Dear Clients, Customers, and Investors,
As we conclude 2025, I would like to reflect on what has been a significant year for Twelve31. This marks our first annual letter, a new tradition we intend to continue as a means of sharing our progress with transparency and insight. We have drawn inspiration from holding companies such as Chenmark, which effectively combine practical insights with a long-term perspective in their communications, as well as enduring examples from Berkshire Hathaway. This has guided us in preparing this update with transparency, precision, and an emphasis on the core principles that underpin our mutual success. Our mission remains steadfast: to acquire, expand, and enhance outstanding small businesses in sectors including specialty food, technology, dental and healthcare services, light manufacturing, and media. We have adhered to this strategy throughout the year, addressing opportunities and obstacles with the consistent discipline that has characterized our approach since our inception in 2010.
A Year of Steady Progress and Strategic Growth
Our portfolio demonstrated resilience in 2025, notwithstanding broader economic pressures such as sustained inflation and supply chain disruptions. We realized meaningful growth through organic development in our established holdings and two targeted acquisitions that align closely with our standards: enduring enterprises with robust customer loyalty and substantial potential for advancement.
A key achievement was the integration of a Midwest-based dental services provider, which enhances our healthcare presence and introduces innovative, patient-centered approaches that we are implementing across our operations. This complements the substantial progress in our dental practices and holdings, where we have increased patient volumes and service capabilities through strategic investments in technology and personnel development. We also incorporated a light manufacturing enterprise specializing in sustainable packaging, capitalizing on the growing market for environmentally responsible solutions. These decisions were not driven by fleeting trends but by careful selections of operators who align with our principles of integrity and excellence. As Chenmark frequently highlights in its weekly commentaries, it is the intangible factors—such as culture and relationships—that generate enduring value.
Our other businesses performed admirably as well. In specialty food, Frisco Brands achieved notable expansion, particularly through the successful introduction of customer-oriented seasonings and soup lines, which have driven enhanced e-commerce performance via focused digital marketing and supply chain optimizations. Our technology entities adopted AI-driven tools to improve efficiency while preserving the personal engagement essential to small business operations. In healthcare, we emphasized employee well-being programs, leading to reduced turnover and elevated client satisfaction levels. These outcomes underscore that prioritizing our people—from employees to customers and communities—delivers lasting returns.
Naturally, no year is without challenges. We encountered substantial difficulties in the dental lab segment arising from a prior acquisition in which the former owners misrepresented financial information. This resulted in ongoing litigation that we are managing diligently, coupled with a 70% revenue decline in that entity. In the spirit of Warren Buffett’s forthright disclosures in his annual letters, we acknowledge our oversights: we placed undue reliance on the furnished data. However, we responded promptly by fortifying our legal stance, restructuring operations, and committing resources to recovery initiatives. We are now positioning the business for future growth through an emphasis on core competencies, cost management, and strategic market adjustments. Additionally, we derived valuable insights from our media properties within Aksarben Media, where the prior leadership was unable to advance the business effectively. Consequently, we are redirecting efforts under new management, with a sharpened focus on marketing services to capitalize on our expertise in content and client relationships. In an environment of uncertainty, as Jamie Dimon of JPMorgan Chase often observes, decisiveness and principled judgment are essential. We have employed these qualities to maintain the antifragility of our portfolio.
Looking Ahead to 2026 and Beyond
As we advance into 2026, our perspective is positive yet pragmatic. We anticipate further expansion, supported by a pipeline of acquisition prospects that conform to our evergreen framework: no expedients, only judicious deployment of permanent capital. We will sustain investments in our personnel, investigate AI applications for operational intelligence, and intensify our dedication to sustainability throughout our holdings. Economic fluctuations may continue, but our diversified assets and strong financial position enable us to navigate them while capitalizing on opportunities that may elude others.
To our clients and customers: We appreciate your confidence and collaboration; your commitment forms the foundation of our enterprises. To our investors: Your partnership facilitates this endeavor, and we remain dedicated to generating compounded value without exaggeration. And to our committed teams: You are the true architects of our achievements, translating strategy into execution daily.
We look forward to continued advancement in 2026. Should you wish to discuss any element of our progress, I am always available.
Best regards,
Chris Lausten
Founder & CEO
December 31, 2025
