SouthernSun Asset Management, LLC, an investment management firm, released its “SouthernSun Small Cap Strategy” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. During the quarter, the Small Cap Composite returned -2.45% on a gross basis (-2.64% net) compared to 2.19% for the Russell 2000 Index and 3.26% return for the Russell 2000 Value Index. The Composite returned 6.21% on a gross basis (5.40% net) over the trailing 12 months compared to 12.81% and 12.59% for the indexes, respectively. The letter highlighted the economic lessons learned during the oil price collapse of 2014-15. Initially seen as a positive development for the global economy, the decline in oil prices later revealed underlying weaknesses, leading to broader economic impacts beyond the energy sector. The author compares this to the current situation with artificial intelligence (AI), cautioning that while AI is now a fundamental aspect of economic planning and decision-making, its associated risks must be carefully analyzed. As the market approaches 2026, the investment landscape is shaped by various scenarios, including valuation compression and overcapacity in AI infrastructure, rather than inevitable outcomes. SouthernSun Asset Management maintains a disciplined, humble approach focused on intrinsic value and is optimistic about the future but remains aware of historical lessons. In addition, please check the Strategy’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, SouthernSun Small Cap Strategy highlighted Advanced Energy Industries, Inc. (NASDAQ:AEIS) as one of its leading contributors. Advanced Energy Industries, Inc. (NASDAQ:AEIS) is leading precision power conversion, measurement, and control solutions provider for semiconductor equipment and data centers. On February 27, 2026, Advanced Energy Industries, Inc. (NASDAQ:AEIS) stock closed at $335.57 per share. One-month return of Advanced Energy Industries, Inc. (NASDAQ:AEIS) was 28.17%, and its shares gained 212.36% over the past 52 weeks. Advanced Energy Industries, Inc. (NASDAQ:AEIS) has a market capitalization of $12.668 billion.
SouthernSun Small Cap Strategy stated the following regarding Advanced Energy Industries, Inc. (NASDAQ:AEIS) in its fourth quarter 2025 investor letter:
“Advanced Energy Industries, Inc. (NASDAQ:AEIS) was a top contributor in the Small Cap strategy during the quarter. AEIS provides highly engineered power conversion and control solutions for semiconductor equipment and data centers. Shares performed well after the company delivered a strong third-quarter report, exceeding the high end of guidance on the back of record Data Center Computing revenue that more than doubled year-over-year. Total revenue increased 24% year over-year and Adjusted EPS rose 78%, reflecting both growth and operating leverage. Looking ahead, we spent time with management and others in and around the space during the quarter, and management reiterated that AI-driven demand remains robust and expects Data Center Computing to grow 25–30% in 2026 on secured design wins, supported by incremental capacity in the Philippines and Mexico and a Thailand facility that is ready to ramp quickly. In Semiconductor, customer validation of the eVerest and eVoS platforms underpins our expectation for growth as leading-edge logic and memory spending is expected to strengthen into 2026–2027. The balance sheet remains strong with a $192M net cash position.”
Advanced Energy Industries, Inc. (NASDAQ:AEIS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 27 hedge fund portfolios held Advanced Energy Industries, Inc. (NASDAQ:AEIS) at the end of the fourth quarter, compared to 28 in the previous quarter. hile we acknowledge the risk and potential of Advanced Energy Industries, Inc. (NASDAQ:AEIS) 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 Advanced Energy Industries, Inc. (NASDAQ:AEIS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In addition, please check out our hedge fund investor letters Q4 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.
