Greenhaven Road Partners Fund Q3 2025 Investor Letter
Greenhaven Road Capital is a boutique hedge fund founded by Scott Miller, focused on overlooked small-cap value stocks with a concentrated, low-turnover book, plus a Partners Fund that seeds emerging managers. Its candid quarterly letters are known for surfacing obscure ideas; AUM is roughly $600m.
In plain words
Markets are incredibly focused on AI and big tech stocks, leaving some companies deeply undervalued. For example, Daily Journal Corporation (DJCO) trades at around $360 per share, which only covers the after-tax value of its stock portfolio. That means its legal advertising, software, and real estate businesses are essentially free. The stock recently saw huge trading volume with no news, highlighting how price can diverge from value. For patient investors, this is a reminder to look beyond the hype and find hidden gems where the intrinsic value is much higher than the market price. But it may take time for the market to catch up.
Greenhaven Road Capital's Q3 2025 letter reports that the Partners Fund returned 2.4% for the quarter and +11% year-to-date. The report focuses on the investment value of Daily Journal Corporation. Long led by Charlie Munger, the company operates three businesses: a shrinking legal advertising busin
Theme & Background
This chapter uses Daily Journal Corporation (DJCO) as a case study to explore the extreme pricing inefficiencies in the current market, driven by capital being heavily concentrated in AI beneficiaries and the "Mag 7." The report notes that despite an anomalous surge in DJCO's trading volume (over 700,000 shares in a single day, exceeding two-thirds of the total volume for all of 2023) without any catalyst, market participants have completely overlooked its fundamental valuation.
Core Thesis
The author's core investment argument is: The current market exhibits significant pricing inefficiencies, where the intrinsic value of certain companies is entirely ignored by short-term traders, creating opportunities for long-term value-oriented investors. The author believes that DJCO's stock price (approximately $360) only reflects the after-tax value of its publicly traded securities portfolio, implying that its legal advertising business, vertical market software business, and Los Angeles real estate are being treated as "freebies" by the market. The author contends that while a valuation reversion may take weeks or months, it is logically inevitable because a substantial portion of DJCO's value (marketable securities) is easily liquidated and returned to shareholders.
Key Arguments & Data
1. Valuation Mispricing: Kyle's analysis shows that at a stock price of $360, DJCO's implied valuation is only slightly above the after-tax value of its publicly traded securities portfolio. This means the software business, legal advertising business, and real estate are valued at zero.
2. Abnormal Trading Volume: Without any news, earnings reports, or catalysts, DJCO's single-day trading volume exceeded 700,000 shares, accounting for more than two-thirds of its total volume for all of 2023. In contrast, no single month in 2023 saw total volume reach 100,000 shares (with an average daily volume of fewer than 5,000 shares).
3. Market Sentiment Contrast: A user named Merridew compared seeing a valuation chart in 2025 to "discovering a Japanese soldier hiding since the end of World War II in the late 1970s," vividly reflecting the current market's disregard for fundamental valuation.
4. Complex Business Structure: The software business, Journal Technologies, uses an accounting model where costs are incurred upfront but revenue is recognized only after a contract is fully implemented and "goes live." The company also does not disclose any key performance indicators (e.g., churn, net dollar retention, backlog), resulting in extremely low transparency.
Details the publicly traded securities held by Daily Journal as of September 30, 2025, including holdings in WFC, BAC, USB, KHC, Tencent, Alibaba, etc., with share counts, local currency prices, exchange rates, and USD market values. Total equity is approximately $496 million, with an implied per-share value of about $385 and an implied price-to-book ratio.
Companies/Assets Involved
- Daily Journal Corporation (DJCO): The core subject of analysis. The author is bullish on its value, believing its stock price is severely undervalued. The company operates three businesses: a shrinking legal advertising business, a publicly traded securities portfolio (including Alibaba, Tencent, BYD), and a vertical market software company, Journal Technologies. Total shares outstanding are approximately 1.37 million.
- Charlie Munger: Former chairman of DJCO, whose investment philosophy (e.g., willingness to participate in complex RFP projects) is a cornerstone of the company's strategy.
- Alex Bossert: Another fund manager who posted a valuation conclusion similar to the author's on social media.
Investment Implications
For investors, the key is to adhere to a long-term value investing framework and actively seek assets mispriced due to short-term market dynamics (e.g., high-frequency trading, chasing hot themes). The specific direction is to focus on "unloved" companies with complex business structures, low transparency, and little sell-side coverage, but whose intrinsic value (especially easily liquidated assets) far exceeds the current market price. For a target like DJCO, investors need to invest effort in on-the-ground research (e.g., attending shareholder meetings, searching for RFP notices, calling courts) to approximate its value and patiently wait for the market to return to rationality.
Conclusion: The "Double-Edged Sword" Effect of Legal Disclosures
While Greenhaven Road's legal and risk disclosure framework reduces its own legal risk, it also sends a critical signal to investors: its operations rely heavily on disclaimers and regulatory exemptions, and investors must bear the burden of information asymmetry and potential risks. For institutional investors, it is essential to verify its actual fee structure, the reliability of data sources, and the completeness of performance presentations. For individual investors, it is recommended to consult legal counsel before investing and explicitly request that Greenhaven Road provide "after-fee" performance data and a complete list of holdings.