Ace River Capital Q4 2025 Quarterly Letter

Dear Investors,

For the fourth quarter of 2025, Ace River Capital Partners, L.P. (the “Fund”) returned -4.55%. Over the same period, the S&P 500 (SPX) and Russell 2000 (RTY) returned +2.7% and +2.2%, respectively. For the full year, the Fund returned -21.95%, compared to +18.0% for the S&P 500 and +12.8% for the Russell 2000.

While these results were clearly disappointing, the year was defined far more by valuation compression and idiosyncratic events than by any permanent impairment of underlying business value. As always, my focus remains on long-term intrinsic value rather than short-term price movements.

Cadence Note: Beginning in 2026, investor communications will shift from a quarterly schedule to semiannual updates. This change reflects the Fund’s long-term, low-turnover approach and emphasis on intrinsic value over short-term volatility. Interim updates will be provided as warranted by material developments.

Strategy

Ace River Capital maintains a highly concentrated portfolio of small- and micro-cap businesses with durable economics, tangible assets, and long runways for reinvestment. I focus on companies where competitive advantages are structural rather than ephemeral, and where capital can be redeployed at attractive rates over long periods of time.

The portfolio intentionally avoids software, finance, and insurance businesses. Instead, it emphasizes asset-backed businesses with scarcity value, including:

• special-purpose licensed real estate (RCI Hospitality),
• waterfront and marina assets (MarineMax),
• and royalty interests in mineral deposits (Vox Royalty).

This approach requires patience, deep research, and the willingness to tolerate volatility. I typically hold fewer than five positions, follow them closely, and only add when the risk-reward profile is clearly asymmetric. There will be extended periods of inactivity, limited trading, and occasional sharp drawdowns. This is a feature of the strategy, not a flaw.

Portfolio Update

Vox Royalty Corp. (VOXR):

Since initiating a position in Vox Royalty in Q4 2023, it has grown into the Fund’s largest holding and has returned approximately 160% at the time of writing. Gold prices continue to reach record highs, driven by inflation concerns, geopolitical instability, and inconsistent trade and fiscal policy.

Vox’s royalty-based business model provides leveraged exposure to these trends while avoiding the capital intensity and operational risks faced by traditional mining companies.

The company continues to add producing royalties, expand cash flow, and maintain a clean balance sheet. I view Vox as both a long-term compounder and a natural hedge against macro uncertainty. No change in thesis.

RCI Hospitality Holdings (RICK):

During the fourth quarter, RCI Hospitality shares declined roughly 25% following the filing of bribery and tax-related charges against the CEO, CFO, and other executives by the New York Attorney General in September 2025. These developments created significant legal and governance uncertainty and drove the stock to what I would describe as crisis valuation without crisis operations.

Importantly, the core business remains intact. Cash flow continues, share repurchases have not stopped, and the company now trades below the estimated value of its owned real estate, effectively assigning little value to ongoing earnings power.

Short interest has increased to roughly 12% of the float, further compressing an already small share base following recent buybacks. The CEO and CFO have since stepped down, reducing governance risk, and while there may be fines or balance-sheet impacts ahead, I believe much of this risk is already reflected in the stock price.

The long-term thesis is unchanged. I view current prices as an opportunity and expect to add to the position as conditions warrant.

MarineMax (HZO):

MarineMax remains an attractive long-term asset owner with a valuable portfolio of marinas and waterfront real estate. However, absent near-term catalysts and given the cyclical nature of the retail boating business, I elected to sell in-the-money covered calls during the quarter. The shares were called away, and the position was reduced by roughly half.

While I like management’s stated shift toward higher-margin service, storage, and marina revenue, it remains unclear how much of this mix shift reflects structural improvement versus cyclical weakness in retail sales. I continue to monitor the position but will remain selective in deploying additional capital.

DSHK / GLFE Update (Speculative Position):

During the period, Drive Shack Inc. (DSHK) completed a corporate restructuring that resulted in the rebranding of the equity to Green Light Financial Enterprises (GLFE) along with a change in listing status and trading venue. This transition reflects the company’s ongoing efforts to reposition its assets and capital structure following the wind‑down of its legacy entertainment operations.

The position remains highly speculative and illiquid and is sized accordingly. While near‑term fundamentals remain challenged, the thesis is driven by optionality around asset monetization, balance‑sheet outcomes, and any improvement in liquidity or strategic direction under the new structure. We do not intend to add to the position and will look to reduce exposure opportunistically if liquidity improves.

Looking Ahead

Markets continue to reward a narrow group of large-cap technology companies, while small-caps remain broadly ignored. History suggests these periods of dislocation tend to create some of the best long-term opportunities.

I remain patient, focused, and prepared to act when valuations become compelling. Volatility does not concern me; permanent capital impairment does.

Fund Positions – In Order of Portfolio Weight

VOXR, RICK, HZO, DSHK

Thank you for reading. Please reach out for any reason.

Nicholas D’Agnillo | Ace River Capital Partners | Nick@AceRiverCapital.com | 401-499-3935

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.