Longleaf Partners Fund, managed by Southeastern Asset Management, has released its investor letter for the fourth quarter of 2025. The fund returned 3.35% during the quarter. This compares to a 2.66% return for the S&P 500 and a 3.81% return for the Russell 1000 Value Index.
The firm described 2025 as a challenging year without standout performers. Approximately 5% of its portfolio gained 20% or more, while 35% of the S&P 500 reached that level. The firm stated that overall market dynamics drove this underperformance. It focuses on actions to strengthen portfolio outcomes rather than chasing winners at the wrong time.
The letter reiterated that building a portfolio of real companies during a period of excessive speculation will benefit all markets.
In the letter, the fund highlighted IAC Inc. (NASDAQ:IAC), a leading media and internet company. IAC's one-month return was -3.167%, while its shares gained 13.37% over the last 52 weeks. On January 16, 2026, IAC stock closed at $39.51 per share, giving it a market capitalization of $3.167 billion.
Regarding IAC, the fund stated: "IAC Inc. (NASDAQ:IAC), MGM Resorts and Angi – The related group of IAC, MGM Resorts and Angi contributed strongly in aggregate this year. Digital holding company IAC has signaled its plans to dispose of all assets besides People Inc. and an approximate 25% stake in MGM. Chairman Barry Diller is focused on closing the valuation disconnect as no value has been ascribed by the markets to IAC’s assets beyond MGM for too long. Share repurchase and increasing the stake in MGM are the main capital allocation options, and the company is already acting on both. One specific simplification move IAC made this year was the spinoff of Angi, the home services marketplace. We purchased more Angi shares post-spin at a depressed price and then sold our position as evidence of their multi-year turnaround heading down the right path caused the stock to reach our appraisal. Casino operator MGM Resorts had a relatively weaker 2025 in Las Vegas due to difficult comparisons after multiple years of strength. A significant turnaround at BetMGM plus strong performances at non-Las Vegas 'regional' properties and Macau helped steady the consolidated business throughout the year. The general market narrative for most of the year has been that Las Vegas has peaked for various reasons. We, and IAC, believe Vegas cannot be replicated anywhere in the world, and MGM has a great position as the market leader. Management has corrected some pricing mistakes while making moves to narrow their focus. A recent sale of one of their lower quality properties for a higher multiple than where the consolidated business trades, as well as withdrawing their New York City casino bid, freed up more capital for a management team who has repurchased over 40% of their shares at extremely attractive prices over the past five years."
According to a database, 47 hedge fund portfolios held IAC Inc. at the end of the third quarter, compared to 46 in the previous quarter.