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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, DKAM Donville Kent Asset Management. This analysis is provided for institutional research purposes only and is not investment advice.
"Donville Kent owns high-growth small-cap companies trading at 8.7x earnings while growing 52%, versus major indices at 16-26x with half the growth. Small caps are at historic valuation discounts that have always reversed."
Donville Kent focuses on bottom-up, fundamentally driven investing in small-cap companies that compound capital at high rates of return. The fund's top 10 investments are growing revenues 49% and earnings 52% in 2026 while trading at just 8.7x P/E, compared to major indices trading at 16-26x multiples with significantly lower growth rates. This creates substantial margin of safety and diversification for investors overexposed to expensive large-cap momentum stocks. The managers emphasize that over 100 years, stocks and earnings have shown 0.98 correlation, both growing approximately 6% annually, and while markets can trade on sentiment short-term, earnings growth drives long-term returns. Small-cap stocks currently show the greatest negative valuation spread versus large caps in history, with past extremes consistently followed by strong reversals. Portfolio companies continue executing with record results, including VitalHub growing earnings 35%, Enterprise up 64%, Zedcor up 51%, and MDA Space up 68%. The fund sees a Canadian LNG Supercycle emerging with natural gas prices up 30% and multiple pipeline projects in development. Recent validation came from SSC Security's acquisition at 118% premium, demonstrating that underlying business value eventually gets recognized even when stock prices lag fundamentals.
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