Merion Road Capital's Update on Bel Fuse (BELFB)

Merion Road Capital Management, an investment advisor, released its third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the third quarter, Merion Road Small Cap Fund returned 5.0% compared to 12.4% return for the Russell 2000 Index. The long-only portfolio of Merion Road returned 10.1% during the quarter compared to the S&P 500’s 8.1% return. The portfolio’s performance was largely driven by the strong performance of Kratos. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Merion Road Capital highlighted stocks such as Bel Fuse Inc. (NASDAQ:BELFB). Bel Fuse Inc. (NASDAQ:BELFB) designs, manufactures, markets, and sells products that power, protect, and connect electronic circuits. The one-month return of Bel Fuse Inc. (NASDAQ:BELFB) was 0.15%, and its shares gained 93.40% of their value over the last 52 weeks. On November 26, 2025, Bel Fuse Inc. (NASDAQ:BELFB) stock closed at $152.69 per share, with a market capitalization of $1.933 billion.

Merion Road Capital stated the following regarding Bel Fuse Inc. (NASDAQ:BELFB) in its third quarter 2025 investor letter:

I also established a capital structure arbitrage in Bel Fuse (“BELFA” / “BELFB”). As you may recall, I previously owned Bel Fuse Inc. (NASDAQ:BELFB) based first on new management improving sales and profitability and subsequently on the acquisition and integration of Enercon. That investment worked out wonderfully for us, though in hindsight I sold too early as the company posted banner Q2 results. In revisiting the name, I noticed two things. Firstly, the discount in the price of the Class A shares versus the Class B shares had materially widened and was approaching historic levels. Secondly, Gabelli, a large holder of the Class A shares updated his holdings report to note that he is considering resubmitting a shareholder proposal to collapse the share structure.

Gabelli had previously submitted similar proposals in 2018 and 2020. At the time those proposals did not pass as the company’s governance documents suppress the voting rights of Class A shareholders who own more than 10% of the outstanding Class A; and with approximately 21% of the outstanding Class A, Gabelli was not able to fully exercise its voting rights. At the 2020 shareholder meeting, the Gabelli proposal received 567k votes in favor and 921k votes against. Had Gabelli been able to vote their 463k shares the proposal would have passed. In the years since, however, Gabelli has sold his Class A shares down to 7.966% and should be able to vote for any proposal…” (Click here to read the full text)

Bel Fuse Inc. (NASDAQ:BELFB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 15 hedge fund portfolios held Bel Fuse Inc. (NASDAQ:BELFB) at the end of the second quarter, which was 14 in the previous quarter. In the third quarter of 2025, Bel Fuse Inc. (NASDAQ:BELFB) announced sales of $179 million, marking a 44.8% rise compared to the same quarter in the previous year. While we acknowledge the potential of Bel Fuse Inc. (NASDAQ:BELFB) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.