Increased Demand for Data Centers Lifted Modine Manufacturing Company (MOD) in Q3

Core Insights - SouthernSun Asset Management's "SouthernSun Small Cap Strategy" reported an 11.73% gross return for Q3 2025, underperforming the Russell 2000 Index and Russell 2000 Value Index which returned 12.39% and 12.60% respectively [1] - Over the trailing twelve months, the strategy returned -0.66% gross, significantly lower than the indexes which returned 10.76% and 7.88% [1] Company Highlights - Modine Manufacturing Company (NYSE:MOD) was highlighted as a top contributor in the SouthernSun Small Cap Strategy for Q3 2025, with a one-month return of -5.44% and a 52-week gain of 16.90% [2][3] - Modine's stock closed at $146.14 on November 4, 2025, with a market capitalization of $7.694 billion [2] - The company plans to invest $100 million over the next 12-18 months to increase production capacity by approximately 80% due to rising demand for cooling equipment in AI datacenters [3] - Modine's balance sheet is strong, with a net debt to adjusted EBITDA ratio of around 1x, and management intends to pause acquisitions while integrating recent ones and exploring the sale of its light-duty vehicle heat exchanger business [3] Market Position - Modine Manufacturing Company was held by 49 hedge fund portfolios at the end of Q2 2025, an increase from 45 in the previous quarter [4] - The company's sales for Q2 2026 increased by 12%, driven by revenue growth in Climate Solutions [4] - Despite its potential, some analysts believe that certain AI stocks may offer greater upside potential with less downside risk compared to Modine [4]