| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 6.1% | 5.1% | 39.6% |
| 2025 | 2024 |
|---|---|
| 39.6% | -6.1% |
The Gabelli International Small Cap Fund returned 5.12% in Q4 2025, contributing to a remarkable 39.63% annual return as international equities significantly outperformed U.S. markets for the first time in years. The fund's performance was driven by three key themes: gold equity holdings led by Westgold Resources, Endeavour Mining, and other precious metals miners benefiting from gold's 65% annual appreciation; defense-related investments including Chemring Group and Kawasaki Heavy Industries capitalizing on Japan's planned defense spending increase to 2% of GDP; and broad international market strength supported by dollar weakness and attractive valuations relative to U.S. equities. The portfolio was repositioned during the quarter, adding Japanese defense contractors like Chugoku Marine Paints while reducing exposure to larger gold producers in favor of smaller capitalization miners. Looking ahead, the manager expects continued outperformance from international small caps supported by accommodative monetary policy, increased defense spending in Europe and Japan, and structural demand for gold as a monetary alternative amid elevated global debt levels.
International small-cap equities are benefiting from a structural shift away from mega-cap U.S. technology dominance, supported by attractive valuations, dollar weakness, and improving relative earnings growth, particularly in defense-related sectors and precious metals.
The broadening of equity market performance to non-technology sectors, smaller capitalization stocks, and international equities is viewed as positive. Inflation remains muted, allowing for accommodative monetary policy from most central banks. Tax cuts in the U.S. and increased defense expenditures in Europe will likely support economic activity.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 18 2026 | 2025 Q4 | 4617.T, 7012.T, AGI, CHG.L, EGO, EURN, GENI, MOLHF, PRU.AX, SFM.SW, TAMP.MI, WGX.AX | defense, Europe, gold, international, Japan, small caps | 4617 JP | Gold equity holdings were the top contributors to performance, with multiple gold miners including Westgold Resources, Endeavour Mining, Eldorado Gold, and Perseus Mining driving returns. Gold is undergoing a longer-term revaluation as a monetary alternative amid elevated sovereign debt levels and shifting geopolitical alliances. Defense spending increases are supporting companies like Chemring Group and Kawasaki Heavy Industries. Japan plans to double defense spending by 2035, while European defense expenditures are rising due to security concerns. The fund added Japanese defense-related companies including Chugoku Marine Paints and Namura Shipbuilding. International equities benefited from investors diversifying from mega-cap U.S. technology companies. Dollar weakness supported returns, with the DXY Index declining about 9% during 2025. Valuations between U.S. and international markets had become stretched in favor of non-U.S. equities. |
| Nov 16 2025 | 2025 Q3 | 3110 JP, POLR LN | growth, international, Restructuring, SmallCap, valuation |
3110 JT POLR LN |
The fund emphasizes opportunities in international small caps, where inefficient pricing, overlooked franchises, and regional catalysts create attractive alpha potential. Management focuses on cash-generative businesses with durable niches, disciplined capital allocation, and valuation disconnects versus intrinsic value. Exposure across Europe and Asia aims to harness localized growth drivers and corporate restructuring trends. |
| Jun 30 2025 | 2025 Q2 | 5444 JP, TCAP LN | Currency, Governance, international small cap, stock selection, valuation |
TCAP LN 5444 JP |
The commentary emphasizes international small-cap stocks trading at discounts to intrinsic value due to limited coverage and investor neglect. Local catalysts, improving governance, and M&A activity support revaluation potential. Stock selection is key amid regional and currency dispersion. |
| Mar 31 2025 | 2025 Q1 | GENI, IVG IM | - | - | |
| Dec 31 2024 | 2024 Q4 | 8136 JP, CKN LN | - | - | |
| Sep 30 2024 | 2024 Q3 | 3046 JP, OMG LN, SFZN SW | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
DefenseThe team initiated a position in Curtiss-Wright, believing the company is entering a period where multiple near-term growth drivers are converging, including rising defense budgets, commercial aerospace production ramps, nuclear power plant life extensions and new builds, and submarine production. |
Defense Budgets Aerospace Nuclear Submarines |
GoldGold returned +65% in dollars in 2025, driven by broadening demand from central banks, professional and retail investors. Central banks now hold 24% of reserves in gold versus 23% in US Treasuries for the first time. Maintained 12% portfolio allocation throughout the year. |
Central Banks Reserves Diversification Demand | |
InternationalHigh-quality international businesses trade at fractions of US multiples, with the manager positioning clients to take advantage of this divergence. Despite US equity market dominating investor mindshare, the rest of the world returned 32.6% in dollar terms in 2025 versus SPY's 17.7%. |
Discount Opportunity Outperformance Quality Positioning | |
| 2025 Q3 |
Small Cap |
|
| 2025 Q2 |
InternationalHigh-quality international businesses trade at fractions of US multiples, with the manager positioning clients to take advantage of this divergence. Despite US equity market dominating investor mindshare, the rest of the world returned 32.6% in dollar terms in 2025 versus SPY's 17.7%. |
Discount Opportunity Outperformance Quality Positioning |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Nov 16, 2025 | Fund Letters | Ashish Sinha | 3110 JT | Nitto Boseki Co., Ltd. | Materials | Glass fiber products | Bull | NYSE | electronics, Industrials, materials, oligopoly, semiconductors, Substrates | Login |
| Nov 16, 2025 | Fund Letters | Ashish Sinha | POLR LN | Polar Capital Holdings plc | Financials | Active fund management | Bull | London Stock Exchange | Active, Alpha, Asset Management & Custody Banks, AUM, dividends, Thematics | Login |
| Jun 30, 2025 | Fund Letters | Ashish Sinha | TCAP LN | TP ICAP Group plc | Financials | Investment Banking & Brokerage | Bull | New York Stock Exchange | analytics, Brokerage, cashflow, Costs, dividend, IPO, margin, Volatility | Login |
| Jun 30, 2025 | Fund Letters | Ashish Sinha | 5444 JP | Yamato Kogyo Co., Ltd. | Materials | Steel | Bull | New York Stock Exchange | Balance, datacenter, expansion, infrastructure, Jointventure, Pricing, Steel, tariffs | Login |
| Feb 18, 2026 | Fund Letters | Ashish Sinha | 4617 JP | Chugoku Marine Paints Ltd. | Materials | Specialty Chemicals | Bull | New York Stock Exchange | Antifouling, Coatings, Defense, Marine, ROE, Shipbuilding | Login |
| TICKER | COMMENTARY |
|---|---|
| 4617.T | Chugoku Marine Paints Ltd. (4617.T – $28.19/¥4,415.00 – Tokyo Stock Exchange) has a 60% market share for coatings for new ships in Japan and 20% globally. CMP has particular strength in 'anti-fouling' paints, which prevent marine organisms like barnacles and algae from attaching. Japan plans to double shipbuilding capacity by 2035, anticipating strong growth in marine transportation volume in Asia, Africa, and Latin America. In addition, orders for U.S. naval repair work are expected to increase as the U.S. administration refocuses on the shipbuilding sector, including those in allies Japan, South Korea, and Singapore, to counter China's maritime rise. CMP's ROE is currently 17.8%, normalizing at 15%; this is a net cash company. |
| 7012.T | Kawasaki Heavy Industries Ltd. (7012.T – $66.27/ ¥10,380.00 – Tokyo Stock Exchange), founded in 1896 as a shipbuilder, is now one of the 'big three' defense contractors in Japan, along with MHI (7011.T) and IHI (7013.T); defense sales currently account for 20% of total sales. KHI supplies submarines, aircraft, helicopters, and rocket payload fairings to the Japanese defense forces. It is also an important producer of heavy machinery, rolling stock, and motorcycles for the private sector. After holding steady at 1% of GDP since the end of World War II, defense spending in Japan is slated to rise to 2% of GDP by fiscal year 2027, ending in March 2028. It currently stands at 1.6%. |
| CHG.L | Key detractors from performance were defence companies Qinetic and Chemring, and video games developer Everplay. Both Qinetic and Chemring saw their share prices fall amid news of a potential peace agreement between Russia and Ukraine. UK defence contractors are also waiting for the publication of the government's Defence Investment Plan, which is slowing decision making. For Chemring, there was also disappointment around a capital expenditure (capex) overspend on its build-out in Norway. |
| WGX.AX | Westgold Resources (Long +44%) performed strongly, as the U.S. dollar gold price increased ~12% over the month, bringing the rally to around 65% for the calendar year. Additionally, during the quarter, Westgold released a 3-year outlook for the business that was well-received by the market. The outlook demonstrated its transformation into a producer of material scale, with FY25 production of ~325koz expected to grow towards ~470koz in FY28. We believe there remains significant medium-term upside to grow production further, as these targets do not include any contribution from the newly discovered Fletcher Zone at Beta Hunt, which is potentially transformational for the scale of the asset. |
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