| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 7.8% | 18.2% |
| 2025 | 2024 |
|---|---|
| 18.2% | 22.6% |
Sound Shore Fund delivered strong performance in Q4 2025, gaining 7.83% versus S&P 500's 2.66%, driven by a diverse group of companies across multiple sectors rather than technology dominance. The fund's value-oriented approach focuses on identifying undervalued companies undergoing transformations, with the portfolio trading at 13.5 times forward earnings versus the market's 22 times. Healthcare emerged as the top Q4 performer after regulatory clarity, with holdings Regeneron and TEVA contributing significantly. Defense contractor Huntington Ingalls Industries stood out as a 2025 winner, benefiting from Navy fleet expansion commitments. Contract manufacturer FLEX continued its evolution to higher-value specialized manufacturing. The managers acknowledge they sold PayPal and PVH at modest losses due to consumer spending concerns and tariff uncertainty. Despite strong recent performance, Sound Shore maintains this is not yet a value market environment, but sees the current discount as an opportunity for patient capital deployment focused on quality companies with strong balance sheets and free cash flow generation.
Sound Shore specializes in identifying undervalued companies undergoing significant transformations through rigorous research focused on industry shifts, management transitions, and undervalued assets, seeking internally driven earnings and free cash flow improvement.
Sound Shore believes they are still not in a value market and don't have the wind at their backs, but sees this as the opportunity ahead. While uncertain when the trend may change, they maintain their long-held belief that buying stocks at a discount to their true value is critical for risk management and generating attractive long-term returns.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 3 2026 | 2025 Q4 | C, COF, FLEX, GM, HII, LUV, MSFT, PVH, PYPL, REGN, TEVA, TMO, TXN, WBD | defense, earnings, healthcare, Manufacturing, Transformation, undervalued, value | - | Sound Shore specializes in identifying undervalued companies undergoing transformations, focusing on stocks trading at attractive valuations relative to earnings power. The portfolio trades at 13.5… |
| Nov 8 2025 | 2025 Q3 | - | fundamentals, M&A, Renewables, Restructuring, value |
TLNE WBD AES |
The fund highlights broad equity-market strength but attributes its outperformance to idiosyncratic value opportunitiesespecially restructurings, sum-of-parts repricing, and acquisition interest. Examples include Warner Bros. Discoverys… |
| Jul 24 2025 | 2025 Q2 | - | contrarian, fundamentals, Margin Of Safety, Patience, value |
TEVA HOLX FLEX AES DIS |
The letter reinforces traditional value investing grounded in fundamental analysis and margin of safety. Management highlights opportunities created by market overreaction and short-termism. Long holding… |
| Mar 31 2025 | 2025 Q1 | CHKP, PYPL, TEVA IT, VST | - | - | - |
| Dec 31 2024 | 2024 Q4 | BA, BKR, FLEX, ORCL, TEVA, VST | - | - | - |
| Sep 30 2024 | 2024 Q3 | AVTR, Gold, NXPI, PEG | - | - | - |
| Jul 31 2024 | 2024 Q2 | BBWI, GEHC, ORCL, TEVA | - | - | - |
| Apr 15 2024 | 2024 Q1 | CEG, TEVA, VST | - | - | - |
| Jan 26 2024 | 2023 Q4 | COF, PVH, VST | - | - | - |
| Sep 30 2023 | 2023 Q3 | CEG, GEHC, VST | - | - | - |
| Jun 30 2023 | 2023 Q2 | AMAT, CAG, CAH | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
Contract ManufacturingFLEX evolved from low-value electronics assembly to high-value specialized manufacturing for medical, industrial, and automotive industries. Under CEO Revathi Advaithi, the company achieved operational discipline and double-digit earnings growth with expanding margins, benefiting from accelerating data center end-markets. |
Manufacturing Data Centers Operational Discipline Margins |
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 | |
HealthcareHealthcare was the strongest relative contributor in the quarter with holdings increasing nearly +16% compared to benchmark returns of roughly +12%. Exact Sciences was acquired for a significant premium by Abbott Laboratories resulting in an +86% return, while other strong performers included Tarsus Pharmaceuticals, Glaukos following approval of a new product, Penumbra, and Repligen driven by strong earnings results. |
M&A Product Approval Earnings Biotech | |
ValueManager emphasizes investing in controlled companies trading at significant discounts to NAV, with European holding companies showing discounts of 30-68%. The strategy focuses on securities mispricing where real value exists, contrasting with overvalued technology stocks. |
Discounts NAV Mispricing Undervalued Controlled | |
| 2025 Q3 |
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic |
| 2025 Q2 |
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Nov 8, 2025 | Fund Letters | Harry Burn, John P. DeGulis, T. Gibbs Kane | AES | AES Corporation | Utilities | Independent Power Producers & Energy Traders | Bull | NYSE | acquisition, datacenters, infrastructure, Power, renewables, Solar, Storage, utilities | Login |
| Jul 24, 2025 | Fund Letters | Harry Burn | TEVA | Teva Pharmaceutical Industries Limited | Health Care | Pharmaceuticals | Bull | New York Stock Exchange | drug pipeline, growth acceleration, pharmaceuticals, turnaround | Login |
| Jul 24, 2025 | Fund Letters | Harry Burn | HOLX | Hologic, Inc. | Health Care | Health Care Equipment & Supplies | Bull | NASDAQ | Buyout Rumors, diagnostics, PE ratio, valuation, women's health | Login |
| Jul 24, 2025 | Fund Letters | Harry Burn | FLEX | Flex Ltd. | Information Technology | Electronic Equipment, Instruments & Components | Bull | NASDAQ | AI infrastructure, data centers, manufacturing, Outsourcing | Login |
| Jul 24, 2025 | Fund Letters | Harry Burn | AES | The AES Corporation | Utilities | Independent Power and Renewable Electricity Producers | Bull | New York Stock Exchange | data centers, infrastructure, renewable energy, tax credits, utilities | Login |
| Jul 24, 2025 | Fund Letters | Harry Burn | DIS | The Walt Disney Company | Communication Services | Entertainment | Bull | New York Stock Exchange | media, scale, sports, Streaming, transformation | Login |
| Nov 8, 2025 | Fund Letters | Harry Burn, John P. DeGulis, T. Gibbs Kane | TLNE | Talen Energy | Other | Independent Power Producers | Bull | - | Baseload, datacenters, Electricity, Naturalgas, Nuclear, Powerdemand | Login |
| Nov 8, 2025 | Fund Letters | Harry Burn, John P. DeGulis, T. Gibbs Kane | WBD | Warner Bros. Discovery, Inc. | Communication Services | Movies & Entertainment | Bull | NASDAQ | Content, deleveraging, Freecashflow, M&A, media, rerating, spinoff, Streaming | Login |
| TICKER | COMMENTARY |
|---|---|
| C | Money center bank Citigroup rose amid strong capital markets activity and benign credit conditions. The company continued to repurchase stock and return capital to shareholders, while expenses related to its transformation are expected to decline next year. |
| COF | We added to Capital One Financial Corporation, which was a core new addition in the prior quarter. |
| FLEX | Flex is a global manufacturing and supply chain solutions provider with exposure to high-margin AI and cloud data center infrastructure, particularly power and cooling systems. We began harvesting our position this quarter as its market capitalization has grown beyond our small-cap mandate. We continue to view management favorably for its focus on optimizing product mix toward higher margin, fast-growing segments such as data centers and power. |
| GM | For insight into the real economy operating beneath this AI and data center boom, we must look elsewhere within the S&P 500, including bellwethers like General Motors |
| HII | Huntington Ingalls Industries, the largest shipbuilder for the US Navy, outperformed during the quarter after reporting strong Q3 results and raising full-year guidance. Shares also benefited after the award of a new frigate contract and discussion of a potential Trump-class battleship, both of which were viewed as meaningful opportunities. Performance was further supported by improving execution as recent labor challenges eased. |
| LUV | Selection in industrials was a further plus, led by Southwest Airlines. The company continued to make progress on its turnaround, and it provided upbeat guidance for 2026. |
| MSFT | MSFT was a detractor in 4Q25 following its fiscal first-quarter 2026 earnings report released on October 29. While results were better than expected operationally, investor reaction was driven by guidance and capital expenditure intensity rather than headline performance. Revenue grew 17% year-over-year, exceeding consensus expectations, and Azure revenue increased 39% year-over-year, also ahead of estimates. However, management guided to a sequential deceleration in Azure growth in fiscal Q2, signaling some moderation after a period of exceptional demand. |
| PVH | Branded apparel company PVH was a detractor for the quarter and the year. The company's shares experienced considerable price fluctuations, while our appraisal stayed flattish, which was disappointing. This is a company that will likely always have more quarterly earnings volatility than others. The good news is that the long-run earnings per share power remains intact at over $10 per share. |
| PYPL | By looking at their Rnancials, FactSet, PayPal, Adobe, and Salesforce seem to be doing Rne. The market, however, is reading subdued revenue growth as a sign of increased competition on their core oSerings. These companies' outlooks look more di'cult than their past. |
| REGN | Performance was driven by strength in large-cap longs, specifically Regeneron |
| TEVA | Teva has historically been known for its large generics business but is increasingly focused on growing its innovative pharmaceutical business, which now represents roughly half of the company's profits. Austedo continues to see strong adoption in a significantly underpenetrated and underdiagnosed tardive dyskinesia market, Ajovy has gained share in chronic migraine, and Uzedy has launched successfully in schizophrenia. |
| TMO | Thermo Fisher Scientific was a strong contributor with 8.69% ending weight and 1.47% contribution. |
| TXN | During the quarter, we started a position in Texas Instruments (TXN), a leading semiconductor company. TXN is very well managed with a strategy of investing through the business cycle. The company has a strong balance sheet and earnings history. Its share price was volatile in 2025, peaking at over $200 in July following strong second quarter earnings but declining in November to less than $160 after weaker fourth quarter guidance despite beating third quarter revenue and profits forecasts. The drop in the share price provided a good entry point for this high-quality company and we expect to see a nice cyclical rebound in its business and a much higher stock price over the next few years. |
| WBD | Warner Bros Discovery (WBD) was the top contributor during the quarter. The U.S.-headquartered media company's stock price surged as multiple parties submitted offers to acquire all or part of the business. Following several rounds of bidding, WBD announced an agreement to sell its Streaming and Studios business to Netflix, while spinning the Global Networks business to shareholders. Paramount Skydance subsequently made a direct $30 per share offer to shareholders for the entire company. We are pleased with the steps the WBD board has taken thus far to unlock shareholder value. We will continue to closely monitor developments as this bidding war unfolds. |
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