Group 1: Market Overview - The fourth quarter of 2025 saw favorable gains in equity markets, with the Russell 2000 Index returning 2.19% and the Russell 1000 Index gaining 2.41% [1] - Health care was the best-performing sector in the Russell 2000 Index, with an increase of 18.6% [1] - Despite heightened uncertainty and geopolitical risks, the Russell 2000 Index posted a 12.81% gain for the year [1] Group 2: Diamond Hill Small Cap Strategy Performance - The Diamond Hill Small Cap Strategy achieved a return of 4.88% (net of fees) in the fourth quarter, outperforming the Russell 2000 Index [1] - The firm continues to focus on resilient businesses capable of sustaining earnings in a volatile market environment as it heads into 2026 [1] Group 3: Transcat, Inc. Overview - Transcat, Inc. (NASDAQ:TRNS) provides calibration and laboratory instrument services to highly regulated industries, including life sciences, aerospace, and defense [3] - The company has strong recurring revenue streams driven by regulation and a successful acquisition track record while maintaining a strong balance sheet [3] Group 4: Transcat, Inc. Stock Performance - Transcat, Inc. had a one-month return of 11.70%, but its shares lost 9.21% of their value over the last 52 weeks [2] - As of February 4, 2026, Transcat, Inc. stock closed at $70.64 per share, with a market capitalization of $659.226 million [2] Group 5: Hedge Fund Interest and Revenue Growth - Transcat, Inc. was held by 18 hedge fund portfolios at the end of the third quarter, an increase from 12 in the previous quarter [5] - In the fiscal second quarter of 2026, Transcat, Inc.'s consolidated revenue increased by 21% to $83 million [5]

Core Insights - Prosper Stars & Stripes achieved a net return of +9.8% in Q3 2025, outperforming its peer group which returned +3.8% and the Russell 2000 Index which returned +12.4% [1] - Year-to-date, the fund returned +8.6%, lagging behind the HFRI's +13.6% and the Russell's +10.4% [1] Fund Performance - The long book of the fund delivered strong performance in both Q3 and year-to-date 2025 [1] - The short book detracted from performance in both periods [1] Company Focus: Transcat, Inc. - Transcat, Inc. (NASDAQ:TRNS) has seen a one-month return of -23.90% and a 52-week loss of 46.48%, with a market capitalization of $524.443 million as of November 27, 2025 [2] - The fund has increased its exposure to healthcare stocks, particularly focusing on companies providing essential services and products to the sector [3] Industry Trends - The healthcare sector is expected to regain growth momentum as headwinds from the pandemic ease, driven by population growth and technological advancements [3] - Significant capital expenditure projects announced by major pharmaceutical and healthcare supply chain companies are anticipated to create growth opportunities for Transcat [3] - The trend towards reshoring production to avoid supply disruptions is a priority for both government and corporate sectors, which may benefit Transcat [3] Investment Outlook - Transcat is positioned to capitalize on expanding growth opportunities due to its strong distribution and service platform in the healthcare sector [3] - The company is expected to surprise positively as the industry materializes hundreds of billions in incremental investments over the next few years [3] - A potential recovery of Transcat's stock price towards $90+ is projected within the next 12 months, based on a mid to high teens EBITDA multiple [3]