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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Concentrated small-cap stock selection exploits structural indexation inefficiencies and straggler bias, favoring deeply discounted, cash-generative micro-caps with clean balance sheets and idiosyncratic product-cycle catalysts."
For the third quarter of 2026, Long Cast Advisers generated a net return of -5%, bringing year-to-date net performance to 14% and compounding at a 14% net annualized rate since inception in November 2015. The portfolio remains highly concentrated, with the top five holdings representing 62% of aggregate assets, reflecting a disciplined strategy centered on high conviction, extensive proprietary fundamental research, and patient ownership within micro- and small-cap equities. Performance in the quarter was led by gains in Pro-Dex (PDEX) and Perma-Fix (PESI), which were offset by weakness in Matrix Service (MTRX) and Mama's Creations (MAMA). The manager articulates structural inefficiencies inherent to passive small-cap indexation, pointing out that passive benchmarks suffer from straggler bias because successful companies graduate to larger benchmarks, leaving indices burdened with unprofitable biotechnology firms and speculative issuers. In contrast, an active, concentrated approach selectively captures idiosyncratic mispricings while filtering out low-quality businesses. Across broader themes, the manager notes the pervasive market anxiety surrounding artificial intelligence disruption in enterprise and information services, arguing that the public markets have indiscriminately penalized mission-critical niche data workflows despite resilient intellectual property protections. Portfolio activity centered on holding through cyclical volatility in top positions while monitoring fundamental milestones. Matrix Service remains a top-five position trading at roughly 4x trailing EBITDA, supported by a clean balance sheet, internal leadership changes under a new CEO and CFO, and an active share repurchase program. Research Solutions remains a substantial position trading under 2x recurring revenue and 8x trailing EBITDA, with management iterating compliance tools for agentic artificial intelligence. Core holding Pro-Dex continues to execute against multi-year orthopedic robotics distribution milestones while trading at 14x trailing EBITDA.
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