SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the third quarter, the strategy returned 11.73% on a gross basis (11.52% net) compared to a 12.39% return for the Russell 2000 Index and 12.60% for the Russell 2000 Value Index. The strategy returned -0.66% on a gross basis (-0.10% net) for the trailing twelve months compared to 10.76% and 7.88% respectively for the indexes over the same period. In addition, please check the top 5 holdings of the strategy to know its best pick in 2025.
In its third-quarter 2025 investor letter, SouthernSun Small Cap Strategy highlighted stocks such as Darling Ingredients Inc. (NYSE:DAR). Darling Ingredients Inc. (NYSE:DAR) develops, produces, and sells natural ingredients from edible and inedible bio-nutrients. The one-month return of Darling Ingredients Inc. (NYSE:DAR) was 3.23%, and its shares lost 17.32% of their value over the last 52 weeks. On November 4, 2025, Darling Ingredients Inc. (NYSE:DAR) stock closed at $32.56 per share, with a market capitalization of $5.151 billion.
SouthernSun Small Cap Strategy stated the following regarding Darling Ingredients Inc. (NYSE:DAR) in its third quarter 2025 investor letter:
“Darling Ingredients Inc. (NYSE:DAR) was the top detractor in the Small Cap strategy in the third quarter after being a top contributor in the strategy in the second quarter. DAR is the largest publicly traded company turning edible by-products and food waste into sustainable products and a leading producer of renewable energy. DAR has faced significant headwinds which have affected the share price for the past 2 years. This downturn is, in our opinion, at or near a bottom. We see several fundamental and regulatory changes supporting our view that top line and bottom-line results will inflect higher in 2026. Recent announcements from DC and from the company are supportive of our view. The base Food and Feed businesses are providing significant support for the struggling Fuel business – a natural hedge we have long discussed. In addition, the company’s vertically integrated supply chain and low-cost position have proven resilient in the face of such headwinds. We expect results for the remainder of 2025 to be challenged and believe this reality is more than accounted for in today’s share price. As the cycle turns, the operational improvements made the past couple of years together with an upgraded asset base will, in our opinion, provide a substantial boost to operating profitability and discretionary cash flow. While frustrated with the recent performance, we do believe some meaningful relief is on the horizon.”
