In the second quarter of 2026, Cedar Creek Partners delivered robust performance, achieving a 5.4% increase for the quarter and a 12.6% gain for the first half of the year, net of all fees and expenses. This performance stands out against a backdrop of significant rises in major market indices, such as the NASDAQ (up 21.4%), S&P 500 (up 15.1%), and DJIA (up 13.2%). The fund, which primarily focuses on microcap and over-the-counter stocks, aims to surpass leading passive benchmarks over time. Since its inception, Cedar Creek Partners has achieved an impressive average annual return of 15.0%, net of fees, demonstrating a cumulative return of 1,650.5%.
The fund's holdings are currently valued at exceptionally attractive prices, with a weighted average trading at 7.3 times our estimated forward earnings and 4.2 times expected earnings net of cash. The portfolio’s weighted price-to-book ratio stands at 1.0, with an expected return on equity of 13.8% as of June 30, 2026. A significant portion of the fund, 32.5%, is allocated to expert market stocks—companies affected by SEC Rule 15c2-11. These include major positions in Exco Resources (10%), Harbor Diversified (8%), and PHI Group (5%). Cedar Creek Partners actively seeks opportunities where restrictions on share purchasing create undervaluation, enabling the fund to generate substantial returns over time.
Looking ahead, Cedar Creek Partners continues to strategically deploy its capital in undervalued assets and expert market stocks. The fund reduced its cash levels from 13% to 9% during the quarter, indicating ongoing investment in promising companies. Noteworthy holdings include Harbor Diversified, where the fund acquired shares at a significant discount, anticipating its expert market status to be removed. Additionally, the fund maintains a strong position in community banks, which constitute about 14% of its portfolio. These banks, such as Steele Bancorp, Skyline Bankshares, and River Financial Corp., are trading at less than eight times earnings and are considered attractive acquisition targets, poised for growth. The fund also highlights Solitron Devices and ENDI Corp as key holdings with positive outlooks.
Cedar Creek Partners exemplifies a diligent investment strategy focused on identifying and capitalizing on deeply undervalued and overlooked market segments. Through meticulous research and a patient approach, the fund consistently strives to deliver superior, risk-adjusted returns for its investors. This success is built on a foundation of seeking out companies with strong fundamentals and significant growth potential, regardless of their market visibility. By empowering informed decision-making, Cedar Creek Partners continues to foster financial growth and prosperity for all its stakeholders.
