His second type of investments were work-outs—securities whose financial results depend on corporate action such as mergers, liquidations, reorganizations, and spin-offs. Sell-outs by small oil producers to major oil companies in the late 1950s were one source of such securities, Buffett said in his 1962 letter to partners.
The third category were situations where the Buffett partnership either took control or held a large position and attempted to influence company policies. Such holdings included Berkshire Hathaway, Sanborn Maps, Dempster Manufacturing, and Diversified Retailing.
Investors who lack the funds to take major stakes can duplicate this strategy by buying value securities that have large, shareholder-friendly holders—managements, investors and funds. In fact, searching for news and SEC filings of large positions is a source for finding value investing ideas to research.
In some cases, stocks of companies with major holders and good long-term business prospects plunge on news of temporary problems. A recent example was SunOpta, based in Eden Prairie, Minnesota. It is a vendor of plant-based beverages and broth and organic fruit snacks. Customers include major national brands, foodservice vendors and retailers. Revenues in fiscal 2024 were $724 million.
In November 2025, SunOpta’s stock fell by a third to around $3.30, after its third quarter earnings announcement. Since the company imported some of its raw materials, the stock fell on fears that tariffs would raise costs. SunOpta stock was selling at ten times estimated 2027 free cash flow per share, according to Banyan’s estimates.
Meanwhile, Brian Kocher, the new CEO who took over in January 2024, began selling unprofitable businesses, boosting revenues, cutting costs, and reducing debt. Value-oriented Oaktree Capital, which owned 20% of the stock, had two members with extensive food industry experience on SunOpta’s board. Investors buying SunOpta stock could expect the Oaktree board members would encourage management to take actions which would benefit shareholders.
In February 2026, Refresco, a Netherlands-based provider of beverage products, announced it will buy SunOpta for $1.1 billion. The cash purchase at $6.50 a share, which closed in May 2026, was at a price roughly 90% higher than where the stock traded six months earlier.
Value investors can also benefit from price distortions caused by the rapid growth in passive index-based funds and ETFs as well as reduced sell-side research coverage. Typically, when removed from an index, stocks fall further in price since they are automatically sold by funds and ETFs based on the index. Yet, as the stocks get cheaper, there may be reduced demand from actively managed value funds, since their buying power continues to shrink.
At year-end 2025, passively managed index funds and ETFs held $19 trillion in assets, more than half the total funds under management, according to a February 2026 report by the Institute of Business & Finance. Meanwhile, assets at actively managed funds totaled $17 trillion, down from around 80% of total fund assets in 2010.
With the sharp decline in actively managed assets, some small- and mid-cap stocks have little or no sell-side research coverage. So, such stocks with lumpy earnings can drop to very cheap valuations since they will be ignored by momentum driven passive funds and ETFs. A quarter of U.S.-listed companies have no analyst coverage, according to a Nasdaq study. Their average market cap is around $230 million. While large-cap stocks are typically covered by an average of 16.4 analysts, small-cap stocks receive coverage from only about 5.7 analysts, according to Russell Investments.
On September 21 this year, following Standard & Poor’s latest quarterly rebalancing of its indexes, among the stocks demoted to the S&P 600 were two beer stocks: Molson Coors from the S&P 500, and Boston Beer from the S&P 400. The stocks, which were both declining, slid further after the index rebalancing was announced on September 4. They now trade near their 10-year lows. Perhaps in the near future, the excess capacity in the beer and alcohol businesses may be reduced. Also, the decline in demand, due to consumers taking GLP weight loss drugs, may stabilize.
Buffett invested his own money alongside partners. Investments held by him, relatives and office staff totaled over $27 million of the partnership’s $104 million in net assets, according to his January 1969 partnership letter.
In 1968, the partners enjoyed a 45.6% gain, compared to a 7.7 % total return for the Dow, according to the letter. To research and find value stocks, Buffett cautioned at the 2024 Berkshire annual meeting, “you have to be in love with the subject. You can’t just be in love with the money.”
