Cedar Creek returned 5.4% in Q2, trailing the S&P 500. The fund's 32.5% expert-market bet is concentrated in four stocks, led by Exco Resources and Harbor Diversified.
Cedar Creek Partners returned 5.4% in the second quarter of 2026, net of fees, trailing the S&P 500's 15.1% gain by a wide margin. The fund, which focuses on microcap and over-the-counter stocks, is up 12.6% for the first half of the year.
Manager Tim Eriksen said the underperformance relative to broad indices was expected given the fund's positioning. Cedar Creek's average annual return since its January 2006 inception is 15%, net of fees, versus 1,650.5% cumulative over the period.
The fund's portfolio carries a weighted price-to-earnings multiple of 7.3 times estimated forward earnings, and 4.2 times earnings net of cash. Price-to-book sits at 1.0, with a dividend yield of 1.4%.
Expert Market Concentration
Exposure to stocks trading in the "expert market" – companies affected by SEC Rule 15c2-11, which restricts quote display and retail buying – rose to 32.5% of the fund. Four positions account for roughly 80% of that allocation.
Exco Resources (expert: EXCE) is the largest expert-market holding at about 10% of the fund. Eriksen valued the natural gas producer at $22 per share, less than four times his 2026 earnings estimate excluding hedging-related mark-to-market charges. He said the stock would trade near its year-end PV-10 value of roughly $55 per share if it were listed, and could fetch around $80 per share in a sale. Fairfax Financial Holdings (FRFHF) owns over 49% of Exco.
Harbor Diversified (expert: HRBR) makes up 8% of the fund. Cedar Creek began accumulating shares after the company announced the sale of its Air Wisconsin subsidiary in December 2025 for $113 million. Eriksen estimated Harbor holds roughly $205 million in cash, or $3.50 per share, after accounting for the sale proceeds and estimated taxes. The fund's average cost on the position is $1.50 per share; the stock trades near $2.08. Eriksen expects Harbor to file delinquent SEC reports in the coming months, removing the expert-market designation and allowing the stock to trade over the counter.
PHI Group (expert: PHIG) at 5% of the fund and PD-Rx Pharmaceuticals (expert: PDRX) at 3% round out the top four expert-market positions. Eriksen said PHI Group is worth two to three times its current trading price, in line with publicly listed peers. He criticized management's handling of a recent tender offer, saying they need to "rebuild their reputation after botching everything related to the tender." PD-Rx is shrinking as a position; Eriksen said he hopes management stops overpaying themselves and sells the business.
Control Position and Valuations
The fund's single control holding is Solitron Devices (otc: SODI), where Eriksen serves as CEO and board member. The bid price rose from $25.00 to $25.50 during the quarter. Solitron announced in February it would evaluate strategic alternatives after receiving an unsolicited acquisition proposal, and retained an investment banker in July. Eriksen, citing insider restrictions, said he would only restate publicly released information.
ENDI Corp (otc: ENDI) rose from $15.00 to $15.20. The company's CrossingBridge Advisors unit has grown assets under management over 19% in 2025 and 30% in 2024. Eriksen projected 2026 GAAP earnings of roughly $0.95 per share, but cash earnings of $1.45 per share after adjusting for non-cash charges.
Queen City Investments (otc: QUCT) is a position the fund re-entered after attending the 2025 annual meeting. The company put its 26,000-acre ranch near Paso Robles, California, on the market with an asking price of $75 million. Eriksen built the position a year ago near book value at about $1,600 per share; the stock closed the quarter at $2,349.
Community Bank Basket
Bank exposure reached about 14% of the fund, concentrated in three positions. Steele Bancorp (otc: STLE) earned $1.54 per share under GAAP in Q2 and $1.74 in cash earnings, putting the run rate at $7 per share. The stock trades at $46, or about 6.5 times cash earnings. Skyline Bankshares (otc: SLBK) closed at $26.20, up from a cost basis under $13. River Financial Corp. (otc: RVRF) earned $1.77 per share in Q2, trading at $46, or roughly 6.5 times annualized earnings. Eriksen noted River Financial was subject to a June cyber attack that has not had a material impact, though lawsuits have been filed.
Eriksen said nearly all the community bank holdings trade at less than eight times earnings and should trade at higher valuations, making them attractive acquisition candidates.
The fund ended the quarter with 9% cash, down from 13% at the start. Eriksen said he continues to find uses for capital and has been increasing positions in several companies.
AlphaScala Data FRFHF carries an Alpha Score of 58/100, rated Moderate, within the Financial Services sector.
Drafted by a large language model from the source reporting linked above, then screened by automated publishing checks. It is not read by a journalist before publication. Some articles cite our Alpha Score. Verify prices and figures against the original source. Educational coverage, not personalized advice.