Longleaf Partners, managed by Southeastern Asset Management, released its second-quarter 2026 investor letter for its “Small-Cap Fund”. A copy of the letter can be downloaded here. The letter states that the portfolio holdings are attractive now based on both P/V and P/FCF metrics; however, market winners have gone far higher than fair value. The Fund returned -2.47% in the quarter, underperforming the 21.49% return for the Russell 2000 Index and the 17.19% gain for the Russell 2000 Value Index. The underperformance in the quarter was driven by unexpected moves primarily in the IT and industrials sectors and market favor for speculative stocks. The Firm’s investment approach focuses on median, unweighted multiples, prioritizing growth in free cash flow per share, the potential for multiple expansion, and strategic initiatives. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Longleaf Partners Small-Cap Fund highlighted Liberty Capital Corporation (NASDAQ:GLIBK). Liberty Capital Corporation (NASDAQ:GLIBK) is a communication services company that provides a range of data, wireless, video, voice, and managed services. GCI Liberty, Inc. rebranded to Liberty Capital Corporation in May 2026. On July 13, 2026, Liberty Capital Corporation (NASDAQ:GLIBK) closed at $22.00 per share, reflecting a market capitalization of $877.91 million. Liberty Capital Corporation (NASDAQ:GLIBK) posted a one-month return of 3.63%, while its shares lost 29.03% over the past 52 weeks.
Longleaf Partners Small-Cap Fund stated the following regarding Liberty Capital Corporation (NASDAQ:GLIBK) in its Q2 2026 investor update:
“Liberty Capital Corporation (NASDAQ:GLIBK) – Alaskan cable company GCI Liberty was a detractor during the quarter. The company has recently changed its name to Liberty Capital Corp to signify their goal to transform into an owner of assets beyond their core business in Alaska. Prior to this move, GCI made a smart acquisition of Quintillion at a good price for an asset that will strengthen their Alaskan network. We trimmed our holding earlier in the quarter when the stock was trading well in the wake of the news. The stock was hit later in the quarter as they announced a deal to acquire a voting interest in Liberty Latin America from a private equity firm and John Malone, with the goal of eventually obtaining control. The market did not like this decision, and we did not either. To their credit (and with engagement from us), management quickly rectified it by having Malone purchase at cost all the shares they had acquired. We expect that the company will further distance itself from this episode as the year goes on, but its impact lingered in the quarter. Negative overall sentiment for the broadband industry, fueled by SpaceX going public and making outlandish claims, has also continued to weigh on the stock. This sentiment fails to take into account the company’s strong balance sheet and a more favorable competitive environment in Alaska compared to the Lower 48, along with free upside for a stronger Alaskan economy if the long-discussed LNG project (which 2/3rds to 3/4ths of Alaskans want) comes to fruition. At less than 4x EBITDA, we believe share repurchase is an intelligent use of capital and something that will take place as FCF rolls in during Q4 as their multi-year capital plan winds down. We added to our position later in the quarter and were encouraged to see CEO Ron Duncan purchase shares personally.”