Market Overview - The market rebound that began in April continued into the third quarter of 2025, with growth and momentum stocks delivering double-digit returns [1] - Small and micro-cap value stocks achieved their best quarterly returns since Q4 2023 [1] Performance of Deep Value Strategy - The Deep Value strategy appreciated by +26.50% in Q3 2025, outperforming the S&P 1500 Value Index (+6.29%) and the S&P 600 Value Index (+11.71%) [1] - Year-to-date, the strategy's net returns are +9.20%, compared to +9.28% for the S&P 1500 Value Index and +3.17% for the S&P 600 Value Index [1] Focus on Nabors Industries Ltd. - Nabors Industries Ltd. (NYSE:NBR) was highlighted as a significant holding, with a one-month return of 10.40% and a 52-week loss of 14.64% [2] - On December 04, 2025, Nabors Industries' stock closed at $56.91 per share, with a market capitalization of $829.501 million [2] Performance and Strategy of Nabors Industries - Nabors Industries was the largest positive contributor to the Deep Value strategy, with a market share price increase of 46% during the quarter [3] - The company is undergoing a multi-year transformation focused on leveraging leading technology, holding over 450 patents and developing industry-leading drilling automation and robotics [3] - Nabors sold its Quail Tools business segment for $600 million, with proceeds aimed at accelerating debt reduction and enhancing the company's balance sheet and liquidity [3]

Market Overview - The market recovery that began in early April continued throughout the third quarter, with small and micro-cap value stocks posting their strongest quarterly returns since Q4 2023 [2] - Small caps resumed upward momentum after a four-year pause, reaching new highs and breaking the price level peak of 2021, indicating the early stages of a multi-year outperformance cycle for low valuation equities and smaller market caps [2] Technology Sector Insights - The Technology sector's weighting in the S&P 500 increased to 34.8%, significantly above its earnings contribution, indicating crowded ownership and market valuation expansion [3][6] - The Technology sector is nearing its all-time high weighting of 34.9% from March 2000, with forward price-to-earnings multiples above 30x, compared to the 20-year historical average of 18.3x [6][7] - The price-to-sales multiple for the Technology sector is approaching 10x revenue, with the "Magnificent 7" companies nearing 13x, highlighting elevated valuations [8] Valuation Discrepancies - There are significant valuation spreads between low valuation equities and longer duration/technology equities, with Deep Value Select strategy's valuation multiples at over a 70% discount to the S&P 500 Index [10][12] - The small cap sector is emerging from a multi-year earnings recession, with expected earnings growth in 2026 anticipated to outpace larger companies [12] Performance of Deep Value Strategy - The Deep Value Select strategy achieved a quarterly return of +26.50%, outperforming the S&P 1500 Value Index and S&P 600 Value Index [14] - Year-to-date, the Deep Value Select strategy net returns are +9.20%, slightly behind the S&P 1500 Value Index [14] - Ten of the twelve holdings in the strategy delivered positive double-digit returns, with Nabors Industries being the largest contributor, up 46% [16] Company-Specific Highlights - Nabors Industries is undergoing a multi-year transformation focused on technology, with over 450 patents and a strong balance sheet following the sale of its Quail Tools business for $600 million [16][19] - Bread Financial, despite a 2% decline in market share price, has improved its capital ratios and reduced debt significantly, positioning itself for long-term financial targets [20]