Investor Summary
Fund Strategy
FUND PERFORMANCE AS OF 31st December 2025
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.3% | 2.0% | -1.6% |
| 2025 |
|---|
| -4.8% |
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.3% | 2.0% | -1.6% |
| 2025 |
|---|
| -4.8% |
The London Company SMID Cap portfolio returned 2.0% net in Q4 2025, matching the Russell 2500 Index return of 2.2%. The quarter was characterized by strong earnings growth, Fed rate cuts, and extended US-China trade truce, though headwinds emerged from AI investment scrutiny and labor market softening. Value outperformed Growth across market caps, with Value factors driving returns through lower price-to-sales and price-to-book ratios. Top contributors included AerCap Holdings benefiting from aviation recovery and share buybacks, White Mountains Insurance generating 4x returns from asset sales, and Waters Corporation delivering broad-based growth. Detractors included Zebra Technologies facing trade policy uncertainty, NewMarket Corporation pressured by China slowdown, and Lamb Weston dealing with QSR traffic weakness. Looking ahead, the manager sees late-cycle dynamics emerging with labor market softening and housing weakness, while trade policy remains fluid. They believe markets are becoming more conducive to fundamentals-based investing, favoring companies with quality attributes like strong balance sheets, conservative leverage, and reasonable valuations over multiple expansion.
Focus on quality companies with high returns on invested capital, conservative leverage, and reasonable valuations to provide downside protection and participate in long-term wealth creation as markets shift toward fundamentals-based leadership.
The manager believes caution is prudent given crosscurrents including late-cycle dynamics, trade policy uncertainty, and elevated complacency. They expect the environment to become more conducive to broader leadership and fundamentals-based investing, where quality attributes like earnings growth, dividends, and balance-sheet strength matter more than multiple expansion.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 21 2026 | 2025 Q4 | AER, LW, NEU, WAT, WTM, ZBRA | industrials, mid cap, Quality, small cap, SMID Cap, value |
AER ZBRA NEU LW |
The portfolio emphasizes companies with high and stable returns on invested capital, conservative leverage, and reasonable valuations. Quality factors were headwinds during the quarter but… |
| Oct 28 2025 | 2025 Q3 | ACIW, AWI, CWST, DECK, JKHY, NEU, REYN, SGI, WAT | Artificial Intelligence, fundamentals, interest rates, Mid Caps, Quality |
AWI SGI NEU WAT CWST JKHY ACIW DECK AWI SGI NEU WAT CWST JKHY ACIW DECK |
The fund lagged its benchmark due to underperformance of high-quality holdings during a high-beta rally driven by AI enthusiasm and rate cuts. Management emphasized patience… |
| Jul 29 2025 | 2025 Q2 | AER, AWI, MUSA, NEU, SAIA, WTM | Capital Allocation, earnings, Quality, risk control, valuation |
NEU AWI AER |
The commentary reiterates a quality-first approach focused on predictable earnings, prudent capital allocation, and downside protection. Management stresses patience through volatility and selective exposure to… |
| May 13 2024 | 2024 Q1 | AWI, CABO, CHDN, DAVA, DECK, LANC | - | - | - |
| Jan 23 2024 | 2023 Q4 | CABO, DECK, HAS, MBI, TREX, WTM | - | - | - |
| Oct 31 2023 | 2023 Q3 | BKI, BR, CHDN, CWST, LANC, LW, MTN, NEU, WAT, ZBRA | - | - | - |
| Jul 19 2023 | 2023 Q2 | DECK, ENTG, ST, THG, TREX, UNF | - | - | - |
| Apr 20 2023 | 2023 Q1 | BR, CHDN, ENTG, IAA, JKHY, LW, MBI, MUSA, STOR | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
QualityThe portfolio has shifted toward higher quality businesses with better profitability, lower leverage, and less volatile earnings. Quality stocks underperformed significantly in 2025, creating attractive entry points for value investors. The manager maintains price discipline while seeking quality companies trading at discounts to intrinsic value. |
Quality Profitability Leverage Earnings |
ValueBlue Tower focuses on value investing with international diversification. The manager notes that the valuation spread between cheap and expensive stocks is one of the greatest in market history, creating a favorable environment for their value-oriented approach. |
Value International Cheap Expensive Valuation | |
| 2025 Q3 |
AIAI has become a dominant theme across major equity indices, with Nvidia leading the S&P 500, ASML dominating MSCI EAFE, and TSMC leading emerging markets. The fund benefited from AI-related dynamics, particularly through Samsung's memory products experiencing substantial price increases due to DRAM shortages driven by AI demand. |
Semiconductors Memory DRAM Technology Nvidia |
RatesFed cut rates by 25bps on December 10 while describing growth as moderate and inflation as still somewhat elevated. Markets took message as cut now, likely pause soon. The opportunity set was less about calling one Fed meeting and more about trading the path via rates and FX. |
Fed Easing Policy Duration Curve | |
| 2025 Q2 |
QualityThe portfolio has shifted toward higher quality businesses with better profitability, lower leverage, and less volatile earnings. Quality stocks underperformed significantly in 2025, creating attractive entry points for value investors. The manager maintains price discipline while seeking quality companies trading at discounts to intrinsic value. |
Quality Profitability Leverage Earnings |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 28, 2025 | Fund Letters | Brian Campbell | DECK | Deckers Outdoor Corp. | Consumer Discretionary | Footwear & Apparel | Bull | NYSE | — | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | AWI | Armstrong World Industries Inc. | Industrials | Building Products | Bull | NYSE | Building materials, cash flow, construction, growth, oligopoly, Pricing power | Login |
| Jul 29, 2025 | Fund Letters | Brian Campbell | NEU | NewMarket Corporation | Materials | Chemicals | Bull | New York Stock Exchange | buybacks, Capacity, Chemicals, Defense, oligopoly | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | SGI | Somnigroup International Inc. | Consumer Discretionary | Household Durables | Bull | NASDAQ | Bedding, Brand Equity, cash flow, Margins, merger, retail, synergies | Login |
| Jul 29, 2025 | Fund Letters | Brian Campbell | AWI | Armstrong World Industries, Inc. | Industrials | Building Products | Bull | New York Stock Exchange | Acquisitions, Building Products, Margins, Moat, Pricing | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | NEU | NewMarket Corporation | Materials | Specialty Chemicals | Bull | NYSE | acquisition, cash flow, Defense, deleveraging, Margins, Petrochemicals | Login |
| Jul 29, 2025 | Fund Letters | Brian Campbell | AER | AerCap Holdings N.V. | Industrials | Trading Companies & Distributors | Bull | New York Stock Exchange | Aircraft Leasing, asset sales, Book Value, buybacks, Supply | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | WAT | Waters Corporation | Health Care | Life Sciences Tools & Services | Bull | NYSE | acquisition, diagnostics, growth, life sciences, M&A, recurring revenue, ROIC | Login |
| Jan 21, 2026 | Fund Letters | Brian Campbell | AER | AerCap Holdings N.V. | Industrials | Transportation | Bull | New York Stock Exchange | Aircraftleasing, Aviation, Balancesheet, buybacks, cashflow | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | CWST | Casella Waste Systems Inc. | Industrials | Environmental Services | Bull | NASDAQ | — | Login |
| Jan 21, 2026 | Fund Letters | Brian Campbell | ZBRA | Zebra Technologies Corporation | Information Technology | Technology Hardware | Bull | NASDAQ | Automation, Industrialcycle, Margins, Rebound, Supplychain | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | JKHY | Jack Henry & Associates Inc. | Information Technology | Financial Software & Data Systems | Bull | NASDAQ | — | Login |
| Jan 21, 2026 | Fund Letters | Brian Campbell | NEU | NewMarket Corporation | Materials | Specialty Chemicals | Bull | New York Stock Exchange | capital discipline, cashflow, Cyclicality, energy, specialty chemicals | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | ACIW | ACI Worldwide Inc. | Information Technology | Financial Software & Data Systems | Bull | NASDAQ | Fintech, intrinsic value, Margins, Payments, recurring revenue, Software | Login |
| Jan 21, 2026 | Fund Letters | Brian Campbell | LW | Lamb Weston Holdings, Inc. | Consumer Staples | Packaged Foods | Bull | New York Stock Exchange | balance sheet, Food service, market share, Pricingpower, QSR | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | DECK | Deckers Outdoor Corp. | Consumer Discretionary | Footwear & Apparel | Bull | NYSE | — | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | AWI | Armstrong World Industries Inc. | Industrials | Building Products | Bull | NYSE | Building materials, cash flow, construction, growth, oligopoly, Pricing power | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | SGI | Somnigroup International Inc. | Consumer Discretionary | Household Durables | Bull | NASDAQ | Bedding, Brand Equity, cash flow, Margins, merger, retail, synergies | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | NEU | NewMarket Corporation | Materials | Specialty Chemicals | Bull | NYSE | acquisition, cash flow, Defense, deleveraging, Margins, Petrochemicals | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | WAT | Waters Corporation | Health Care | Life Sciences Tools & Services | Bull | NYSE | acquisition, diagnostics, growth, life sciences, M&A, recurring revenue, ROIC | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | CWST | Casella Waste Systems Inc. | Industrials | Environmental Services | Bull | NASDAQ | — | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | JKHY | Jack Henry & Associates Inc. | Information Technology | Financial Software & Data Systems | Bull | NASDAQ | — | Login |
| Oct 28, 2025 | Fund Letters | Brian Campbell | ACIW | ACI Worldwide Inc. | Information Technology | Financial Software & Data Systems | Bull | NASDAQ | Fintech, intrinsic value, Margins, Payments, recurring revenue, Software | Login |
| TICKER | COMMENTARY |
|---|---|
| AER | Airline leasing business AerCap contributed 1.4% to the Fund's returns |
| LW | LW was a weaker name after reporting ongoing pricing pressure and industry headwinds, including softer QSR traffic. Management has executed on controllable operational issues but lingering issues have made a recovery more challenging. While these seem to be short-term headwinds, the long-term industry drivers remain attractive. We remain attracted to LW's flexible balance sheet, leading market share, and capital allocation strategy. |
| NEU | NEU was a weaker performer as a softer global environment (mostly China's slowdown) pressured Petroleum Additives volumes and margins. The Specialty Materials business had lumpy demand, which weighed on results. Lower oil prices reduced operating leverage. Despite near-term pressure, we continue to view NEU as a strong business with disciplined capital allocation, balance sheet flexibility, and strong cash flow generation. |
| WAT | Waters reported solid results supported by growth in Asia, and we increased the position following its acquisition of Becton Dickinson's biosciences and diagnostics business |
| WTM | WTM was a top performer after announcing the sale of a controlling stake in its retail brokerage platform, Bamboo, generating a roughly 4x return in just two years. The transaction, alongside a concurrent share buyback, drove a meaningful increase in book value per share and reinforced confidence in management's disciplined capital allocation and ability to compound shareholder capital. |
| ZBRA | back in November, Zebra Technologies (ZBRA) hit our insider radar. On the surface, the valuation of the $12.6B business appeared attractive at less than a 14x P/E, a modest debt burden and decent return on incremental invested capital. It looked like a worthwhile investment candidate – but the wheels came flying off when we did our risk review. What these attractive statistics do not tell you is that management had entered into a transformative acquisition of commercial touch screen provider, Elo Touch for $1.3B. The problem, management almost certainly paid too much for a business generating ~$80M in EBITDA (earnings before interest, taxes and depreciation) (press release). At over 16x EBITDA, the acquisition blew out the capital structure with debt and presented significant execution risk resulting in an expected risk-adjusted return well below our threshold of safety. |
| 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 | |||