Kingsway Financial Services (KFS) Targets Aggressive Growth Through Strategic Acquisitions

Alphyn Capital Management, an investment management firm, released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The Master Account of the fund returned 12.4% net in the second quarter compared to 10.9% for the S&P 500 Index. As of the second quarter of 2025, the top ten holdings accounted for approximately 65% of the portfolio, and approximately 17% of the portfolio was held in cash. Market conditions remained volatile in Q2 due to ongoing tariff developments and evolving interest rate projections. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, Alphyn Capital Management highlighted stocks such as Kingsway Financial Services Inc. (NYSE:KFS). Headquartered in Chicago, Illinois, Kingsway Financial Services Inc. (NYSE:KFS) engages in extended warranty and business services. The one-month return of Kingsway Financial Services Inc. (NYSE:KFS) was 6.91%, and its shares gained 73.72% of their value over the last 52 weeks. On July 10, 2025, Kingsway Financial Services Inc. (NYSE:KFS) stock closed at $14.54 per share, with a market capitalization of $413.374 million.

Alphyn Capital Management stated the following regarding Kingsway Financial Services Inc. (NYSE:KFS) in its second quarter 2025 investor letter:

“Kingsway Financial Services Inc.’s (NYSE:KFS) shares spent most of the past year moving sideways, which is unsurprising for a roughly $400 million market cap company that receives little sell-side coverage and whose value depends more on future acquisition-driven growth than on reported earnings today. Execution across the portfolio has been uneven. Acquisitions such as Ravix and SPI have performed well, while CSuite has proven difficult, and Secure Nursing has faced soft demand for travel nurses and wage pressure, resulting in revenue remaining flat and margins under strain as the industry normalizes following the pandemic. At the May Investor Day, management reaffirmed its goal of two to three acquisitions a year at 5-7x EBITDA on companies earning $1.5 – $3 million and walked through an operating playbook for their most recent acquisition Buds Plumbing that showed how pricing, service mix expansion, and bolt-on M&A can double profits within three years. Two weeks later, Kingsway closed a $15.7 million PIPE at $11.75 per share, lifting its acquisition cadence target to three to five deals per year. The share price has run up on that news and could be volatile until the playbook is proven; but if management executes on a handful of high quality acquisitions a year and brings solid operational discipline to formerly lifestyle family businesses, the earnings base could expand meaningfully over the next few years.”

A service technician with a tool belt, inspecting an HVAC unit in a customer’s home.

Kingsway Financial Services Inc. (NYSE:KFS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 4 hedge fund portfolios held Kingsway Financial Services Inc. (NYSE:KFS) at the end of the first quarter, compared to 5 in the last quarter. While we acknowledge the risk and potential of KFS as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KFS and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Kingsway Financial Services Inc. (NYSE:KFS) and shared Greenhaven Road Capital’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.