SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Smid Cap Strategy” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. During the quarter, the SMID Cap Composite returned -3.72% on a gross basis (-3.89% net) compared to 2.22% for the Russell 2500 Index and 3.15% return for the Russell 2500® Value Index. The composite returned 5.19% on a gross basis (4.46% net) over the trailing 12 months compared to 11.91% and 12.73% for the indexes, respectively. The letter highlighted the economic lessons learned during the oil price collapse of 2014-15. Initially seen as a positive development for the global economy, the decline in oil prices revealed underlying weaknesses, leading to broader economic impacts beyond the energy sector. The author compares this to the current situation with artificial intelligence (AI), cautioning that while AI is now a fundamental aspect of economic planning and decision-making, its associated risks need to be carefully analyzed. As the market approaches 2026, the investment landscape is shaped by various scenarios, including valuation compression and overcapacity in AI infrastructure, rather than inevitable outcomes. SouthernSun Asset Management maintains a disciplined, humble approach focused on intrinsic value and is optimistic about the future but remains aware of historical lessons. In addition, please check the Strategy’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, SouthernSun Smid Cap Strategy highlighted stocks such as Live Oak Bancshares, Inc. (NYSE:LOB). Headquartered in Wilmington, North Carolina, Live Oak Bancshares, Inc. (NYSE:LOB) is a bank holding company for Live Oak Banking Company that offers commercial banking products and services. On March 03, 2026, Live Oak Bancshares, Inc. (NYSE:LOB) stock closed at $36.45 per share. One-month return of Live Oak Bancshares, Inc. (NYSE:LOB) was -12.57%, and its shares gained 21.30% over the past 52 weeks. Live Oak Bancshares, Inc. (NYSE:LOB) has a market capitalization of $1.678 billion.
SouthernSun Smid Cap Strategy stated the following regarding Live Oak Bancshares, Inc. (NYSE:LOB) in its fourth quarter 2025 investor letter:
“During the fourth quarter we initiated new positions in Oshkosh Corporation (OSK), Live Oak Bancshares, Inc. (NYSE:LOB) and Extreme Networks Inc. (EXTR). Live Oak Bancshares, Inc. (LOB) We initiated a position in Live Oak Bancshares, Inc. during the fourth quarter of 2025. Live Oak is the largest originator of SBA 7(a) loans in the United States and has continued to expand its market leadership through the current small business credit cycle. SBA lending remains a relatively small but complex segment of the banking market, requiring deep institutional knowledge, rigorous compliance processes, and significant operational scale to efficiently originate, process, and service loans. Live Oak has built a differentiated, branchless operating model that leverages proprietary technology, vertical specialization, and close borrower relationships to efficiently deliver faster turnaround times and superior service, while maintaining disciplined underwriting standards. Over the past year, Live Oak has further strengthened its position as “America’s Small Business Bank,” growing SBA approvals materially faster than peers and expanding market share despite a challenging macro backdrop.
