Here’s Why SouthernSun Decided to Exit Its Long-Term Holding in Dycom Industries (DY)

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During the quarter, the Small Cap Composite returned -2.45% on a gross basis (-2.64% net) compared to 2.19% for the Russell 2000 Index and 3.26% return for the Russell 2000 Value Index. The Composite returned 6.21% on a gross basis (5.40% net) over the trailing 12 months compared to 12.81% and 12.59% for the indexes, respectively.  The letter highlighted the economic lessons learned during the oil price collapse of 2014-15. Initially seen as a positive development for the global economy, the decline in oil prices later revealed underlying weaknesses, leading to broader economic impacts beyond the energy sector. The author compares this to the current situation with artificial intelligence (AI), cautioning that while AI is now a fundamental aspect of economic planning and decision-making, its associated risks must be carefully analyzed. As the market approaches 2026, the investment landscape is shaped by various scenarios, including valuation compression and overcapacity in AI infrastructure, rather than inevitable outcomes. SouthernSun Asset Management maintains a disciplined, humble approach focused on intrinsic value and is optimistic about the future but remains aware of historical lessons. In addition, please check the Strategy’s top five holdings to know its best picks in 2025.In its fourth-quarter 2025 investor letter, SouthernSun Small Cap Strategy highlighted stocks like Dycom Industries, Inc. (NYSE:DY). Based in Palm Beach Gardens, FloridaDycom Industries, Inc. (NYSE:DY) provides specialty contract services to telecommunication infrastructure and utility industries. On February 27, 2026, Dycom Industries, Inc. (NYSE:DY) stock closed at $420.02 per share. One-month return of Dycom Industries, Inc. (NYSE:DY) was 162.83%, and its shares gained 2.83% over the past 52 weeks. Dycom Industries, Inc. (NYSE:DY) has a market capitalization of $12.682 billion.SouthernSun Small Cap Strategy stated the following regarding Dycom Industries, Inc. (NYSE:DY) in its fourth quarter 2025 investor letter:"During the fourth quarter of 2025 we exited positions in Dycom Industries, Inc. (NYSE:DY) and Timken Inc. (TKR) in the Small Cap Strategy. Dycom Industries Inc. (DY) After a long and successful ownership of DY, we decided to exit our position in the fourth quarter in favor of more attractive opportunities. The business is experiencing strong demand from internet providers for fiber deployment, but we believe much of the recent valuation expansion is being driven by AI exuberance. Although fiber connections to new AI data centers will be an incremental opportunity for DY, we do not expect AI related fiber demand to be material to the overall value of the business. Furthermore, we were skeptical of the new CEO’s decision to make a large, ~$2B acquisition of an electrical contractor with ~90% of its revenues from data center projects. Historically, DY had been disciplined with its focus on wireline and wireless telecommunications, but this acquisition marked a significant departure from this discipline."Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P Futures6,781.50 -43.25 (-0.63%)Dow Futures48,317.00 -243.00 (-0.50%)Nasdaq Futures24,546.50 -209.25 (-0.85%)Russell 2000 Futures2,585.20 -26.90 (-1.03%)VIX23.57 +2.13 (+9.93%)Gold5,169.50 +45.80 (+0.89%)Trending tickersMOBX Mobix Labs, Inc. 1.1200 +0.9430 (+532.77%)CRWD CrowdStrike Holdings, Inc. 391.42 +6.56 (+1.70%)MRNA Moderna, Inc. 49.83 -3.02 (-5.71%)TGT Target Corporation 120.80 +7.63 (+6.74%)MU Micron Technology, Inc. 379.68 -32.99 (-7.99%)PortfolioSign in to access your portfolioSign inTop gainersKTB Kontoor Brands, Inc. 78.18 +13.36 (+20.61%)INGM Ingram Micro Holding Corporation 24.41 +3.06 (+14.33%)INTA Intapp, Inc. 26.14 +2.70 (+11.52%)TDW Tidewater Inc. 87.67 +7.80 (+9.77%)AVAV AeroVironment, Inc. 228.30 +19.98 (+9.59%)Top losersMDB MongoDB, Inc. 252.73 -72.28 (-22.24%)STNE StoneCo Ltd. 13.73 -3.30 (-19.38%)LIF Life360, Inc. 43.97 -9.82 (-18.26%)SE Sea Limited 87.82 -17.39 (-16.53%)ALG Alamo Group Inc. 184.78 -33.69 (-15.42%)Most activePLUG Plug Power Inc. 2.2300 +0.4200 (+23.20%)NVDA NVIDIA Corporation 180.05 -2.32 (-1.27%)ONDS Ondas Inc. 10.02 -0.65 (-6.09%)AAL American Airlines Group Inc. 12.46 -0.06 (-0.48%)F Ford Motor Company 12.70 -0.69 (-5.15%)Top economic eventsEarnings eventsMy earnings eventsEarnings events