Letters | SouthernSun SMID Cap | BBDC4.SA | Belden Inc. | Information Technology | Electronic Equipment, Instruments & Components | Bull | NYSE | 5G Deployment, Customer Innovation, Destocking Cycle, Equity, Global Supplier, Industrial automation, Reliable Networks, Specialty Networking | Login |
| Dec 31, 2023 | Fund Letters | SouthernSun SMID Cap | SAM | Boston Beer Company, Inc. | Consumer Staples | Beverages | Bull | NASDAQ | alcoholic beverages, brand portfolio, Equity, margin expansion, operational efficiency, share repurchases, Truly Hard Seltzer, Twisted Tea | Login |
| Dec 31, 2023 | Fund Letters | SouthernSun SMID Cap | ADI|BDX|FI|FND|HAS|META|MSFT|MSI|ORCL|TMO | Floor & Décor Holdings | Consumer Discretionary | Specialty Retail | Bull | NYSE | Direct Sourcing, Equity, hard-surface flooring, market share gains, Specialty retail, store expansion, Unit economics, Warehouse Format | Login |
| Sep 30, 2023 | Fund Letters | SouthernSun SMID Cap | AER|AWI|MUSA|NEU|SAIA|WTM | Murphy USA, Inc. | Consumer Discretionary | Specialty Retail | Bull | NYSE | convenience stores, Fuel Retail, industry consolidation, Low-Cost Model, Same-Store Growth, share repurchases, Walmart Outparcels | Login |
| Sep 30, 2023 | Fund Letters | SouthernSun SMID Cap | ABDY.L | Dycom Industries, Inc. | Industrials | Construction & Engineering | Bull | NYSE | BEAD Program, Construction services, Fiber networks, Fiber Penetration, government funding, margin expansion, telecommunications infrastructure | Login |
| Sep 30, 2023 | Fund Letters | SouthernSun SMID Cap | ALDAR.AD | Darling Ingredients Inc. | Materials | Chemicals | Bull | NYSE | industry consolidation, low valuation, renewable energy, Sustainable aviation fuel, sustainable products, vertical integration, Waste-to-Energy | Login |
| Sep 30, 2023 | Fund Letters | SouthernSun SMID Cap | SAM | Boston Beer Company, Inc. | Consumer Staples | Brewers | Bull | NASDAQ | alcoholic beverages, brand portfolio, Brewers, debt-free, Hard Seltzer, Manufacturing efficiency, share repurchases | Login |
| Mar 31, 2023 | Fund Letters | SouthernSun SMID Cap | WRK | WestRock Company | Materials | Paper & Forest Products | Bull | NYSE | Consumer Packaging, Corrugated, Cyclical, Free Cash Flow, Latin America, Mill Optimization, Packaging | Login |
| Mar 31, 2023 | Fund Letters | SouthernSun SMID Cap | LPX | Louisiana-Pacific Corporation | Materials | Paper & Forest Products | Bull | NYSE | Building Products, Engineered Wood, Housing, market share, OSB, Siding, transformation, Value Added | Login |
| Mar 31, 2023 | Fund Letters | SouthernSun SMID Cap | WSO | Watsco Inc. | Capital Goods | Trading Companies & Distributors | Bull | NYSE | Acquisitions, defensive, Distribution, HVAC, North America, Repair, Replace, technology | Login |
| Mar 31, 2023 | Fund Letters | SouthernSun SMID Cap | BCO | The Brink's Company | Commercial & Professional Services | Commercial Services & Supplies | Bull | NYSE | ATM Services, Cash management, Digital Solutions, Global, margin expansion, organic growth, transformation | Login |
| Mar 31, 2023 | Fund Letters | SouthernSun SMID Cap | ALDAR.AD | Darling Ingredients | Food, Beverage & Tobacco | Food Products | Bull | NYSE | Acquisitions, Decarbonization, EBITDA, Rendering, renewable energy, Sustainable aviation fuel, vertical integration | Login |
| TICKER | COMMENTARY |
|---|---|
| APG | APi Group Corp. (APG), a leading provider of fire and life safety, security, elevator and escalator, and specialty services, was a top contributor in the SMID Cap strategy this quarter. APG delivered record third-quarter results, with revenues up 14% (10% organic) and Adjusted EBITDA +15%. The company continued to execute its inspection-first strategy, delivering its 21st consecutive quarter of double-digit inspection growth in North America. |
| BOOT | Longer-term holdings such as Boot Barn increased, outperforming benchmark returns |
| CXT | Crane NXT (CXT) was a bottom contributor in the SMID Cap strategy during the quarter despite delivering solid operating performance in its most recent earnings release. The company reported sales of $445 million (+10% YoY) with a core sales increase of 1%, adjusted operating margin of 24.7%, and adjusted EPS of $1.28, while also raising full-year sales growth guidance. However, management also highlighted macroeconomic uncertainty impacting demand in the Payment Innovations segment. |
| DAR | Darling Ingredients (DAR) was a top contributor in the SMID Cap strategy in the fourth quarter. DAR is the largest publicly traded company turning edible by-products and food waste into sustainable products and a leading producer of renewable energy. Darling has faced significant headwinds over the past couple of years, and the stock traded within a fairly tight range of $30-40 over the past twelve months. This downturn is, in our opinion, at or near a bottom. We see several fundamental and regulatory changes supporting our view that top line and bottom-line results will inflect higher in 2026. |
| DY | After a long and successful ownership of DY, we decided to exit our position in the fourth quarter in favor of more attractive opportunities. The business is experiencing strong demand from internet providers for fiber deployment, but we believe much of the recent valuation expansion is being driven by AI exuberance. |
| EXTR | Earlier in 2025, we added EXTR to the Small Cap strategy. We have continued to get to know the company throughout the year, and our conviction has built, so in the fourth quarter we added EXTR to the SMID strategy. Extreme Networks is one of the top three players in the enterprise networking industry, although it remains a distant third behind Cisco and Hewlett Packard (HPE), which together control more than 60% of the market. |
| FND | Floor & Decor (FND) is a business I've wanted to own shares in for some time. They are the leading warehouse-style flooring store with higher in-stock inventory selection and lower prices than scaled competitors, and have been taking market share for years if not decades. In my opinion, they are following the Home Depot model to disrupt a profitable subcategory of home improvement. I still believe the current purchase price is not obviously cheap on near-term earnings, but the purchase price does reflect an attractive valuation on long-term margins. The company's current EBIT margins are about 30% below their long-term pre-COVID levels, and I believe EBIT margins should continue to scale towards the low-to-mid-teens as the company builds out its store base. Current sales per store are depressed by a post-COVID hangover and higher interest rates which have depressed existing home sales, a key catalyst for renovation activity. Higher sales per store will lead directly to higher store-level margins, which flow nicely through to EBIT margins. I believe, with a more favorable existing home sales macro backdrop, that sales can grow at double digits with significant flow-through to the bottom line. It would not surprise me to look a couple years out and see the company generating $6.5B of sales at 7.0% net margins, which would mean the company is trading at 16x that admittedly uncertain (due to macro uncertainty) future earnings with nearly a decade of future store growth and comp growth. I see the company generating nearly $12 earnings per share 10 years from now, when it's store growth plan should be essentially complete. |
| GNRC | Generac Holdings, Inc. (GNRC) was a bottom performer in the SMID Cap strategy in the fourth quarter. Generac's most profitable product group is Home Standby (HSB) generators, and in 2025, the U.S. experienced the fewest power outages (related to weather or other grid failures) since 2015. The lower demand for HSB will also create slightly lower margins for the year. The Commercial and Industrial segment is doing well with sales increasing 9% over last year. |
| LOB | We initiated a position in Live Oak Bancshares, Inc. during the fourth quarter of 2025. Live Oak is the largest originator of SBA 7(a) loans in the United States and has continued to expand its market leadership through the current small business credit cycle. SBA lending remains a relatively small but complex segment of the banking market, requiring deep institutional knowledge, rigorous compliance processes, and significant operational scale. |
| MUSA | Murphy USA, Inc. MUSA was a top contributor with 4.5% average weighting contributing 20 basis points to return. |
| OSK | Oshkosh Corporation (OSK) was added to the SMID strategy in the fourth quarter. OSK is a global manufacturer of specialized vehicles and equipment used in essential and mission-critical applications. The company operates across three primary segments: Access equipment, Vocational vehicles, and Transport, serving customers in construction, airport and municipal services, fire and emergency response, defense, and delivery markets. |
| TKR | We exited our position in TKR after a long and successful investment in favor of more attractive opportunities. Despite still believing TKR has strong and durable brands in industrial bearings, we don't expect the company's strategy of redeploying capital into acquiring industrial motion businesses to create material value for shareholders. |
| TREX | TREX Company, a leader in composite decking, was our biggest laggard in Industrials during the fourth quarter, as an increasingly competitive environment and weaker end-market trends led to poor Q3 results. TREX saw business fall off after Labor Day, which is inconsistent with results from other peers and surveys. It was quite surprising and may be a function of its higher DIY business. Regardless, this contradicts our thesis, so we exited the position. |
| WSO | Relative weakness was also driven by Watsco amid softer HVAC trends |
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