Donald Smith & Company 13F Portfolio

The biggest dollar add was Mosaic, where shares rose 67.3% and the position reached 2.9% of the book. The fertilizer maker sits 13.8% below the fund's average buy price, so this looks like a deliberate average-down into an out-of-favor agricultural chemical cycle, not momentum chasing. Eldorado Gold was the second-largest add by dollars: shares up 20.5%, now 4.82% of the portfolio, and the position is already 188.5% above average cost. The fund is adding to a gold miner it knows well, which says the inflation and hard-asset hedge is getting more capital.

• PennyMac Financial Services: shares up 37.2% to 2.9% of the book. The mortgage originator and servicer is 27.0% below average cost, making it a rate-normalization and housing-turnover bet.
• NMI Holdings: shares up 122.0%, though still only 0.64% of the portfolio. The mortgage insurer adds leverage to the same housing-finance thesis.
• KB Home: shares up 45.7% to 1.92% of the book. The fund is consolidating homebuilder exposure here while cutting Taylor Morrison by 48.4%.
• Greenbrier: a new 0.57% position in railcar manufacturing and leasing. It is a small but telling bet on the industrial replacement cycle.

These adds are not a broad risk-on signal. They are specific, asset-heavy value bets where the fund sees cash flow and collateral underpricing.

Donald Smith did not fund these adds with new cash alone; it harvested gains from several long-held winners. The largest dollar trim was SiriusPoint, down 35.0% in shares and -$79.7M in estimated value, though it remains a 2.62% position. Tutor Perini was cut 62.9% after a 625.8% gain versus average cost, shrinking to 0.72% of the book. That is classic profit-taking, not a rejection of the business.

• Unum Group: shares down 51.1%, a -$60.7M trim, with the stock 177.8% above average cost. The position is now 1.03%.
• Taylor Morrison Home: shares down 48.4% and -$58.1M, leaving 1.1% of the book after a 217.7% gain.
• Citigroup: shares down 27.8%, a -$50.2M reduction, though it remains 2.31% of the portfolio and 151.8% above average cost.
• AerCap: shares down 7.6%, a -$34.7M trim, but it is still the largest holding at 7.52% after a 391.0% gain.

The pattern is consistent: trim where the fund has a huge embedded gain, and keep a residual position if the valuation case is not broken. Insurance is mixed — SPNT, UNM, HG, and UVE were cut, while NMIH and JRVR were added. Consumer cyclicals were trimmed broadly, but KB Home was the exception.

At the sector level, the move is subtle but real. Finance fell from 33.74% to 31.86% of the book, and consumer discretionary slipped from 31.49% to 29.59%. Industrials rose from 12.52% to 14.44%, while basic materials edged up from 10.16% to 10.51%. Energy went from 3.12% to 3.57%. The unclassified bucket, which is just Eldorado Gold here, rose from 3.75% to 4.88% — and Eldorado is really a precious-metals miner, not a mystery sector.

That matters because the NASDAQ labels occasionally blur the real exposure. AerCap is filed under consumer discretionary but is an aircraft lessor; Global Ship Lease is marine transportation; Park Hotels, RLJ Lodging, and Chatham Lodging are lodging REITs. If you mentally reclassify those, the book looks even more like a collection of asset-heavy cyclicals and financials than the labels suggest.

The net shift is not a wholesale abandonment of finance. It is a modest reallocation from realized winners in banks, insurers, and consumer cyclicals toward materials, industrial cyclicals, and a larger gold position. The fund is still concentrated in finance and consumer names, but the marginal dollar is going where the deep-value discount is widest.

The forward message is that Donald Smith sees better deep-value odds in hard assets and housing finance than in the financial and consumer winners it has already harvested. The 5-year annualized return of 26.3% and 3-year annualized return of 31.83% give the manager a strong cushion to average into laggards like Mosaic and PennyMac, both below average cost. The latest quarter's 7.82% gain also suggests the core book is working.

The highest-conviction additions point to a specific macro view: gold as an inflation and stress hedge, fertilizer as a scarce agricultural input, and mortgage finance as a rate-normalization play. The new Greenbrier and Piedmont positions add smaller industrial and real-estate value angles. If those themes persist, expect further profit-taking in banks, insurers, and travel, with proceeds recycled into materials, industrials, and select housing names.

The risks are real. Gold and fertilizer are volatile, mortgage finance is sensitive to rates and housing turnover, and railcar demand depends on freight cycles. With the top 10 at 42.5% of the book, single-name risk is meaningful. This 13F is a quarter-end snapshot filed later, so it shows intent, not a live portfolio. The direction, however, is clear: harvest what has worked, and buy what the market still dislikes.