Value Trap No More
The Mindset Value Fund 2025 Annual Letter
Disclaimer: The below post is the 2025 Annual Investor Letter that I sent to investors in the Mindset Value Fund. This post is NOT a solicitation. I talk about stocks that I own and my view of the future. It is imperative that you do your own due diligence and not rely on anything written below. I’m posting this in order to show how my writing translates to actual performance. With that, I hope you enjoy and gain insights.
The Mindset Value Fund gained 19.6% on a net basis in Q4 and finished up 4.8% year-to-date.
Consorcio Ara is a Value Trap No More
Consorcio Ara (BMV: ARA) is a Mexican home builder that has long been a classic value trap, but we believe new leadership is going to move aggressively to unlock its value.
Despite a pristine balance sheet, strong free cashflow, and a solid dividend, ARA has traded for years at a ludicrous valuation of 30% of its book value as the company has been under-earning their cost of capital. But change is afoot. A historic leadership transition has led to a shift in the company’s DNA- reorienting the company to maximizing Return on Equity just as the Mexican Government leads a massive national push to fix its acute housing shortage.
This combination of proactive management and strong industry tailwinds sets the stage for a dramatic revaluation of the company’s share price as revenue, earnings, return on equity and dividends all shoot higher.
This has been a long time holding for the fund and we believe 2026 could be the year that the stock breaks out to the upside in a dramatic way.
We wrote a new long form deep dive research report on Consorcio Ara that you can find at this link: Consorcio Ara Research Report.
HireQuest Buys Back Stock
In our second-quarter investor letter, we wrote about HireQuest (NASDAQ: HQI) and its efforts to acquire a poorly managed competitor, TrueBlue (NYSE: TBI). While there has been no update on a potential tie-up between the two companies, HireQuest’s stock sold off sharply in Q4, reaching a low of $7.38. This decline appeared driven by tax-loss selling and other non-fundamental factors.
We were aggressive buyers. HireQuest’s franchise model makes it a cash-generating business with minimal debt, a combination we find particularly attractive. Sure enough, on December 17, the company announced a $20 million share repurchase program—an amount that, at the time, represented most of the publicly traded float, as the company is tightly held by insiders. Since then, the stock has rebounded sharply and is now up roughly 50% from its lows.
The temporary staffing industry has been in a nearly three-year bear market for a variety of reasons, including the surge in illegal immigration from 2021 to 2024. We believe many of the forces that drove this weakness are now unwinding, and that headwinds are beginning to turn into tailwinds. We continue to believe HireQuest has a superior business model relative to much of the industry and that the stock offers significant upside, particularly if it can wrest control of TrueBlue.
We wrote a new long form deep dive research report on the company that you can find at this link: HireQuest Research Report.
Trump Moves to Reschedule Cannabis
Last quarter, I wrote:
“While patience has been necessary and the waiting frustrating, we believe there is now a strong likelihood of meaningful federal reform before the midterm elections next year.”
In December, President Trump signed an executive order directing Attorney General Pam Bondi to “take all necessary steps to complete the rulemaking process related to rescheduling marijuana to Schedule III of the Controlled Substances Act (CSA) in the most expeditious manner in accordance with federal law.”
In plain English: Trump instructed the Attorney General to move cannabis to Schedule III.
This was a historic moment in U.S. cannabis policy—arguably the first meaningful federal shift since cannabis was placed into the CSA as a Schedule I substance alongside drugs like heroin.
Without getting lost in procedural weeds, I now expect cannabis to be officially rescheduled sometime in the first half of this year.
Importantly, I view this announcement as the beginning, not the end, of the opportunity in cannabis. December’s news did not instantly make investors rich—because it isn’t the endgame. It is the first pitch, not the final inning.
I expanded on this idea in greater detail in a post titled The First Pitch.
Grown Rogue’s Cost Advantages Should Drive Strong Growth
One of the primary ways we have generated outsized returns in cannabis is by focusing on unit-level economics, particularly the cost to produce one pound of cannabis flower. From the outset, we have sought operators with genuine and sustainable cost advantages.
Our research revealed one of the great myths of cannabis investing: that cannabis is easy to grow.
This insight led us to become early investors in Glass House Brands and to “pound the table” in 2022 and 2023, when the stock price failed to reflect its cost advantages or the growth potential those advantages would unlock. Glass House could profitably grow cannabis when many competitors could not.
Since then, Glass House has significantly outperformed the broader cannabis sector and now trades at a healthy valuation multiple that reflects both its cost leadership and its growth runway as additional greenhouses come online.
While Glass House benefits from massive scale and state-of-the-art greenhouse cultivation, we believe Grown Rogue has developed a meaningful cost advantage in indoor craft flower. Our research indicates that Grown Rogue may operate at more than a 50% cost advantage relative to larger U.S. cannabis operators, who mainly grow indoors.
This advantage matters because it allows the company to operate profitably in markets where others cannot like in markets like Oregon and Michigan. Further, this allows the company to produce outsized returns when it enters markets like New Jersey with constrained supply.
In December, Grown Rogue announced it was sold out in New Jersey and had begun construction on Phase 2 of its indoor facility. The company has also started building a new facility in Minnesota—a market that is structurally short on cannabis flower and likely to remain so for some time.
However, there may be even more compelling opportunities not in traditional expansion through new licenses or greenfield builds, but instead with stepping into facilities abandoned by operators who could not compete or went bankrupt.
The cannabis industry is currently experiencing widespread distress driven by oversupply, falling prices, and capital scarcity. Based on our research, very few operators are capable—or willing—to take over these distressed assets and operate them profitably.
Grown Rogue has noted on recent conference calls that it is in discussions with cannabis lenders and cannabis real estate investors. Since the company operates at half the cost of peers, the opportunity to restart defunct facilities could represent a significant growth lever.
And what makes these opportunities especially attractive is the potential speed and capital efficiency. Instead of a two- to three-year buildout, these facilities could potentially be brought online in six to nine months with substantially lower capital expenditures. The incremental returns on invested capital could be materially higher for these distressed deals.
One of the major factors suppressing cannabis valuations has been the lack of visible growth pathways. Too many companies lack a clear plan for how incremental capital will generate attractive returns. Grown Rogue does not suffer from this problem.
We see a long runway for reinvestment and growth over the next three to five years, and it is our view that following a period of digestion and consolidation, both the company’s growth rate and stock price could inflect meaningfully this year.
Summary
Our portfolio has been exceptionally volatile the last few months. December for example was the second-best month we’ve ever posted. We expect this may continue up and down, but with meaningful catalysts, strong expected growth, and improving earnings across our portfolio, we remain optimistic about the long-term future of our portfolio.
As always, please reach out with any questions or comments.
Sincerely,
Aaron M. Edelheit