The Chicken Little Market
This summer, my family headed back to our roots and settled into an old farmhouse where I grew up in Antigonish County, Nova Scotia. We decided to sell our cottage in Kawartha Lakes to give our girls a chance to slow down and soak up family time—beach days, cousins, and lots of moments with their grandparents—before the busy school year kicks back in.
While unpacking, I came across an old favourite: Chicken Little. My kids have outgrown bedtime stories, but flipping through it brought back memories and reminded me of a pattern I’ve seen often in equity markets over the past 20+ years. Panic, overreaction, and herd behaviour never go out of style.
The Tale Of Chicken Little
Chicken Little is a small chicken who one day gets hit on the head by a falling acorn. She panics and believes the sky is falling. Alarmed, she decides to go warn the king. On her journey, she meets several other animals who join her - Henny Penny, Ducky Lucky, Goosey Loosey and Turkey Lurkey. Henny Penny is so convincing, all of them believe her story and follow her in a frightened march to the palace.
Eventually, they meet Foxy Loxy, who offers to guide them to the king. But Foxy Loxy is cunning and eats them one by one.
The Value Of Staying Focused In A Sentiment Driven Market
The old mantra “Sell in May and go away” often holds true - summer typically brings lower volumes and quieter markets as investors take a step back. But 2025 has defied the pattern.
After a surge of optimism following last year’s U.S. election, markets took a sharp turn early this year. The Tariff and Trade shock in April sent the S&P down 17.6% and pushed the VIX sharply higher. However, since the April low, markets have rebounded strongly. The S&P is up 18% from April to July, with small caps outperforming as evidenced by a 27.8% gain in the Russell 2000. As it turns out, the sky isn’t falling.
It’s not the first time we’ve seen sentiment shift this abruptly, and as the table below shows, those who understand market psychology and stay focused can identify the acorns and act accordingly, often finding meaningful opportunities in the aftermath.
Source: Factset
Client Spotlight - ADENTRA Inc. (ADEN:TSX) – Building Value For The Long Term
ADENTRA is the largest distributor of architectural building products in North America, selling over US$2.2 billion last year in doors, mouldings, stair parts, decorative surfaces, decking, and more—products that shape the interiors of homes and commercial buildings across the U.S.
The leadership team is seasoned and steady. CEO Rob Brown, who was CFO during the global financial crisis, has led ADENTRA through numerous cycles. What stands out is not just the company’s resilience, but its ability to emerge stronger and more focused every time.
That’s largely due to a strategy grounded in shareholder value creation. Since 2010, ADENTRA has delivered low- to mid-single-digit organic growth, and completed 16 acquisitions that added US$1.7 billion in sales, broadened the product offering, expanded geographic reach, and improved adjusted EBITDA margin by over 100 bps. Over that time, ADENTRA has achieved a 20% CAGR in adjusted EBITDA, a 12-year track record of dividend growth, and an impressive 18.9% total shareholder return, outperforming both the TSX (6.2%) and the S&P 500 (10.5%) from 2013 to 2024.
And there’s still plenty of runway. ADENTRA holds just ~5% share of a US$43 billion market and has earned a strong reputation for being a thoughtful acquirer of founder- and family-led businesses. That’s because the company doesn’t strip out costs and culture, it helps businesses thrive by bringing scale: over 2,500 suppliers, 60,000 customers, purchasing power, data analytics, technology, and back-office support that create real synergy and long-term value.
Like many in the building products sector, ADENTRA has faced a tough trading year—down 17.7% YTD—but management has seen this before. They’re using the opportunity to buy back shares under the NCIB at compelling valuations, while staying focused on the long-term. Their growth strategy continues to target double-digit shareholder returns, combining operational efficiency with disciplined M&A. Importantly, every acquisition must be immediately accretive to EPS and meet a 12% ROIC hurdle.
In our view, the recent sell-off, sparked by the falling tariff/trade acorn, will likely prove to be a compelling long-term entry point. ADENTRA’s track record speaks for itself, and we believe the team will keep doing what they do best: building a stronger business and delivering value for shareholders.
The Sky Isn’t Falling – Stay Calm. Think Clearly
At IronBird, we don’t chase the noise. We help our clients spot the acorns and stay focused on what truly matters. In a market full of Chicken Littles, our data driven approach and experience enable us to remain calm, strategic, and focused on long-term value. We invest alongside the companies we work with, aligning ourselves through a finance-led approach built on decades of capital markets experience.
How We Add Value:
We drive rerating, realignment, and results by helping management teams and boards think like investors:
Refocusing on capital deployment and returns
Building say/do cadence and market credibility
Bridging disconnects with investors and analysts
Improving the quality of the shareholder base
In the long term, discipline and strategy win.
Wishing You a Wonderful Summer!
—The IronBird Team