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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Moerus Capital Management LLC 2026 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Moerus Capital Management LLC)

Primary Source Intelligence • Q3 2026 Letter Analysis

Moerus Capital Management LLC Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Moerus Capital Management LLC. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+1.56%

YTD+7.02%

Annualized+11.25%

Positioning StanceCONSTRUCTIVE

Market CapAll Cap

GeographyGlobal, LatAM, Europe

Digest Analysis

Quick Take

"Extreme equity market volatility and narrow index concentration create mispricings across out-of-favor cyclical businesses, natural resources, and deeply discounted international franchises with counter-cyclical management teams."

Executive Summary

The Moerus Worldwide Fund Institutional Class generated a net return of +1.56% in the third quarter of 2026, bringing its year-to-date net performance to +7.02%. The Fund outperformed the MSCI ACWI ex USA Net Index (+0.48%) while performing in line with the MSCI ACWI Net Index (+1.60%). Over longer horizons, the Fund has generated an annualized net return of 11.25% since its June 2016 inception, outpacing the MSCI ACWI ex USA Net Index (9.48%). Net portfolio exposure remains concentrated in deep value, unhedged international equities across resources, industrials, and financials, without relying on mega-cap technology benchmark drivers. Management emphasizes that positive headline market gains masked underlying deterioration in breadth, with equal-weighted indices slumping while surging sovereign bond yields, persistent inflation, and escalating Middle East geopolitical conflict pushed energy commodities higher. Rather than wagering on volatile short-term commodity prices or interest rate trajectories, the investment framework focuses on acquiring durable, asset-rich businesses led by opportunistic capital allocators who exploit cyclical distress to expand intrinsic value. Positive performance in Q3 was spearheaded by Dundee Corp., Greenfire Resources, Barratt Redrow, Aker ASA, and Grupo Cibest, benefiting from operating execution and resource strength. Detractors were clustered in Latin American holdings—principally Natura Cosméticos, Grupo Financiero Galicia, and LATAM Airlines—alongside rate-sensitive real estate positions like Cromwell Property and Midland Holdings, which the manager views as well-financed franchises trading at excessively discounted valuations.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

82%

CautiousHigh

High Conviction (82%)

Portfolio conviction is high, characterized by substantial concentration in deeply out-of-favor international holdings and explicit portfolio disclosures where the top ten positions constitute nearly 32% of total assets. Management demonstrates resolute willingness to hold through volatility across Brazilian consumer franchises, U.K. homebuilders, and energy holdings without hedging. High conviction is counterbalanced only by multi-sector international breadth.

Growth Outlook

45%

BearishBullish

Neutral (45%)

Market outlook reflects caution regarding broad indices due to historically narrow market breadth, stretched valuations in artificial intelligence and mega-cap technology, and surging sovereign yields. However, management views headline macroeconomic turbulence as constructive for discovering contrarian bargains.

Risk Appetite

70%

DefensiveAggressive

Balanced (70%)

Positioning reflects a willingness to take selective balance sheet risk, holding cyclical natural resource producers, leveraged turnarounds, and out-of-favor Latin American and U.K. equities. Capital is deliberately placed into areas experiencing severe sentiment drawdowns.

Capital Deployment

60%

De-riskingDeploying

Net Neutral (60%)

Capital deployment is moderately active, marked by the new position initiation in Barratt Redrow during 2026 and participation in rights offerings alongside controlling shareholders at Greenfire Resources.

Forward Guidance

65%

CautiousExpansionary

Expansionary (65%)

The manager shows a clear bias toward deploying capital into deeply discounted assets created by episodic volatility, evidenced by the addition of Barratt Redrow in 2026. Forward actions emphasize patient buying of neglected businesses rather than aggressive portfolio-wide scaling.

Language Signal

58%

BearishBullish

Balanced (58%)

Directional language balances substantial discussions of market noise, persistent inflation, high interest rates, and geopolitical conflict with strong value descriptors such as bargain prices, prolific value creators, and compelling valuations.

Perceived Risk

72%

Low RiskElevated

Elevated Risk (72%)

Perceived macro risk is elevated, with explicit discussion of Middle East infrastructure attacks, the Russia-Ukraine war, multidecade highs in global bond yields, sticky inflation, and excessive concentration in artificial intelligence capital expenditures.

Opportunity Density

72%

ScarceAbundant

Abundant (72%)

Opportunity density is viewed favorably in non-consensus segments, with management highlighting reduced competition in deep-value global equities as generalist managers crowd into mega-cap growth and artificial intelligence names.

Time Horizon

85%

Short-TermLong-Term

Decade+ (85%)

The investment strategy adheres to a multi-year to decade-long orientation, evaluating investments over 5-to-15 year holding periods and explicitly dismissing quarter-to-quarter commodity price fluctuations.