Rewey Asset Management, an investment management firm, released its “RAM Smid Composite” investor letter for the fourth quarter of 2025. A copy of the letter can be downloaded here. In Q4 2025, the composite returned 3.58%, exceeding the Russell 2500 Value Total Return index’s 3.15% gain. YTD, the composite delivered a return of 13.09% vs. 12.73% for the Index. In 2025, equities experienced another solid year. This year, large-cap stocks dominated due to AI and technology, but momentum shifted late in the year. The Russell 2000 Value and Russell 2500 Value both outperformed the Nasdaq Composite and S&P 500 in 4Q25. The US economy ended the year on a strong note, recovering from Q1 2025 lows. The firm views compelling valuation in small caps, given the ongoing concerns in the large-cap technology sector. Please review the Composite’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, RAM Smid Composite stocks like highlighted Donnelley Financial Solutions, Inc. (NYSE:DFIN). Donnelley Financial Solutions, Inc. (NYSE:DFIN) is a provider compliance and regulatory software and services. On March 13, 2026, Donnelley Financial Solutions, Inc. (NYSE:DFIN) stock closed at $49.53 per share. One-month return of Donnelley Financial Solutions, Inc. (NYSE:DFIN) was 26.61%, and its shares gained 13.08% over the past 52 weeks. Donnelley Financial Solutions, Inc. (NYSE:DFIN) has a market capitalization of $1.314 billion.
RAM Smid Composite stated the following regarding Donnelley Financial Solutions, Inc. (NYSE:DFIN) in its fourth quarter 2025 investor letter:
“We initiated a position in Donnelley Financial Solutions, Inc. (NYSE:DFIN), a provider of capital markets and compliance-related technology solutions. We believe significant, but positive, changes in the business model have reduced investor visibility leading to investor neglect and undervaluation of the shares. DFIN is in the mid-stages of transitioning to a software-as-a-service model for corporate governance reporting, mergers and acquisitions filings and initial public offering registrations. While the metrics of software solutions continued to improve in 3Q25, results were obscured by one-time charges to terminate the company’s pension plan, which strengthened the balance sheet, and the 4Q25 impact of the government shutdown, which paused, but likely did not cancel, M&A and IPO activity.
DFIN maintains a strong balance sheet and generates substantial free cash flow. Donnelley’s 2025(e) debt-to-EBITDA ratio is a low .6x, and trailing twelve-month EBITDA covers interest expense by over 20x. In March, the company renewed its credit facility, extending the maturities of its Term Loan A and revolver to 2030. At 3Q25 it has only $43 million drawn on its $300 million revolver. We see the positive free cash flow and balance sheet strength as providing plenty of stability for DFIN as the transition to software revenues continues. This strength also allows DFIN to repurchase its own shares, with $35.5 million and $111.6 million in buybacks for 3Q25 and YTD25, respectively…” (Click here to read the full text)
Donnelley Financial Solutions, Inc. (NYSE:DFIN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 57 hedge fund portfolios held Donnelley Financial Solutions, Inc. (NYSE:DFIN) at the end of the fourth quarter, up from 56 in the previous quarter. While we acknowledge the risk and potential of Donnelley Financial Solutions, Inc. (NYSE:DFIN) 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 Donnelley Financial Solutions, Inc. (NYSE:DFIN) 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.
