Core Insights - Black Bear Value Fund reported a return of +0.2% in December 2025, resulting in a total return of -12.6% for the year, while the S&P 500 returned +0.1% in December and +17.9% for 2025 [1] - The Fund has underperformed by 10-15% over the past two years in a rising market, indicating a divergence from index performance expectations [1] - The Fund anticipates a significant rerating of its holdings as they are at the end of a capital-investment cycle, despite current market conditions not being favorable [1] Company Insights: Builders FirstSource, Inc. (NYSE:BLDR) - Builders FirstSource, Inc. experienced a one-month return of 0.27% but saw a decline of 20.10% over the last 52 weeks, closing at $124.42 per share with a market capitalization of $13.758 billion on February 6, 2026 [2] - The company faced a 28% decline in 2025 due to weakness in the housing market and pressure from new home starts, yet it is expected to generate significant free cash flow between $800 million and $1 billion in 2025, translating to a trailing yield of 7-9% [3] - The long-term investment thesis for Builders FirstSource remains intact, with expectations of higher cash flows when housing starts improve, despite potential short-term stock fluctuations [3]

Group 1 - Black Bear Value Fund reported a return of -7.1% in September, -1.0% in the quarter, and -12.7% year-to-date, contrasting with the S&P 500's returns of +3.6% in September, +8.1% in the quarter, and +14.8% year-to-date [1] - Builders FirstSource, Inc. (NYSE:BLDR) experienced a one-month return of -11.61% and a 52-week loss of 32.44%, with a market capitalization of $14.32 billion as of October 8, 2025 [2] - The investment letter highlighted a structural shortage of housing in the USA, with higher mortgage rates limiting existing home supply as homeowners remain locked into low-rate mortgages [3] Group 2 - Builders FirstSource, Inc. (NYSE:BLDR) saw a 5% decrease in second-quarter sales, totaling $4.2 billion, while the number of hedge funds holding the stock increased from 58 to 74 [4] - Despite the potential of Builders FirstSource, certain AI stocks are considered to offer greater upside potential and less downside risk [4]