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Matthias Knab, Opalesque: Portfolio manager Chris Colvin posted his recent investor letter to the popular Harvest Exchange (link below), reporting a return of 8.6%, net of fees and expenses, significantly outperforming its peers (HFRX Equity Hedge Index) and the large cap index (S&P 500). Colving pointed out that the net return was also nearly as high as its small cap benchmark (Russell 2000) despite holding ~40% cash.
In its first seven months since inception (March 1st), the Partnership’s net return exceeded 15% while holding an average cash balance of ~45%.Also this performance surpassed peers and the large cap index.
Results were fairly evenly distributed in 3Q16 with every position generating a gain, except a warrant that produced a small unrealized loss. Notable contributors included two new investments described in the investor letter, as well as Fortress ("FIG"), Medifast ("MED"), and Sparton ("SPA"). FIG, discussed in detail in Colvin’s 1Q16 letter, continues to be one of his largest holdings due to its large base of recurring earnings, high insider ownership, and attractive valuation at ~6x trailing earnings. Colvin outlined his theses on both MED and SPA in the 2Q16 letter and believes these continue to have significant upside. MED’s business model benefits from a sticky customer base, highly variable cost structure, and low capital intensity that should enable it to grow profits regardless of the economic environment.
Colvin added the firm wi...................... To view our full article Click here
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