Greenhaven Road Partners Fund Q4 2025 Shareholder Letter
The Partners Fund concluded the fourth quarter with a net return of approximately 2%, contributing to an impressive 14% annual return. This success is attributed to a distinctive investment philosophy that prioritizes specific attributes in its selected managers. These include an independent investment committee, concentrated portfolio holdings, manageable assets under management, substantial personal investments by managers, and a commitment to original thought processes. Crucially, the focus deviates from the conventional pursuit of extreme wealth, emphasizing instead a deeper, more principled approach to capital growth. This strategy inherently leads to investments in smaller, often overlooked companies, contrasting sharply with the prevalent market focus on major technology giants, which experienced significant growth and investor interest in 2025.
A notable example within the fund's portfolio is Horizon Kinetics (HKHC), an entity described as an 'invisible company' by its CEO, Murray Stahl. Its unconventional path to public markets, trading on the OTC market without analyst coverage or inclusion in major indices, means it escapes the attention of large institutional investors like Vanguard and BlackRock. HKHC's valuation is primarily underpinned by three components: a substantial balance sheet with approximately $384 million in cash and investments (equating to over 85% of its year-end share price of $23.50 in 2025), a fluctuating but potentially significant stream of incentive fees, and a core asset management business overseeing more than $10 billion in assets. Despite a share price decline in 2025, Maran Capital, a key investor in HKHC and a holding of the Partners Fund, maintains a strong conviction in its intrinsic value. Maran Capital's strategy is to invest in well-managed, inexpensive, and unleveraged companies operating outside mainstream indices, a description perfectly fitting HKHC.
Horizon Kinetics provides considerable exposure to inflation-benefiting sectors, including energy and precious metals royalties, real estate, mineral and water rights, and various exchanges. The company's asset management segment is projected to generate about $1.30 per share in annual operating income, which, if valued at a conservative 16 times earnings, suggests an additional value of over $20 per share. This indicates that HKHC is significantly undervalued, presenting a compelling opportunity for future returns. The Partners Fund's diversified portfolio, spanning both U.S. and international markets, including investments in South Africa, Portugal, and Southeast Asia, underscores its commitment to exploring unique, undervalued opportunities beyond the spotlight. The fund's approach is designed to be distinctly different, aiming for smaller, more specialized holdings and fostering collaboration among its managers, ultimately striving for a 'good different' outcome in long-term capital appreciation.
Investing wisely means seeking out value where others may not. The story of Horizon Kinetics within the Partners Fund illustrates that genuine worth often lies in the overlooked, in companies that prioritize fundamental strength and thoughtful management over fleeting market trends. This strategy not only uncovers hidden gems but also builds a resilient portfolio capable of navigating diverse market conditions. It's a testament to the idea that patience, deep analysis, and a willingness to diverge from the crowd can lead to substantial and sustainable success.