Mittleman Value Partners’ investor letter for the year ended December 31, 2025 and the first quarter of 2026.
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To the clients of Mittleman Value Partners:
Peter Lynch on investing: “The person that turns over the most rocks wins the game.” Recent market action compelled me to turn over more rocks than usual, which delayed my year-end 2025 letter into the Q1 2026 combo I present today. I hope the extra transparency provided makes it worth the wait. 2025: The rep account gained 19% net of fees in 2025, vs. 17.9% for S&P 500, 12.8% for Russell 2000, and 22.9% for MSCI ACWI; all total returns. Our low in 2025 was -15% on the 4/8/2025 market low of the tariff tantrum and our high for 2025 was over +25% in early September, with a weak USD assisting.
2026 Q1: The rep account dropped 4.59% net of fees in Q1 2026, vs. a loss of -4.35% for the S&P 500, a gain of 0.92% for the Russell 2000, and a decline of -3.10% for MSCI ACWI; all total returns. Simply put, the place to be in Q1 2026 was natural resources, with the Bloomberg Commodity Index +23.3%. Not having exposure to that segment of the market, along with a stronger USD, hindered our results in Q1.
Still, if the value-based investment discipline to which I adhere is valid and my ability as a practitioner sufficient, the idiosyncratic aspects of our portfolio should far outweigh the various macro headwinds or tailwinds over time. So, while this highly global (82% of portfolio is non-U.S.) approach lately seems dominated by the ups and downs of the USD currency, with the strong USD weakening our unhedged results in Q1 2026, I do not expect our returns to be perpetually pressured in the absence of USD weakness. Yet, I remain a bit wary of most USD assets, mainly on valuation, as the positioning implies.
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