3Q25 Partners Fund Commentary

Longleaf Partners Fund returned -0.33% in 3Q25 versus the S&P 500's 8.12%, extending year-to-date underperformance to -0.41% versus 14.83%. The fund's managers acknowledge trailing the broader market in late-stage bull conditions but argue this reflects disciplined avoidance of overvalued assets. The portfolio trades at roughly 10x free cash flow per share and holds concentrated positions in companies with real assets, growing FCF, and management teams executing value-creation strategies. Top holdings include CNX Resources, Mattel, Kraft Heinz, IAC, EXOR, and FedEx, each representing 5–6% of assets. Managers highlight specific catalysts: CNX's hedges maturing and Deep Utica resource potential; Kraft Heinz's planned split into two businesses; FedEx's Freight unit separation; and Rayonier/PotlatchDeltic's announced merger. The fund's P/V ratio sits in the low-60s%. Managers flag market excess in AI-related stocks, noting that since ChatGPT's launch, AI stocks accounted for 75% of S&P 500 returns despite weighted-average FCF per share growth of less than 30% for the Magnificent 7 from FY22 to FY25 estimates.