The Frank Value Fund Institutional class returned 11.23% YTD 2026, compared to 15.25% 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 79.38%, outperforming the Russell Midcap Value ETF return of 42.15% and the S&P 500 ETF return of 71.11%. For the five years ended September 30, 2026, the Frank Value Fund Institutional class ranked in the top 7% of its Morningstar category, Mid-Cap Value. Please see the end of this letter for more performance information.
Value on Sale and Management is Buying
Frank Value Fund's largest holding is Spectrum Brands Holdings (NYSE: SPB). The stock is one of our best performers year-to-date and still has tremendous upside. It pays a 2.4% dividend, and management is repurchasing over 4% of shares in 2026. Additionally, the company recently partnered with Oaktree Capital management for a $127 million strategic investment in its lowest margin segment, Home and Personal Care. We believe Oaktree could purchase the entire segment, leaving Spectrum management with an over-capitalized balance sheet and the remaining high-margin businesses.
Like most value companies, Spectrum Brands declined 12% towards the end of Q3 on no news. Investors are so eager to purchase AI companies that they are selling non-AI stocks to funnel even more capital towards AI. While it is frustrating to have value stocks declining on improving fundamentals, this is where stock repurchases like Spectrum's can make a significant difference.
Take Frank Value Fund holding H&R Block (NYSE: HRB), for example. Stuck with a low stock-valuation range, HRB's management team has been aggressively repurchasing shares since 2022. In this period, EBITDA has averaged a sleepy 2.2% growth rate. Yet, since cash is being invested into a productive asset at an extremely low valuation, earnings per share have increased at a 13.3% rate! This earnings growth makes H&R Block an exciting company, and analysts are catching on, forecasting 32% and 14% earnings per share growth in the next two years, respectively. As long as HRB has a cheap valuation, management will retire material amounts of shares, giving us remaining stockholders increasing ownership of earnings.
At the end of the quarter, two more of our holdings announced accelerated share repurchases. One we have not publicly disclosed, and the other is Talen Energy (NYSE: TLN). Talen committed to buying over 10% of the company in the next six months! Unlike H&R Block, Talen is already a growth company, with earnings per share set to expand to $32.42 in 2027 and $39.04 in 2028. At the time of announcement this equated to a forward P/E of 9.6x. Again, by buying at such a low valuation, Talen is setting up to vastly exceed expectations in 2027.
What's Next
Though the above repurchase activity drives long-term returns higher, it is clear value is out of favor in the short-term. As mentioned, investors have a single-track focus on the Artificial Intelligence trades, and in the last two months of the third quarter, AI pulled capital out of value stocks. Even great earnings reports from the aforementioned companies merely led to temporary increases in stock price, with flows returning towards AI in the ensuing days. Serious mitigating factors like higher interest rates, commoditization of frontier AI models, a rising cost of credit default swap insurance, political and public datacenter backlash, and cyberattack liabilities, to name a few, indicate the frenzy is nearing a peak.
When investor focus turns towards value, as it has many times in the past, the tremendous gap in valuations between our portfolio and AI companies make me optimistic for some of the best potential outperformance of my career. Until then, we wait, and our management teams repurchase shares.
Sincerely,
Brian Frank
Frank Value Fund Portfolio Manager
| Performance as of 9/30/26 |
Total Return % | Average Annualized Total Returns % | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2026 | 2025 | 2024 | 2023 | 2022 | 3 Yr. | 5 Yr. | 7 Yr. | Since 7/21/04 | |
| Frank Value Fund Inst'l | 11.23 | 12.29 | 19.45 | 15.13 | 4.43 | 17.89 | 12.95 | 11.95 | 7.75* |
| Russell Midcap Value Index | 15.25 | 11.06 | 13.07 | 12.71 | -12.03 | 17.50 | 9.26 | 10.84 | 10.13 |
* Represents an estimate based on the performance of the Fund's Investor share class, adjusted for fees.
← Back to NewsPerformance 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 October 8, 2026 and are subject to change without notice.