| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 0% | 73.9% |
| 2025 |
|---|
| 73.9% |
Creek Drive Capital Management delivered a 74% net return in 2025, driven by a concentrated long book supplemented by liquid arbitrage exposures. The long book contributed approximately 60% of returns, with standout performance from Sphere Entertainment (+138%) reflecting sustained conviction in embedded optionality and operating leverage. The arbitrage book added one-third of gross returns through merger arbitrage, volatility positions, and catalyst-driven opportunities. Key positions include biotechnology investments capitalizing on structural undercapitalization, AST SpaceMobile positioned for upcoming launch catalysts, and GameStop benefiting from operational turnaround and digital collectibles initiatives. The portfolio maintained 60% net exposure and 135% gross exposure, with minimal balance sheet leverage. Risk management includes rolling IWM puts providing systematic downside protection. The fund scaled beyond $150 million without performance degradation, demonstrating strategy scalability. Looking ahead, persistent idiosyncratic volatility and price dislocations continue creating opportunities, with the manager expressing quiet confidence while remaining disciplined about extrapolation risks. The framework emphasizes flexibility and liquidity to capitalize on market inefficiencies.
Creek Drive operates a concentrated long book with liquid arbitrage exposures, leveraging persistent idiosyncratic volatility and price dislocations to generate alpha through disciplined sizing, rebalancing, and execution across both fundamental long positions and opportunistic arbitrage strategies.
We approach 2026 with a sense of focus and quiet confidence. The current market environment, characterized by persistent idiosyncratic volatility and frequent price dislocations, continues to be well suited to our approach, and we see no evidence of a slowdown in opportunity formation. We remain constructive on the outlook for the strategy while staying disciplined about the risks of extrapolation and complacency.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Dec 31 2025 | 2025 Q4 | ASTS, CORZ, GME, GOOGL, IBIT, MSTR, SPHE | arbitrage, Biotechnology, Concentration, gaming, Long/Short, rebalancing, Space, volatility |
SPHR ASTS GME |
Creek Drive delivered 74% net returns in 2025 through concentrated long positions and liquid arbitrage strategies. Sphere Entertainment drove significant alpha with 138% gains, while biotechnology and space investments capitalize on structural opportunities. The fund successfully scaled to $150 million while maintaining performance, positioning for continued opportunity capture amid persistent market dislocations and idiosyncratic volatility. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIEdgewood views AI as creating significant opportunities across their portfolio, particularly through Draft One which generates police reports and the AI Era Plan. They see AI driving structural demand for data centers and enabling new product innovations across their holdings. |
Artificial Intelligence Draft One AI Era Plan Data Centers Infrastructure |
SemiconductorsThe firm maintains significant exposure to semiconductor companies including NVIDIA, Broadcom, and ASML, viewing them as beneficiaries of AI infrastructure buildout. They see continued growth despite some cyclical concerns. |
NVIDIA Broadcom ASML AI Infrastructure Memory | |
SoftwareEdgewood emphasizes the growing software revenue percentage in their portfolio companies, noting that every 5% increase in software revenue drives 130bps of gross margin expansion. They see software as providing sticky recurring revenue. |
SaaS Recurring Revenue Margin Expansion Cloud Enterprise Software | |
HealthcareThe firm maintains exposure to healthcare through companies like Eli Lilly, Vertex, and Boston Scientific, viewing the sector as having strong fundamentals and growth prospects despite some volatility. |
Biotechnology Pharmaceuticals Medical Devices Innovation Demographics |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | Fund Letters | Mike He | SPHR | Sphere Entertainment Co. | Communication Services | Entertainment | Bull | New York Stock Exchange | entertainment, mispricing, Operatingleverage, Optionality, Utilization | Login |
| Dec 31, 2025 | Fund Letters | Mike He | ASTS | AST SpaceMobile, Inc. | Communication Services | Wireless Telecommunication Services | Bull | NASDAQ | Connectivity, Execution, Optionality, Satellites, Volatility | Login |
| Dec 31, 2025 | Fund Letters | Mike He | GME | GameStop Corp. | Consumer Discretionary | Specialty Retail | Bull | New York Stock Exchange | collectibles, Netcash, Optionality, turnaround, Volatility | Login |
| TICKER | COMMENTARY |
|---|---|
| ASTS | AST SpaceMobile has rerated materially over the past year despite relatively limited changes to the underlying business. Progress has largely taken the form of execution against previously stated milestones, advancing the regulatory framework and continuing to move the technology toward operational readiness, rather than new information that fundamentally alters the long-term opportunity. One outstanding risk that remains on the cusp of resolution is launch execution. While delays were largely anticipated in our internal planning, we have been somewhat surprised by the degree to which the market has extended the benefit of the doubt despite the company not yet having demonstrated full build-and-launch capability. That dynamic is reflective of the current speculative environment, and we have been disciplined in not chasing the stock as sentiment has improved. Looking ahead, the next three to nine months are expected to be particularly active, with launches, satellite unfurling, and commissioning events likely to drive meaningful volatility. We believe this volatility will create opportunities to actively manage the position within the portfolio. AST SpaceMobile currently represents approximately a 3% position. |
| CORZ | We also welcomed the return of Core Scientific to the long book. The position had previously migrated into the arbitrage book during merger-related activity with CoreWeave and now once again reflects a fundamental long opportunity following the collapse of that transaction. A notable contributor was the Core Scientific / CoreWeave merger arbitrage and subsequent trading around the unlock, which added approximately +550 basis points to portfolio performance. |
| GME | GameStop's operational turnaround has been notable. The business has transitioned from a structurally challenged model to one that is meaningfully more stable, with improved cost discipline and emerging operating leverage driving margin improvement. We are constructive on the company's collectibles initiatives, including the development of new digital collectible products, and view this segment as an underappreciated contributor to future economics. In addition, the company retains a degree of residual optionality tied to its history and investor base, which introduces occasional convex upside. From a risk perspective, while the position is nominally large, it is actively managed and partially hedged through call writing. More than half of the company's current equity value is represented by net cash per share, which materially limits downside in adverse scenarios. Even at a position size exceeding 10%, we estimate that a poor outcome over the next year would likely translate to an approximate 3% drag on portfolio performance. |
| GOOGL | In addition, a long-volatility position in Alphabet, driven by AI-related repricing dynamics, contributed approximately +630 basis points. |
| IBIT | The primary detractor within the book was a mistimed and mis-sized arbitrage between MicroStrategy and iShares Bitcoin Trust, where we exited before being able to benefit from subsequent erosion in mNAV. |
| MSTR | The primary detractor within the book was a mistimed and mis-sized arbitrage between MicroStrategy and iShares Bitcoin Trust, where we exited before being able to benefit from subsequent erosion in mNAV. |
| SPHE | Sphere Entertainment was up 138% over the year, reflecting nearly two years of sustained, data-driven conviction rather than a single opportunistic call. For much of that period, the market appeared to value the company almost entirely on trailing, realized cash flows. Our view was that this framework materially understated the business: Sphere possessed substantial embedded optionality and operating leverage, giving it a clear path to meaningful earnings power as utilization and content cadence improved. We built the position aggressively when the stock traded at deeply discounted levels and maintained significant exposure as identifiable earnings catalysts began to play out. More broadly, this investment illustrates the core drivers of our alpha: sourcing differentiated data unavailable to most market participants, applying holistic economic analysis to the full business, and dynamically sizing positions to maximize long-term geometric return. Sphere reached a peak weight of 27% in the portfolio and currently represents approximately 5% at ~$95 per share. We continue to expect the company to operate at a strong cadence and believe that forthcoming positive developments are unlikely to be fully reflected in the stock price, creating the potential for continued mispricing over time. While we did not have another position with the same magnitude of contribution as Sphere during the year, we continue to see a broad and improving opportunity set heading into the coming period. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
