Black Bear Value Fund's Views on Tidewater (TDW)

Black Bear Value Fund, an investment advisor, released its fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. In December, the Black Bear Value Fund returned +0.2%, bringing 2025 returns to -12.6%. The S&P 500 returned +0.1% in December and +17.9% in 2025. In a rising market environment, the Fund has lost 10-15% over the two years. The Fund does not aim to replicate the Index, so some performance variation is expected. Heading into 2026, the firm has several strong names in its portfolio, even though the market is not receptive to them currently. The firm expects a significant rerating in these holdings as they are at the end of a capital-investment cycle. Please review the Fund’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Black Bear Value Fund highlighted Tidewater Inc. (NYSE:TDW). Tidewater Inc. (NYSE:TDW) provides offshore support vessels and marine support services to the offshore energy industry. The one-month return for Tidewater Inc. (NYSE:TDW) was 15.90%, and its shares gained 18.82% over the last 52 weeks. On February 6, 2026, Tidewater Inc. (NYSE:TDW) stock closed at $66.35 per share, with a market capitalization of $3.289 billion.

Black Bear Value Fund stated the following regarding Tidewater Inc. (NYSE:TDW) in its fourth quarter 2025 investor letter:

"Tidewater Inc. (NYSE:TDW) is a marine services firm that operates one of the world’s largest fleets of offshore support vessels (OSV’s). They serve the energy industry by transporting crew and supplies, towing and anchoring drillships and supporting offshore construction projects. The long-term outlook for international and offshore markets is strong while the near-term is a little cloudier. As current resource plays (the Permian) slow down, worldwide demand will continue to grow and require more oil. It is expected that offshore capital commitments will rebound in the next 1-2 years.

What’s striking about this industry is the lack of investment in the OSV fleet. Since the GFC, global shipyard capacity has shrunk by nearly 60%. In addition, newbuild investment is lacking as many banks have pulled back from lending. Over the next decade, as fleets age, the global OSV market is expected to shrink by ~40%.

This adds up to a potential for large pricing moves, in our favor, coupled with high utilization. We do not have to bank on that as they are currently generating $300MM+ in FCF vs. a $2.5bb market cap or a 12% yield. In a more normal environment, I’d expect them to generate 500mm-1bb which gets to ~20-40% yields. Importantly their share buybacks were historically limited by debt covenants. That debt has been paid off (they have minimal debt now) and they recently instituted a buyback plan for $500MM."

Tidewater Inc. (NYSE:TDW) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 40 hedge fund portfolios held Tidewater Inc. (NYSE:TDW) at the end of the third quarter, which was 29 in the previous quarter. While we acknowledge the potential of Tidewater Inc. (NYSE:TDW) 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 another article, we covered Tidewater Inc. (NYSE:TDW) and shared Night Watch Investment Management's views on the company last quarter. In addition, please check out our hedge fund investor letters Q4 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.