The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Oct 20, 2026
During the third quarter of 2026, the Third Avenue Small-Cap Value Fund returned -3.31% net of fees, outpacing the MSCI USA Small Cap Value Index benchmark return of -4.25%. On a year-to-date basis, the strategy delivered a net return of 17.69% compared to 10.98% for the index. The managers emphasize that extreme valuation disparities between large-cap indices and small-cap value equities continue to favor smaller companies, which have generated strong relative strength year-to-date despite higher treasury and corporate borrowing costs. The investment team focuses heavily on balance sheet quality and financial self-sufficiency in the face of widespread credit stress. Rising borrowing costs, higher bankruptcy rates, and the fact that more than 40% of Russell 2000 index constituents lack profitability make active selection critical. The fund exploits two primary structural drivers: resilient balance sheets that provide downside protection against refinancing risks, and corporate resource conversions—including acquisitions, divestitures, buybacks, and spin-offs—that create substantial countercyclical shareholder value. Portfolio turnover reflected an active deployment pace with ten new initiations year-to-date. In the third quarter, the fund initiated long positions in Champion Homes, capitalizing on depressed sentiment in manufactured housing, and Versigent PLC, an automotive electrical architecture spin-off from Aptiv. Notable exits driven by completed or pending M&A included Catalyst Pharmaceuticals, Taylor Morrison Home, UniFirst, and BlueLinx Holdings, while PBF Energy served as the fund's largest quarterly contributor.
Outperformance in small-cap equities is achieved by investing in well-financed, profitable businesses with pristine balance sheets capable of compounding intrinsic value and executing opportunistic resource conversions.
Prospects for relative performance of U.S. small-cap value stocks compared to large-caps continue to look exceptionally promising given historic valuation spreads. Focus remains squarely on well-capitalized companies positioned to withstand credit stress and compound intrinsic value.
Moderate Conviction Bullish
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