Vulcan Value Partners Q1 2025 Letter

2025-04-10 06:15:00 ET

Summary

• Over the last couple of years, Mac Dunbar has spent some of his time building Opus Holdings, a promising permanent capital venture affiliated with Vulcan Value Partners.
• While we do not minimize the net negative impact of tariffs, increased volatility is providing opportunities for us to reallocate capital and improve our margin of safety.
• We are following our dual discipline and allocating capital to companies whose values are more stable than their stock prices.

Volatility returned during the first quarter. Talking to many of our companies’ management teams, we detect a more cautious view than had been the case following the recent election. Optimism about deregulation and a more business friendly government has given way to uncertainty about tariffs and their potential impacts on earnings, inflation, and economic growth. Despite these potential headwinds we believe our companies are well positioned to grow their values in a sub-par economic environment and maintain them in a more challenging environment.

We welcome market volatility because it gives us opportunities to execute our dual investment discipline. We seek to limit our investments to companies with stable values. Increased market volatility gives us the opportunity to purchase these stable value businesses at lower prices and with a correspondingly larger margin of safety. We are pleased that our price to value ratios improved across all of our strategies during the first quarter....

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