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 a 2.19% return for the Russell 2000 Index and a 3.26% return for the Russell 2000 Value Index. The composite has returned 6.21% on a cumulative basis (5.40% net) over the past 12 months, compared to 12.81% and 12.59% for the indices, respectively. The letter highlights the economic lessons learned during the oil price crash of 2014-15. Initially seen as a positive development for the global economy, the collapse in oil prices has since revealed fundamental weaknesses, leading to wider economic impacts beyond the energy sector. The author compares this current situation to artificial intelligence (AI), warning that while AI is now a fundamental aspect of economic planning and decision-making, its associated risks must be carefully scrutinized. As the market approaches 2026, the investment landscape is shaped by a variety of scenarios, including value compression and overcapacity in AI infrastructure, rather than inevitable outcomes. SouthernSun Asset Management maintains a disciplined, humble approach that focuses on intrinsic value and is optimistic about the future but aware of the lessons of history. In addition, please see the top five retention strategies to identify the best of these in 2025.
In a 2025 Q4 investor letter, Swedish Sun Small Cap Strategy highlighted stocks like Timken Co. (NYSE: TKR ). Founded in 1899, Timken Inc. (NYSE:TKR) designs and manufactures engineered bearings and industrial motion products, and related services. On February 27, 2026, Timken Company (NYSE:TKR) stock closed at $108.38 per share. Timken Company (NYSE:TKR)’s one-month return was 13.38%, and its shares have grown 38.74% over the past 52 weeks. The Timken Company (NYSE:TKR) has a market capitalization of $7.483 billion.
SouthernSun Small Cap Strategy said the following about Timken Inc. (NYSE:TKR) in its 4th quarter 2025 investor letter:
“The Timken Company (NYSE:TKR) After a long and successful investment in TKR, we have decided to exit our position in favor of other attractive opportunities. While still believing that TKR has strong and sustainable brands in industrial bearings, we do not expect the company’s strategy to reinvest in the acquisition of the industrial bearing business to create material value for shareholders. The recent CEO transition – the second in as many years – also does not give us the confidence that the organization has the clear strategic direction or direction necessary to execute and create value.”
