In the second quarter of 2025, the Longleaf Partners International Fund demonstrated remarkable resilience and strategic acumen, achieving a robust 14.89% return. This impressive performance notably outpaced its benchmark index, which recorded a 12.63% return. This success is particularly significant given the quarter's challenging start, marked by a global market sell-off triggered by new US administrative tariffs and heightened geopolitical uncertainties.
\n\nLongleaf Partners International Fund's Strategic Triumph in a Turbulent Quarter
\nDuring the second quarter of 2025, the Longleaf Partners International Fund navigated a turbulent global economic landscape with impressive skill, recording a substantial 14.89% return. This performance, which notably exceeded the FTSE Developed ex North America Index's 12.63%, underscores the fund's robust investment philosophy amidst widespread market volatility. The quarter commenced with significant global jitters, primarily fueled by the United States’ imposition of unprecedented tariffs on its key trading partners. This decision sent shockwaves through equity and fixed income markets, concurrently weakening the US dollar to levels not seen in decades.
\nDespite these macro-economic headwinds, compounded by ongoing geopolitical tensions spanning regions from India and Pakistan to Israel and Iran, alongside the protracted Russia-Ukraine conflict, the fund's diversified portfolio demonstrated remarkable strength. The fund's success stemmed from its unwavering commitment to bottom-up, concentrated, and fundamental-driven investments. This approach allowed the fund to capitalize on specific company performance, rather than being swayed by broad market sentiment or fleeting thematic trends. The fund's management adeptly seized opportunities presented by market dislocations, initiating three new investments—two in burgeoning Asian markets and one in Europe—while strategically exiting positions in companies like Naver and Louis Hachette. This agility enabled the fund to shed underperforming assets and reinvest in more promising ventures.
\nKey contributors to this quarter's stellar performance included Glanbia, an Irish sports nutrition powerhouse, which rebounded significantly from a challenging first quarter. The market's initial overreaction to Glanbia's input costs proved temporary, with improved Q1 results and declining whey prices bolstering investor confidence. French laboratory testing giant Eurofins also played a crucial role, benefiting from a more rational market assessment and proactive self-help measures, including accelerated share buybacks. Another standout was Canal+, the French pay-TV operator, whose unique assets and strong operational management were increasingly recognized by the market, particularly as its strategic acquisition of MultiChoice Group progressed.
\nFurthermore, Melco Resorts, a Macau casino operator, showcased a strong comeback, marked by increased market share and strategic share buybacks. The UK-based sports betting and online casino firm, Entain, also contributed positively, having successfully navigated regulatory challenges and implemented a turnaround strategy that began yielding tangible results in its key markets. In line with its dynamic strategy, the fund initiated new positions in Koninklijke Philips, a Dutch medical equipment manufacturer, betting on its operational turnaround post-supply chain disruptions and regulatory challenges. It also invested in Treasury Wine Estates, an Australia-listed global wine leader, and Medley, Japan's premier online HR platform for medical staff, both identified as undervalued high-quality franchises.
\nThe fund's strategic exits from Naver, the dominant South Korean search and e-commerce platform, and Louis Hachette, a Vivendi spin-off, demonstrate a disciplined approach to portfolio management, reallocating capital to opportunities with greater intrinsic value. The Longleaf Partners International Fund's proactive management and focus on fundamental value have positioned it strongly for future growth, regardless of broader market fluctuations.
\n\nThis quarter's performance by the Longleaf Partners International Fund offers a compelling lesson for investors: in an increasingly interconnected yet volatile global economy, a disciplined, fundamentals-driven investment strategy can yield exceptional results. While macro-economic and geopolitical events can undoubtedly create short-term market disruptions, the true value of an investment lies in the underlying strength and resilience of individual businesses. This report highlights the importance of thorough due diligence and an unshakeable conviction in one's investment thesis, allowing fund managers to identify and capitalize on opportunities that others might overlook due to transient market noise. It serves as a reminder that patience and a long-term perspective are vital in navigating complex market cycles, ultimately leading to significant value creation for investors.
In an investment landscape currently favoring growth, the Schwab U.S. Large-Cap Value ETF (SCHV) presents a compelling argument as a foundational holding for value diversification. This ETF distinguishes itself through its significant value orientation, inherent defensive qualities during market downturns, and an attractive dividend yield exceeding 2%. While its disciplined adherence to value principles results in a lower allocation to technology and a highly diversified sector exposure, which might lead to underperformance against growth-heavy funds in surging bull markets, SCHV is strategically positioned to thrive when value investing regains prominence.
Value Investment Spotlight: SCHV's Strategic Position Amidst Market Dynamics
The financial markets, specifically the arena of exchange-traded funds, have seen continuous flux, with growth strategies often overshadowing their value counterparts. However, the Schwab U.S. Large-Cap Value ETF (SCHV), identified by The Alpha Analyst, offers a nuanced perspective on current investment opportunities. This ETF, characterized by its substantial value exposure and defensive posture against market declines, provides investors with a stable, income-generating option, evident in its dividend yield surpassing 2%.
A key attribute of SCHV is its 'style purity', which consciously minimizes exposure to the often volatile technology sector. Instead, it embraces a broad diversification across various sectors, reducing concentration risks. This approach, while potentially yielding more modest returns compared to funds heavily invested in high-flying growth stocks during prolonged bull runs, underpins its role as a steadfast component within a diversified portfolio.
Amidst a backdrop of elevated growth valuations and prevailing macroeconomic uncertainties, a strategic rebalancing towards value-oriented assets, such as SCHV, appears to be a judicious move for astute investors. Despite any recent subdued performance, the fund's intrinsic characteristics—its low expense ratio, robust defensive capabilities, and a portfolio constructed for genuine value appreciation—reinforce its potential to deliver compelling returns, particularly during periods where the market pivots back to valuing fundamentals over speculative growth. SCHV, therefore, is not merely an alternative but a strategic necessity for those seeking stability and long-term gains in a dynamic investment environment.
As a discerning investor, the detailed analysis of SCHV provides significant insight. In an era where market narratives frequently emphasize rapid growth and technological disruption, the often-overlooked resilience and steady returns offered by value-oriented investments like SCHV are a potent reminder of portfolio diversification's enduring importance. It underscores the wisdom of maintaining a balanced approach, where assets designed for stability and consistent income generation can complement more aggressive growth pursuits. This strategy is not about chasing fleeting trends but about building a robust and adaptable investment framework that can navigate the inevitable shifts in market sentiment and economic conditions, ultimately fostering sustained financial well-being.
Giverny Capital Asset Management (GCAM) recently disclosed its second-quarter performance for 2025, revealing a portfolio return of 5.41% year-to-date. While this figure showcased healthy absolute growth, it slightly lagged behind the S&P 500's robust performance. This differential primarily stemmed from GCAM's intentional decision to maintain a comparatively lower exposure to the technology behemoths that have largely fueled the market's ascent. The firm's core investment philosophy continues to center on identifying and investing in financially sound, niche market leaders, particularly those poised to capitalize on the burgeoning artificial intelligence sector. Amidst an environment of economic uncertainty and market fluctuations, GCAM has actively refined its portfolio through strategic adjustments, demonstrating a clear commitment to its long-term investment principles.
\nSecond Quarter 2025 Investment Review: Giverny Capital Asset Management's Strategic Moves
\nIn the second quarter of 2025, from April through June, Giverny Capital Asset Management (GCAM) navigated a tumultuous market landscape. Despite a rollercoaster start to the year, marked by significant market swings influenced by trade policy shifts, GCAM's model portfolio delivered a 9.11% return for the quarter, culminating in a 5.41% year-to-date performance as of June 30th, 2025.
\nDavid M. Poppe, a key figure at GCAM, highlighted that while the portfolio's returns have historically lagged the broader S&P 500 index, their absolute figures remain impressively high, underscoring the benefits of consistent compounding. This divergence in performance is largely attributed to GCAM's deliberate portfolio construction, which emphasizes high-return, market-leading niche businesses over a heavy concentration in mega-cap technology firms, unlike the S&P 500. A notable strength of GCAM's holdings is their robust financial health, with nearly 40% of the portfolio in a net cash position and a significantly lower debt-to-capitalization ratio compared to the index. This conservative approach positions the portfolio favorably to mitigate risks during economic downturns and to seize opportunistic investments when capital becomes scarce.
\nDuring this period, several holdings significantly boosted the portfolio. Heico Corp. surged by 39.1%, benefiting from the ongoing demand for aircraft parts amidst manufacturing challenges. Ferguson Enterprises, a plumbing supply distributor, saw a 26.6% increase. Meta Platforms, a substantial investor in AI capabilities, climbed 26.3%, while financial powerhouses Charles Schwab and JP Morgan Chase also posted strong gains of 24.1% and 22.2%, respectively.
\nConversely, some investments faced headwinds. Builders FirstSource and CarMax experienced declines of 18.4% and 17.8%, respectively, largely due to high interest rates impacting consumer demand for homes and vehicles. Fiserv's stock dropped 16.7% following a slight earnings miss related to its Clover payment processing business. Align Technology, a provider of clear aligners, also saw a 9.2% decrease, possibly affected by reduced consumer spending on big-ticket discretionary items. Alphabet, despite its promising Gemini AI model and diverse ventures like YouTube and Waymo, saw a 6.7% dip amidst concerns about AI competition in internet search.
\nGCAM undertook several key transactions. The firm exited its position in M&T Bank, a conservative regional bank, due to concerns about its growth prospects in slower-growing Northeastern markets and increasing competition from non-bank lenders. Although the bank was financially sound, GCAM sought opportunities with higher growth potential elsewhere. A portion of the successful holding in Progressive Corp. was trimmed, reflecting a cautious stance on the auto insurance cycle, which appears to be nearing its peak with high rates and rising industry profitability potentially attracting regulatory scrutiny. Despite the trim, GCAM retains a significant stake in Progressive, acknowledging its superior management compared to rivals.
\nOn the acquisition front, GCAM increased its stake in Kinsale Corp., an insurer whose stock had temporarily declined due to a minor revenue miss and wildfire-related losses. Kinsale's efficient operations and high growth rates align with GCAM's investment criteria. Additionally, GCAM added to its Fiserv holdings after a 30% stock drop, viewing the dip as an overreaction given Fiserv's robust long-term earnings growth trajectory and strong regional bank partnerships.
\nThe quarter concluded with 5.4% of the portfolio in cash, with a new position established in early July with a 3.5% weighting. This new investment targets a company critical to the expansion of AI and cloud computing data centers, offering significant AI exposure at a more attractive valuation than industry leaders. This strategic move, alongside existing holdings in Arista Networks, Alphabet, Meta, and AAON, means close to one-third of the portfolio now has substantial exposure to the global AI buildout.
\nLooking ahead, GCAM plans to host its annual client meeting in New York City on October 3rd, where Poppe and Francois Rochon will provide further insights and engage with clients.
\nFrom an investor's vantage point, Giverny Capital Asset Management's approach highlights the critical importance of a clear, disciplined investment philosophy, especially during periods of market turbulence. Their emphasis on financially robust companies with strong fundamentals and a strategic allocation to high-growth sectors like AI, while maintaining a healthy cash position, offers valuable lessons. It underscores that long-term success isn't solely about mirroring market indices but about making informed, strategic decisions that align with a deep understanding of individual company strengths and broader economic trends. This commitment to rigorous due diligence and a willingness to act counter-cyclically by adding to strong positions on weakness can yield substantial rewards, proving that a steady hand and a clear vision are paramount in the complex world of investment.