| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 6.12% | 5.12% | 39.63% |
| 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 | International small caps delivered exceptional 39.63% returns in 2025, driven by gold miners benefiting from precious metals' surge, defense contractors capitalizing on Japan's military spending increases, and broad international equity strength from dollar weakness and attractive valuations. The fund repositioned toward smaller gold producers and Japanese defense companies while maintaining focus on structural themes supporting international outperformance. |
| Nov 16 2025 | 2025 Q3 | AAPL, AMZN, BLK, BRK.B, CAT, CNH, DE, FISV, GOOGL, JPM, KKR, META, MSFT, NEM, NFLX, NVDA, ORCL, SONY, TSLA, WFC | AI, energy, gold, M&A, rates, technology, Trade, Utilities |
3110 JT POLR LN |
Gabelli Funds navigated a strong third quarter driven by AI enthusiasm and broadening market participation. The Federal Reserve began cutting rates while trade tensions eased with new U.S. partnerships. M&A activity surged 33% year-to-date to $3 trillion. Despite market strength and clear tailwinds, valuations remain elevated at 30x earnings, prompting continued focus on undervalued opportunities through Private Market Value analysis. |
| Jun 30 2025 | 2025 Q2 | AAPL, AME, AMZN, AVGO, AXP, BATRA, BK, BMI, BMY, BRK.B, C, CAT, CHWY, CR, CVS, CVX, CW, DAN, DE, ELAN, EVRG, FRPT, GATX, GOOGL, GPC, HES, IDXX, ITT, JPM, KKR, LION, MA, META, MFI.TO, MLI, MSFT, MSGS, NEE, NEM, NFG, NFLX, NVDA, ORCL, PARA, RSG, SONY, SPGI, STT, T, TMUS, TRUP, V, WFC, ZTS | defense, energy, gold, Sports, tariffs, technology, Utilities |
TCAP LN 5444 JP |
GAMCO navigated Q2 2025's tariff-driven volatility with the S&P 500 ultimately gaining 10.9% despite initial 21% drawdown. Key themes include AI infrastructure boom, NATO defense spending surge to 5% GDP, and sports franchise value appreciation. The firm maintains disciplined PMV approach while positioning for industrial renaissance, onshoring benefits, and live entertainment growth despite near-term economic caution. |
| Mar 31 2025 | 2025 Q1 | 9449.T, AGI, CHG.L, EDV.L, GENI, IVG, LOOM.ST, LPE.PA, PRU.AX, SGDG.L, WGX.AX | defense, Europe, Germany, gold, international, small caps | - | International small caps outperformed U.S. markets in Q1 2025, with the Fund gaining 7.52%. European defense spending commitments and gold price strength drove performance, while U.S. trade policy uncertainty creates headwinds. The Fund focuses on companies with strong balance sheets amid this volatile environment. |
| Dec 31 2024 | 2024 Q4 | 8136.T, AGI.TO, CHG.L, CKN.L, DRW3.DE, EDV.L, GENI, GXI.DE, ITP.PA, LPE.PA, SIE.DE, TAM.MI, WGX.AX | Currency, Europe, international, Japan, small cap, value | - | International small cap fund declined 6.11% in 2024 amid challenging conditions including currency headwinds, political uncertainty, and sluggish growth. Small caps remain out of favor globally with record valuation discounts versus U.S. markets. Manager maintains focus on attractively valued companies with strong fundamentals, holding long-term as patient investor despite near-term sector challenges. |
| Sep 30 2024 | 2024 Q3 | AGI.TO, CHG.L, EDV.L, GENI, GERR.DE, ITP.PA, LPE.PA, PSAN.DE, SIEF.L | Central Banks, China, Currency, Europe, gold, international, Japan, small cap | - | The fund returned 8.07% in Q3 2024, benefiting from gold equity strength and central bank easing cycles. Japanese yen volatility from carry trade unwinding created market dislocation, while Chinese stimulus measures drove sharp equity rallies. Gold holdings outperformed on precious metals strength. Lower global interest rates should support equities if economic downturns are avoided. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
TechnologyThe Fund invests at least 80% of net assets in technology companies across multiple sub-industries including IT consulting, internet services, application software, communications equipment, semiconductors, and interactive media. The portfolio focuses on companies with sector-leading cash flows, attractive valuations, and sustainable profitability prospects. |
Software Hardware Semiconductors Internet Communications |
| 2025 Q3 |
AIArtificial Intelligence continues to be the primary driver of market returns, with most of the Magnificent Seven at or near all time highs. The scale of investment in AI infrastructure continues to surpass expectations, with the five largest cloud computing platforms communicating capex plans for 2025 aggregating to approximately $380 billion. |
Infrastructure Investment Cloud Technology |
Trade PolicyTrade continues to be in flux, with the U.S. signing deals with many partners including the UK and European Union, though uncertainty remains for many significant countries, including China and India. The tariff impact has lessened since spring, with average U.S. tariff estimated at 17.5% now versus 23% in April. |
Tariffs China Uncertainty Deals | |
RatesThe Federal Reserve cut rates for the first time this year in September, lowering the Fed Funds rate 25 bps to 4%-4.25%, with expectations for further cuts to come. 10 Year U.S. Treasury yields declined during the quarter and are currently around 4.1%. |
Federal Reserve Monetary Policy Treasury Easing | |
GoldGold and bitcoin extended their rallies at nearly $4,000 per ounce and $120,000, respectively, as investors sought hedges against fiscal concerns and dollar debasement. Gold rose by 16.7% during the quarter, climbing from $3,305.65 to $3,859.40 per ounce. |
Inflation Hedge Fiscal Concerns Dollar Rally | |
BuybacksThe merger & acquisition boom expected under President Trump has come to fruition in 2025, with global deals up 33% year to date to $3 trillion, a four year high. Private equity-backed M&A is up 27%. |
M&A Private Equity Consolidation Activity | |
Data CentersU.S. electricity demand is rising at its fastest pace in five decades, with utilities responding with record capital spending to expand generation, modernize grids, and serve industrial and data center customers, often partnering with hyperscalers such as Amazon, Microsoft, Meta, and Alphabet. |
Electricity Demand Infrastructure Hyperscalers Utilities | |
| 2025 Q2 |
Trade PolicyThe Trump administration's tariff policies dominated market sentiment in Q2 2025, with Liberation Day (April 2) introducing sweeping tariffs that initially triggered a 21% market drawdown. However, a 90-day pause and bilateral trade agreements with key partners helped stabilize markets. The administration appears intent on rolling back globalization, with effective weighted average tariff rates potentially reaching 18%. |
Tariffs Globalization Bilateral Agreements Trade War Liberation Day |
AIArtificial intelligence continued to drive significant investment and growth, with major data center platform operators planning $330 billion in capex for 2025. ChatGPT's weekly active users doubled since the start of the year, while Alphabet's Gemini reported 50x year-over-year growth in tokens generated. Commercial-scale corporate productivity initiatives using AI are expanding across multiple companies. |
Data Centers Capex Productivity Tokens Commercial Scale | |
Defense SpendingGlobal defense spending is experiencing significant increases, with 31 of 32 NATO member nations committing to boost defense spending to 5% of GDP by 2035 (roughly double current levels). European defense budgets are rising sharply following the invasion of Ukraine, with Sweden committing to expand defense spending to 3.5% of GDP by 2032. |
NATO GDP Percentage Ukraine European Defense Military Spending | |
Live SportsThe sports industry continues to show strong momentum with growing enthusiasm for live events. Major League Baseball now allows up to 30% private-equity ownership of teams, increasing buyer interest and team valuations. The Los Angeles Lakers basketball team is being sold for $10 billion, highlighting the significant value appreciation in sports franchises. |
Private Equity Team Valuations Media Rights Sports Betting Fan Engagement | |
Energy TransitionElectricity demand is growing at its fastest pace since the mid-20th century, driven by AI-powered data centers, manufacturing reshoring, and electrification of transport. Utilities are responding with record capital investment in generation and grid upgrades, often in partnership with hyperscalers like Amazon, Microsoft, and Google. |
Electricity Demand Grid Upgrades Hyperscalers Manufacturing Reshoring Capital Investment | |
Pet CareThe pet care industry reached new highs with 94 million U.S. households now owning at least one pet, up from 82 million just two years ago. Gen Z shows a 43.5% increase in pet ownership with a tendency to own multiple pets. U.S. pet industry spending is projected to reach $157 billion in 2025, up from $152 billion in 2024. |
Pet Ownership Gen Z Industry Spending Humanization Multiple Pets | |
GoldGold continued strong performance with central banks driving demand as they diversify reserve assets. Gold now represents 20% of central bank reserve assets, recently overtaking the euro as the second largest allocation after the dollar. The gold price rose 5.8% in Q2 to end at $3,306 per ounce, with gold equities returning almost three times the percentage change in gold price. |
Central Banks Reserve Assets Diversification Gold Price Mining Equities | |
OnshoringThe shift from offshoring to reshoring and localized supply networks is accelerating as companies deal with tariff impacts and supply chain disruptions. This transition is expected to complement new higher value-add jobs with automation and robotics, addressing labor shortages in major economies facing aging demographics. |
Supply Chain Automation Labor Shortages Manufacturing Localization | |
| 2025 Q1 |
GoldGold mining stocks performed strongly with Alamos Gold and Endeavour Mining rallying 45% and 36% respectively on the back of rising gold prices. The Fund holds several gold mining positions that benefited from strong gold price performance during the quarter. |
Gold Miners Gold Precious Metals Mining Commodities |
DefenseIVECO Group's military vehicle division attracted investor interest, with the stock rising 68% as investors were drawn to its defense capabilities. The EU is targeting a common fund of €800 billion to rearm Europe, positioning defense companies to benefit from increased spending. |
Defense Military European Defense Defense Spending Aerospace | |
EuropeEuropean countries have decided to spend much more on defense, with Germany changing its constitution to allow for debt constraints to be lifted for huge infrastructure projects and higher defense spending. This has led to strong performance in European equity markets. |
European Union Germany Infrastructure Spending Defense Spending Fiscal Policy | |
| 2024 Q4 |
Small CapsInternational small cap equities have been out of favor in most markets, with the fund focusing on small capitalization companies in developed markets outside the U.S. The valuation discount has reached record levels compared to U.S. markets. |
Small Cap Valuation International Developed Markets Discount |
ValueThe fund seeks to invest in large capitalization companies that are attractively valued in developed markets outside the U.S., focusing on companies with large market share, strong balance sheets, and solid management. |
Value Attractive Valuation Balance Sheet Management Market Share | |
| 2024 Q3 |
GoldGold equity holdings benefited from continued strength in the price of gold. Alamos Gold, MAG Silver, Osisko Gold Royalties, and Eldorado Gold all appreciated by over 17% during the quarter. |
Gold Miners Precious Metals Commodity Prices Mining |
Central BanksMost global central banks entered an easing cycle with the Fed cutting rates by 50 basis points. The Bank of Japan was the exception, raising rates which created market volatility and yen strength. |
Monetary Policy Interest Rates Currency Policy Easing | |
ChinaChinese authorities announced a series of stimulus measures including lowering bank reserve requirements, cutting mortgage rates, and easing property regulations. This led to a sharp 25% rally in Chinese equities. |
Stimulus Property Economic Policy Emerging Markets | |
CurrencyThe Japanese yen experienced extraordinary volatility, rallying 12% in three weeks from mid-July. The yen appreciated from 161 per dollar to 144 during the quarter, creating significant market dislocation. |
Yen Volatility Carry Trade Exchange Rates |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| 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 |
| 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 |
| 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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