The Frank Value Fund Institutional class returned 8.36% YTD as of June 30, 2025, compared to 3.12% for the Russell Midcap Value Index. Since fully integrating catalyst-unlocking value into the strategy in January 2022, Frank Value Institutional class produced a Total Return of 55.62%, outperforming both the Russell Midcap Value Index Total Return of 15.62%, and the S&P 500 Index Total Return of 37.32%. For the three years ended June 30, 2025, the Frank Value Fund Institutional class ranked in the top 6% of its Morningstar category, Mid-Cap Value. Please see the end of this letter for more performance information.
Electric Avenue
Q2 saw a sharp reversal of the tariff tantrum with our holdings in Independent Power Producers (IPPs) leading the way. Both Frank Value Fund IPPs are currently in the top performing list YTD for the S&P 500. The Fund’s #1 holding, NRG Energy, announced a transformative acquisition in Q2, adding generation assets in the Northeast US and Texas. The selling entity, LS Power, elected to take $2.8 billion of the consideration in NRG stock, making LS Power owners of 11% of NRG while committing to a 6-month lockup where LS Power will not sell a share. Clearly, LS Power sees the same positive dynamics in US electricity demand, and they want to participate in this upside with NRG. When Frank Value initiated its position in NRG at $35 in June of 2023, the company had a flat growth rate. Currently, at $155, NRG is guiding at least 14% growth in Adjusted Earnings Per Share for each of the next five years not considering upside surprises from potential deals with AI datacenter buildouts from the hyper-scaler technology companies. It was the right decision to purchase more NRG during the AI factor freakout earlier this year and to also add Vistra to our portfolio amidst the tariff tantrum. Our valuation targets on NRG and Vistra are still materially higher here as most participants (indexers) are apathetic to the fundamentals, which continue to surprise on the upside. NRG and Vistra are far smaller components of the S&P 500 than their fundamentals merit, and these companies will add additional value to shareholders by repurchasing stock at discounted valuations or executing deals like the LS Power acquisition.
Cantaloupe Summer
On June 16th, Frank Value Fund holding Cantaloupe Inc announced an all-cash transaction to go private at $11.20 per share. This offer is 85% higher than the fund’s initial purchase just nine months ago. Cantaloupe emphasizes the repeatable niche Frank Value Fund enjoys as fewer fundamental analysts are researching s/mid cap companies. Ultimately, when a buyer of the entire company arrives, takeover value will be significantly higher than the public trading price. As with the IPPs, we added significantly to our Cantaloupe position during the tariff tantrum. Quantitative data from our research process allows us to make decisive, opportunistic decisions when volatility and uncertainty are high. We certainly did not expect risk appetite to ravenously return in the past few months, showing why it is important to focus on individual opportunities rather than trying to read the macro tea leaves.
What’s Next
Various consumer staples companies offered attractive long-term entry points in the second quarter, and we rotated the portfolio accordingly. When their valuations are low, consumer staples are an excellent addition because they pay steady dividends, have good growth prospects, and are far less cyclical than most companies. We also added a spinoff position in the second quarter with well over 100% upside if management executes their plan. Opportunities continue to present themselves thanks to our wider universe encompassing stocks outside of any index or ETF. Spinoffs are often indiscriminately sold by indexers as only the parent company is included in the index, forcing a sale of the spinoff’s shares. For example, a company in the Russell 2000 Index spins off a division into a separate publicly traded entity. Any Russell 2000 Index Fund or ETF must sell shares in the spinoff regardless of value because the spinoff is not yet in any index. This creates massive opportunities for fundamentally focused benchmark-agnostic strategies like the Frank Value Fund.
Sincerely,
Brian Frank – Frank Value Fund Portfolio Manager
| Performance as of 6/30/25 | Total Return % | Average Annualized Total Returns % | ||||
| YTD 2025 | 2024 | 2023 | 2022 | 3 Yr. | Since 7/21/04 | |
| Frank Value Fund Inst’l | 8.36 | 19.45 | 15.13 | 4.43 | 17.59 | 7.49* |
| Russell Midcap Value Index | 3.12 | 13.07 | 12.71 | -12.03 | 11.33 | 9.63 |
* Represents an estimate based on the performance of the Fund’s Investor share class, adjusted for fees.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. You may obtain performance data current to the most recent month-end by calling the Fund at 1-888-217-5426 or visiting our website at www.frankfunds.com. Returns include reinvestment of any dividends and capital gain distributions.
Non-FDIC insured. May lose value. No bank guarantee. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the Fund, and it may be obtained by calling 1-888-217-5426. Please read it carefully before you invest or send money.
This publication does not constitute an offer or solicitation of any transaction in any securities. Any recommendation contained herein may not be suitable for all investors. Information contained in this publication has been obtained from sources we believe to be reliable, but cannot be guaranteed.
The information in this portfolio manager letter represents the opinions of the individual portfolio managers and is not intended to be a forecast of future events, a guarantee of future results or investment advice. Also, please note that any discussion of the Fund’s holdings, the Fund’s performance, and the portfolio managers’ views are as of July 3, 2025 and are subject to change without notice.