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Dear Fellow Investors,
The Partners Fund returned approximately 2%1 net in the fourth quarter, bringing full-year returns to 14%.
The criteria for selecting managers in the Partners Fund include:
None of these criteria point to heavy exposure to the “Magnificent 7”. In 2025, that mattered: our managers' focus on smaller, less-followed companies was a headwind as the largest technology companies continued to deliver 20%+ revenue growth, and investors paid higher prices for that growth, even as those businesses migrated from asset-light to capital-intensive businesses.
Murray Stahl, CEO and portfolio manager at Horizon Kinetics, has written about “invisible companies.” As passive investing has grown, some businesses receive little attention for structural reasons—size, liquidity, listing venue, or index rules—rather than fundamentals. Entire categories such as royalty companies, exchanges, and smaller resource companies can be overlooked because of liquidity constraints, domicile rules, sector classification, or trading venue.
Ironically, Stahl's own firm, Horizon Kinetics Holding Company (HKHC), is effectively an invisible company. It went public through a reverse merger whereby a private company merges with a pre-existing public company (not a traditional IPO), has zero analyst coverage, no investor presentation, and trades OTC (not on the Nasdaq or NYSE). HKHC is not in any major index. Unlike virtually every S&P 500 company where Vanguard and BlackRock show up as top 10 shareholders through their passive products, those firms do not own HKHC. Instead, HKHC’s management shows up as its largest holder.
I want to highlight Horizon Kinetics because it is a large holding of Maran Capital, a fund that we are invested in. As Dan Roller wrote in his Q4 letter, Maran’s strategy focuses on companies that are “typically inexpensive, well-run, with little to no leverage, and outside of those that dominate the indices.” In the case of HKHC, Dan serves on the board and helped to facilitate the reverse merger which brought it public.
Horizon Kinetics is an asset manager with more than $10B in AUM. Last year, the share price was down by one third in an up market, which was a headwind for Maran and the Partners Fund. So what does Dan see? In his Q4 letter he wrote:
“When it comes to what really matters—the fundamentals—HKHC is executing well and gives us exposure to a number of “inflation beneficiary” themes. Many of HKHC’s largest investments are in energy and precious metals royalties, real estate, mineral rights, water rights, and other inflation beneficiaries such as exchanges.
HKHC shareholders get exposure to these investments in three ways: 1) investments held directly by HKHC on its balance sheet; 2) HKHC’s core asset management business, which has approximately $10 billion of assets under management (AUM) primarily invested in these same themes; and 3) future incentive fees, or “carry,” from the company’s private funds (which span venture capital, private equity, and hedge funds).”
To simplify the analysis, we’ll break HKHC’s value into the three components above on a per-share basis. As a point of reference, HKHC shares ended 2025 at approximately $23.50 per share.
The largest source of value is the “cash and balance sheet investments,” which as of 9/30/2025 were approximately $384 million, or $20.63 per share. In other words, over 85% of the year-end share price was covered by cash and investments.
The next source of value is the future incentive fees. Incentive fees are difficult to predict and lumpy by nature. In 2024, Horizon Kinetics earned a fee in excess of $2 per share; in 2025, I believe the fee was likely close to zero. For 2026, there was a recent IPO of a long-time HKHC holding, Miami International Exchange (MIAX), and triangulating the valuation for just that one incentive fee suggests another $1.00 per share in value in 2026.2
Because the incentive fees are lumpy and unpredictable, they deserve a lower multiple than operating income from management fees, but zero is unlikely the correct multiple. Applying 5 times multiple to the expected 2026 incentive fee of $1 would put the year-end valuation of $23.50 at a discount to the combination of cash, investments, and incentive fees.
The final component of value would be the core asset management business with over $10 billion of assets under management. The asset management business was on track, through September, to generate approximately $1.15 per share of operating income in 2025. Given the expected AUM growth3 , that number is likely closer to $1.30 per share of annual operating income this year, on very sticky AUM.
Reasonable people can argue about what multiple to put on those operating earnings, but I would postulate that it is well into the double digits. At 16X operating earnings, the core asset management business would be worth an incremental $20+ per share. While Horizon Kinetics may currently be “invisible” to many, it has a strong franchise, highly aligned management, and appears significantly undervalued.
Within the Partners Fund, we are exposed to a full spectrum of public companies – both U.S.-listed and international, including South Africa through Desert Lion, Portugal through our CTT SPV and Southeast Asia through Sixteenth Street. We own large companies, but also invisible ones. I wanted to highlight HKHC because you are unlikely to ever hear about it otherwise, and I think it is an excellent business, severely undervalued, and likely a source of future returns for Maran Capital and, by extension, the Partners Fund.
I end each letter saying our fund of funds is going to be different. It will be smaller, the underlying holdings will be more esoteric, and I hope the managers will continue to collaborate more over time. I believe that it will be “good different,” but only time will tell. Thank you for joining me on this journey. I will work hard to grow your family’s capital alongside mine.
Sincerely,
Scott
1 See end notes for a description of this net performance. 2 From the Q3 2025 10Q “Certain funds with aggregate unearned incentive fees of $18.2 million are not expected to be resolved until the first quarter of 2026, or later.” 3 The largest component of AUM is Texas Pacific Land Trust (TPL) which was up more than 40% YTD 2026 at the time of writing. NOT AN OFFER OR RECOMMENDATION. This document does not constitute an offer to sell, or the solicitation of any offer to buy, any interest in any Fund managed by Greenhaven Road Investment Management LP and/or its affiliates, MVM Funds LLC and Greenhaven Road Capital Partners Fund GP LLC (all together "Greenhaven Road"). Such offer may only be made (i) at the time a qualified offeree receives a confidential private placement memorandum describing the offering and related subscription agreement and (ii) in such jurisdictions where permitted by law. The discussion in this document is not intended to indicate overall performance that may be expected to be achieved by any Fund managed by Greenhaven Road and should not be considered a recommendation to purchase, sell, or otherwise invest in any particular security. Portfolio holdings change over time. Securities and private funds referred to in these materials do not represent all of the securities or private funds held, purchased, or sold by Greenhaven Road. Any references to largest or otherwise notable positions are not based on the past or expected future performance of such positions. An investment in a Fund is speculative and is subject to a risk of loss, including a risk of loss of principal. There is no secondary market for interests in the Funds and none is expected to develop. No assurance can be given that a Fund will achieve its investment objectives or that an investor will receive a return of all or part of its investment. 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Index data or descriptions are provided for comparative purposes only. It should not be assumed that any portfolio(s) managed by Greenhaven Road will consist of any specific securities that comprise the indices described herein. The S&P 500 is a stock market index that tracks the performance of 500 of the largest publicly traded companies in the U.S., representing a broad cross-section of industries. The Russell 2000 is a stock market index that measures the performance of the 2,000 smallest companies in the Russell 3000 index, providing a gauge of the performance of small-cap stocks in the U.S. NET PERFORMANCE. Net Performance (i) is representative of a "Day 1" investor in the U.S. limited partnership Greenhaven Road Capital Partners Fund, LP, (ii) assumes a 0.75% annual management fee, (III) assumes a 0% annual incentive allocation, and (iv) is presented net of all expenses. Fund returns are audited annually, though certain information contained herein may have been internally prepared in order to represent a fee class currently being offered to investors. Performance for an individual investor may vary from the performance stated herein as a result of, among other factors, the timing of their investment and the timing of any additional contributions or withdrawals. Greenhaven Road Investment Management LP is a registered investment adviser with the Securities and Exchange Commission ("SEC"). SEC registration does not imply a certain level of skill or training. The Fund(s)/Partnership(s) are not registered under the Investment Company Act of 1940, as amended, in reliance on exemption(s) thereunder. Interests in each Fund/Partnership have not been registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state, and are being offered and sold in reliance on exemptions from the registration requirements of said Act and laws. 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Footnotes
Disclaimers And Disclosures
Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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