Core Insights - The performance of the Southeastern Small-Cap Fund has been mixed, with the underlying developments of holdings being better than stock price returns, particularly in a challenging market environment [2][3] - The fund's portfolio has a lower percentage of big winners compared to the Russell 2000, with only 15% of its holdings up an average of 30% compared to over 35% of the index's holdings up 70%+ [3] - The fund has maintained a strong position in the mid-range performance category, outperforming the Russell 2000 in that segment [4] - The fund's exposure to decliners was limited, with only 10% of the portfolio in this category, resulting in lower average losses compared to the index [5] Performance Analysis - The fund's average performance in the -20% to +20% return bucket was better than the Russell 2000's 0% return, with key holdings like White Mountains, CNX, and Rayonier contributing positively [4] - The fund's cash position and stable investments like Kodak initially provided safety but later became performance headwinds [6] - The fund's leverage rules have been effective in avoiding pitfalls, and adjustments to the overweight rule have been made to enhance performance [7][8] Notable Contributors - Beclé, a tequila and whiskey manufacturer, was a significant contributor due to its undervaluation and strong market position [9] - GCI Liberty, a communications company in Alaska, benefited from its unique market position and insider support from John Malone [10] - Graham Holdings showed strong performance due to growth in its education and healthcare segments [11] - Mattel has positioned itself well with strong brand power and a robust balance sheet, leading to significant stock repurchases [12] - Oscar Health experienced above-market growth but was exited due to emerging industry risks [14] Notable Detractors - Boston Beer faced challenges due to declining volumes in its major brands, although management is actively addressing these issues [15] - Clearwater Paper struggled with a weak market for solid bleached sulfate paperboard, but management is focusing on share repurchases [16] - Park Hotels & Resorts was impacted by macroeconomic concerns affecting leisure travel, leading to a decision to exit the position [18] Portfolio Activity - The fund made seven new purchases during the year, including GCI Liberty and Beclé, while exiting eight positions, including Kodak and Oscar Health [20][19] Outlook - The fund anticipates continued engagement through research perspectives and podcasts, focusing on quality investments amid market volatility [21] - The fund's strategy emphasizes owning resilient, free cash flow-generating assets to navigate market fluctuations effectively [22]