Management Commentary: April 2025
Dear Investors,
The year began inauspiciously, despite investors' general optimism about the economic outlook, supported by encouraging fiscal and monetary policies that were expected to sustain positive equity performance. By the middle of the quarter, however, attention shifted to concerns over an aggressive tariff policy that could significantly impact inflation and growth. These fears triggered a sharp market correction, along with uncertainty and confusion about how and when the new tariffs would be implemented.
Not surprisingly, investors adopted a more cautious stance, reducing equity exposure while awaiting clarity on the severity and scope of the tariffs. Regarding the Funds, we view this market reaction as reminiscent of the Covid-era sell-off, where fears led to a severe but short-lived downturn. For this reason, we believe the environment will remain favorable for small-cap stocks and continue to overweight them across our portfolios relative to our benchmarks and peers.
The Jacob Internet Fund added two new positions in the quarter, Grab Holdings and Snap. Grab Holdings is a leading ride-sharing and delivery service company operating in Southeast Asia. With a dominant market position in Indonesia and Singapore, and significantly greater scale than its competitors, in our opinion Grab has a unique opportunity to consolidate and expand regionally over the coming years. Its long-term goal is to broaden its range of services, effectively creating a super application for customers. Additionally, Grab has successfully followed the strategy of its U.S.-based counterparts by growing advertising into an additional high-margin revenue stream. Given this impressive growth potential, strong cash flow generation, and nearly $6 billion in cash on its balance sheet, we believe Grab represents a highly attractive investment.
Snap, the global social media company, is the other new addition to the Fund this quarter. This is a company we have followed for some time and have been tempted to invest in on multiple occasions. However, concerns about long-term relevance and persistent losses previously held us back. A renewed focus on monetization, supported by a new subscription service (Snapchat+), along with additional cost reductions, has put Snap on a much more sustainable financial trajectory. Innovations aimed at improving engagement and enhancing its ad platform also give us greater confidence in the sustainability of its recent operational performance. Finally, as acquisition activity is expected to pick up this year, we could see Snap attracting interest from a larger company seeking to establish or expand its presence in the social media space.
The Jacob Discovery Fund did not add any new positions in the quarter.
The Jacob Small Cap Growth Fund did not add any new positions in the quarter.
Ryan Jacob
Portfolio Manager
Jacob Internet Fund
Jacob Small Cap Growth Fund
Darren Chervitz
Portfolio Manager
Jacob Discovery Fund
Jacob Internet Fund, Small Cap Growth Fund and Discovery Fund Risk Disclosures:
Mutual fund investing involves risk. Principal loss is possible. There are specific risks inherent in investing in the Internet area, particularly with respect to smaller capitalized companies and the high volatility of internet stocks. All three funds may invest in foreign securities, which involve greater volatility and political, economic and currency risks, and differences in accounting methods. These risks are greater in emerging markets. All three funds also invest in smaller companies, which involve additional risks, such as limited liquidity and greater volatility.
The Internet Fund may invest in fixed income and convertible securities. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. The market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. In addition, convertible securities generally offer lower interest or dividend yields than non-convertible securities of similar quality.
Investments in micro capitalization companies may involve greater risks, as these companies tend to have limited product lines, markets and financial or managerial resources. Micro cap stocks often also have a more limited trading market, such that the Adviser may not be able to sell stocks at an optimal time or price. In addition, less frequently-traded securities may be subject to more abrupt price movements than securities of larger capitalized companies.
Investing involves risk; Principal loss is possible. Please see the prospectus for the risks associated with investing in the Fund.
Click here to view the Jacob Funds prospectus.
The information provided herein represents the opinion of Jacob Mutual Funds and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.
Click here to view the holdings for the Jacob Internet Fund, as of February 28, 2025.
Click here to view the holdings for the Jacob Small Cap Growth Fund, as of February 28, 2025.
Click here to view the holdings for the Jacob Discovery Fund, as of February 28, 2025.
Please note that these fund holdings are subject to change and should not be considered a recommendation to buy or sell any security.
Earnings growth is not representative of the Fund’s future performance.
The Jacob Funds are distributed by Quasar Distributors, LLC.