SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. During the quarter, the Small Cap Composite returned -2.45% on a gross basis (-2.64% net) compared to 2.19% for the Russell 2000 Index and 3.26% return for the Russell 2000 Value Index. The Composite returned 6.21% on a gross basis (5.40% net) over the trailing 12 months compared to 12.81% and 12.59% for the indexes, respectively. The letter highlighted the economic lessons learned during the oil price collapse of 2014-15. Initially seen as a positive development for the global economy, the decline in oil prices later revealed underlying weaknesses, leading to broader economic impacts beyond the energy sector. The author compares this to the current situation with artificial intelligence (AI), cautioning that while AI is now a fundamental aspect of economic planning and decision-making, its associated risks must be carefully analyzed. As the market approaches 2026, the investment landscape is shaped by various scenarios, including valuation compression and overcapacity in AI infrastructure, rather than inevitable outcomes. SouthernSun Asset Management maintains a disciplined, humble approach focused on intrinsic value and is optimistic about the future but remains aware of historical lessons. In addition, please check the Strategy’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, SouthernSun Small Cap Strategy highlighted stocks like CSW Industrials, Inc. (NYSE:CSW). CSW Industrials, Inc. (NYSE:CSW) is a diversified industrial growth company that operates in Contractor Solutions, Engineered Building Solutions, and Specialized Reliability Solutions segments. On February 27, 2026, CSW Industrials, Inc. (NYSE:CSW) stock closed at $294.33 per share. One-month return of CSW Industrials, Inc. (NYSE:CSW) was 12.52%, and its shares lost 3.68% over the past 52 weeks. CSW Industrials, Inc. (NYSE:CSW) has a market capitalization of $4.887 billion.
SouthernSun Small Cap Strategy stated the following regarding CSW Industrials, Inc. (NYSE:CSW) in its fourth quarter 2025 investor letter:
“During the fourth quarter of 2025 we initiated new positions in CSW Industrials, Inc. (NYSE:CSW) and Kadant Inc. (KAI) and exited positions in Dycom Inc. (DY) and Timken Inc. (TKR) in the Small Cap Strategy.
