Merion Road Capital Re-initiated a Position in Victory Capital (VCTR)

Core Insights - Merion Road Capital Management's third-quarter 2025 investor letter indicates a 5.0% return for the Merion Road Small Cap Fund, underperforming the Russell 2000 Index's 12.4% return, while the long-only portfolio achieved a 10.1% return compared to the S&P 500's 8.1% [1] - The strong performance of Kratos significantly contributed to the portfolio's results [1] Company Focus: Victory Capital Holdings, Inc. (NASDAQ:VCTR) - Victory Capital Holdings, Inc. has experienced a one-month return of -2.89% and a 52-week loss of 9.70%, with a market capitalization of $4.123 billion as of November 20, 2025 [2] - The company has successfully closed the acquisition of the Amundi US business, now managing over $300 billion in assets, with positive net flows reported for 2024 and year-to-date 2025 [3] - Victory Capital's management has increased their cost synergy target to $110 million, with historical performance exceeding guidance, and projected free cash flow of at least $7.00 per share next year, indicating a valuation discount compared to peers [3] Market Position and Performance - Victory Capital Holdings, Inc. was held by 22 hedge fund portfolios at the end of the second quarter, an increase from 16 in the previous quarter [4] - The company's third-quarter revenue rose by 3% from the second quarter to $361.2 million [4] - Despite the potential of Victory Capital, the company is viewed as having less upside compared to certain AI stocks, which are considered to carry greater potential and lower downside risk [4]