| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | -23% | -23% |
Cedar Grove Capital Management launched its multi-strategy approach in January 2026 but suffered a -23.0% net return in Q1 versus -5.6% for the Russell 2000. The manager deployed capital aggressively into what appeared to be healthy pullbacks in SaaS and small-cap valuations, expecting improving fundamentals to drive recovery. Holdings initially performed well during Q4'25 earnings season, but geopolitical events including Trump's combat operation against Iran and the subsequent Strait of Hormuz closure created broad market selloffs that overshadowed positive results. The portfolio focuses on mispriced small and microcap companies in healthcare, biotechnology, and consumer sectors, avoiding crowded AI trades. Key holdings include Evolv Technologies in security screening, Nektar Therapeutics and Abivax in biotechnology, and The RealReal in luxury resale. The manager maintains conviction in portfolio companies despite timing challenges, believing their execution will drive performance recovery as macro uncertainties pass. The special situations sleeve provides some portfolio diversification through merger arbitrage and potential buyout targets.
Cedar Grove focuses on finding mispriced small and microcap equities with supporting tailwinds, particularly in healthcare, biotechnology, and consumer sectors, while avoiding the crowded AI trade to capitalize on opportunities with fewer eyeballs.
Manager feels confident in the names held and believes their future execution will be accurately reflected in performance in coming quarters and years, despite Q1 timing challenges from macro events.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 10 2026 | 2026 Q1 | ABVX, EVLV, HIMS, KITS.TO, LNSR, MTY.TO, NKTR, OSW, REAL, SNWV, TOI, WW | Biotechnology, consumer, healthcare, Long/Short, Multi-Strategy, small cap, special situations |
KITS.TO REAL EVLV SNWV TOI ABVX NKTR MTY.TO |
Cedar Grove launched into a challenging Q1 2026 with -23% returns as geopolitical events overshadowed strong earnings from small-cap holdings. The manager deployed aggressively into SaaS and healthcare dislocations, maintaining conviction in quality companies with strong fundamentals. Portfolio focuses on mispriced opportunities in biotechnology, medical devices, and consumer sectors while avoiding crowded AI trades. |
| Apr 5 2025 | 2025 Q1 | ALC, HIMS, LNSR, TLT | healthcare, Multi-Strategy, Short Selling, small caps, special situations, Trade Policy |
HIMS LNSR |
Cedar Grove's multi-strategy approach delivered 465bp outperformance in Q1 despite Trump tariff volatility. Successful LENSAR trade offset HIMS short squeeze pain. Manager sees unprecedented policy uncertainty driving recession risks higher, with bond markets signaling distress. Maintaining cash reserves and disciplined positioning while awaiting political resolution of tariff policies through GOP constituent pressure. |
| Jan 2 2025 | 2024 Q4 | AAPL, HIMS, MSTR, RCAT, SNBR | AI, crypto, Hedging, Multi-Strategy, Options, small caps, Telehealth, Trump | - | Cedar Grove Capital's multi-strategy approach delivered 38.5% returns in 2024 by combining small-cap core longs with special situations and hedging. Despite strong performance, the manager is increasingly defensive heading into 2025, citing Trump policy uncertainty, speculative market excess, and dangerous concentration risks. They're raising cash and emphasizing protection strategies over aggressive deployment. |
| Oct 5 2024 | 2024 Q3 | - | Concentration, FOMO, Long/Short, risk management, Strategy | - | Cedar Grove Capital outperformed the S&P 500 by 240bps in Q3 through disciplined execution of a new concentrated, multi-year strategy. Despite facing significant position drawdowns and FOMO pressure, manager Paul Cerro stuck to his research-driven approach, avoiding momentum chasing. The strategy shift prioritizes sleep quality and long-term conviction over short-term trading. |
| Jul 7 2024 | 2024 Q2 | AAPL, AMZN, ANF, BIG, GOOGL, HIMS, LULU, META, MSFT, NVDA, TSLA, XPOF | AI, Banking, CRE, Long Term, retail, small cap, value | - | Cedar Grove Capital's 0.6% Q2 return lagged markets due to an ill-timed Xponential Fitness sale. Despite growing stress in CRE, banking, and concentrated AI-driven returns, the manager maintains his long-term approach focused on debt-light businesses with strong management execution, prioritizing sustainable growth over short-term trading gains. |
| Apr 20 2024 | 2024 Q1 | AAPL, ACI, BAC, CCJ, CPRI, DJT, FVRR, IRBT, LULU, MTCH, ONON, OXY, PTON, RH, SAVE, TPR | arbitrage, Consolidation, Frontrunning, portfolio, rates, risk management, Speculation | - | Cedar Grove consolidated from 25 to 11 positions in Q1, returning to concentrated ownership strategy after underperforming due to failed arbitrage deals. Manager warns of excessive speculation across AI, crypto, and meme stocks amid frontrunning of Fed cuts that keep getting delayed. Expects commercial real estate pain but sees private equity capital ready for distressed opportunities. |
| Jul 1 2024 | 2023 Q4 | AAPL, AFRM, BRCC, BYND, CPRI, IRBT, TSLA, WOOF | consumer, defense, Hedging, Long/Short, M&A Arbitrage, rates | - | Cedar Grove Capital delivered 15.2% in Q4 through disciplined short covering and tactical hedging, benefiting from unexpected defense and energy tailwinds. Manager views the rate rally as unsustainable given elevated valuations and declining earnings. Plans to consolidate portfolio from 20-30 positions to 12-15 concentrated holdings while maintaining M&A arbitrage focus and strategic hedging for 2024. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
BiotechnologyManager holds multiple biotech positions including Nektar Therapeutics with a drug targeting atopic dermatitis and alopecia areata, and Abivax with ulcerative colitis treatment. Both companies are viewed as potential acquisition targets with significant upside if clinical trials succeed. |
Drug Development M&A Targets Clinical Trials Specialty Pharma |
HealthcarePortfolio includes medical device companies like Sanuwave Health in wound care and The Oncology Institute operating value-based cancer care. Manager sees opportunities in healthcare companies benefiting from regulatory changes and operating leverage. |
Medical Devices Value Based Care Wound Care Oncology | |
ConsumerHoldings include consumer-facing companies like The RealReal in luxury resale, KITS Eyewear in direct-to-consumer optical, and WW International in weight loss. Manager focuses on companies with strong fundamentals despite consumer headwinds. |
Luxury Resale Direct To Consumer Weight Loss Consumer Discretionary | |
Special SituationsManager employs special situations strategy including merger arbitrage trades like LENSAR and potential buyout targets like MTY Food Group. This sleeve provides portfolio diversification and reduces beta exposure. |
Merger Arbitrage Buyout Targets Event Driven Portfolio Diversification | |
| 2025 Q1 |
Trade PolicyTrump administration's tariff implementation has created unprecedented market uncertainty and negative economic impacts. Manager notes tariffs were expected to be negotiation tactics but have become permanent policy, causing market drawdowns and forcing strategy adjustments. |
Tariffs Trump Trade Policy Uncertainty |
Biopharma M&ALENSAR buyout by Alcon at $14/share with CVR structure demonstrates ongoing consolidation in medical device space. Deal includes contingent value rights based on procedure volume targets, creating interesting risk-reward dynamics for shareholders. |
M&A Buyout CVR Medical Devices Alcon | |
Rates10-year Treasury yield movements signal market stress, dropping 70+ basis points as bond market reacts to policy uncertainty. Manager watching for potential move to 3% yield as recession indicator and considering TLT position. |
10Y Treasury Yield TLT Recession | |
| 2024 Q4 |
TelehealthHIMS is the fund's second-largest holding with immense long-term potential in cash-pay telehealth. The manager navigated complex option strategies around FDA decisions on Tirzepatide and Semaglutide, ultimately protecting the position while maintaining conviction in the long-term thesis despite short-term volatility. |
GLP1 Healthcare Software Pharmaceuticals Specialty Pharma |
Multi-strategyThe fund employs a multi-strategy approach combining core long positions in small-cap names with special situations including M&A arbitrage and event-driven trades. This strategy allows them to reduce beta exposure while capturing alpha in shorter timeframes as they wait for core longs to work. |
Risk Appetite Capital Markets Small Caps | |
AIThe manager notes that anything AI-related skyrocketed in Q4 just from being part of that thematic space, highlighting the speculative nature of AI investments during the quarter. |
AI Technology Momentum | |
CryptoThe manager expresses concern about crypto speculation, citing Microstrategy's Bitcoin strategy and comparing CEO Michael Saylor's approach to failed Celsius CEO Alex Mashinsky. Notes the proliferation of meme coins like fartcoin and PNUT as evidence of market irrationality. |
Crypto Risk Appetite Momentum | |
| 2024 Q3 |
Risk AppetiteManager discusses changing risk tolerance and strategy evolution from trading to long-term holdings. Emphasizes the importance of sleeping well at night and avoiding FOMO-driven decisions that can have disastrous consequences. |
Risk Management Strategy FOMO Volatility |
| 2024 Q2 |
Commercial Real EstateCRE continues to offload entire office buildings at fractions of what they paid for them just a few short years ago. This level of stress in the banking system continues to flash warning signs which have been going on for the last few years. Smaller banks with larger CRE exposure could face solvency issues. |
CRE Banking Stress Solvency Office |
Credit StressCredit card delinquencies are going up, and personal savings rates are still hovering below 4% which hasn't been seen outside the dot com or GFC recessions. History tells us that significant unrealized losses can be a precursor to bank failures, as we saw during the 2008 Financial Crisis. |
Delinquencies Banking Savings Losses Crisis | |
AIAI is driving much of the returns this year, with the Mag 7 contributing to 61% of the S&P gains. It's going to be one hell of a pop once new capex investments in chips even remotely start to slow down. The same companies that held up the market will be the ones to likely bring it down. |
Capex Chips Mag7 Returns Volatility | |
| 2024 Q1 |
AIManager notes AI taking front-row seat despite most companies not understanding how to use it beyond buzzwords and chatbots. Expects capital investment to taper off, ending parabolic growth in semiconductor names. |
Semiconductors Buzzwords Investment Growth Capital |
CryptoManager describes absolute stupidity in crypto prices and euphoric conditions, with many coins having no value and retail investors returning to casino-like behavior. |
Retail Euphoria Casino Speculation Prices | |
Commercial Real EstateManager expects more pain in CRE industry but notes tens of billions in private equity dry powder waiting to pick at bones once bankruptcies and firesales start. |
Bankruptcies Private Equity Distressed Dry Powder Pain | |
SPACsManager highlights Trump's SPAC (DJT) as example of market absurdity, generating only $4.1 million in sales for FY'23 yet losing $58 million, with borrow costs to short ranging from 750% to 900%. |
Trump Absurdity Short Losses Speculation | |
| 2023 Q4 |
DefenseFund was positioned long defense contractors before October 7th Hamas attack on Israel. Geopolitical events including Iran-backed Houthis attacking shipping lanes created unexpected tailwinds for defense holdings. |
Defense Geopolitical Contractors |
Pet CareManager was bullish on pet theme but shocked by industry reversal. Petco was a pain trade as ancillary data suggested consumers cutting back on pet spending beyond bare necessities, serving as economic indicator. |
Pet Consumer Discretionary |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 10, 2026 | Fund Letters | Cedar Grove Capital Management | SNWV | Sanuwave Health | Medical Devices | Health Care Equipment & Supplies | Bull | NASDAQ | acquisition target, CMS Guidance, debt refinancing, Medical Device, Medicare, ultrasound technology, wound care | Login |
| Apr 10, 2026 | Fund Letters | Cedar Grove Capital Management | TOI | The Oncology Institute | Medical Care Facilities | Health Care Providers & Services | Bull | NASDAQ | EBITDA inflection, Healthcare services, Oncology, operating leverage, Payer Contracts, Pharmacy Growth, value-based care | Login |
| Apr 10, 2026 | Fund Letters | Cedar Grove Capital Management | ABVX | Abivax | Biotechnology | Biotechnology | Bull | NASDAQ | acquisition target, biotechnology, Commercialization, French, Maintenance Data, Phase 3, Special situations, Ulcerative Colitis | Login |
| Apr 10, 2026 | Fund Letters | Cedar Grove Capital Management | NKTR | Nektar Therapeutics | Biotechnology | Biotechnology | Bull | NASDAQ | acquisition target, Atopic Dermatitis, biotechnology, JAK Inhibitors, Phase 3, Quarterly Dosing, safety profile, Special situations | Login |
| Apr 10, 2026 | Fund Letters | Cedar Grove Capital Management | MTY.TO | MTY Food Group | Restaurants | Hotels, Restaurants & Leisure | Bull | Toronto Stock Exchange | acquisition target, Canadian, Improving Fundamentals, M&A, private equity, Restaurant Franchisor, Special situations | Login |
| Apr 10, 2026 | Fund Letters | Cedar Grove Capital Management | KITS.TO | KITS Eyewear | Specialty Retail | Specialty Retail | Bull | Toronto Stock Exchange | Canadian, Contact lenses, DTC, e-commerce, EBITDA Positive, Eyewear, net cash, Specialty retail, vertically integrated | Login |
| Apr 10, 2026 | Fund Letters | Cedar Grove Capital Management | REAL | The RealReal | Luxury Goods | Internet & Direct Marketing Retail | Bull | NASDAQ | AI Authentication, EBITDA Expansion, Gmv Growth, Luxury Resale, marketplace, Omnichannel, operating leverage, Second-hand Fashion | Login |
| Apr 10, 2026 | Fund Letters | Cedar Grove Capital Management | EVLV | Evolv Technologies | Security & Protection Services | Technology Hardware, Storage & Peripherals | Bull | NASDAQ | AI Detection, ARR growth, cash flow positive, government contracts, Hardware, net cash, SaaS, Security Technology | Login |
| Apr 6, 2025 | Fund Letters | Cedar Grove Capital Management | LNSR | LENSAR | Health Care | Health Care Equipment | Bull | NASDAQ | Cataract Surgery, CVR, Femtosecond Laser, international expansion, M&A Arbitrage, Medical devices, Ophthalmology | Login |
| Apr 6, 2025 | Fund Letters | Cedar Grove Capital Management | HIMS | Hims and Hers Health | Health Care | Health Care Technology | Bear | NYSE | Bear, Healthcare Technology, Options Strategy, risk management, Short Position, telehealth | Login |
| TICKER | COMMENTARY |
|---|---|
| EVLV | Mass shootings are unfortunately becoming more commonplace in the U.S. these days, with the number through the end of March 31st already up 35% y/y. EVLV aims to help with that by providing various customers (arenas, government buildings, hospitals, educational centers, etc) with AI-integrated hardware that can detect different forms of firearms and knives before they can become a threat. EVLV has >1,000 customers and deployed >8,000 systems to-date. The company operates via hardware + software (SaaS) while allowing customers to either buy the hardware outright with a lower subscription contract or a lower hardware price with a higher subscription contract. This mix shift has led the company to end FY'25 with >$120 million in ARR (+21.3% y/y), inflecting positive on a cash flow basis and sitting on a net cash pile (~$40 million). Once again, we are bullish companies with strong tailwinds, and while, unfortunately, the tailwinds here are mass shootings, they don't seem to be coming down anytime soon, which allows EVLV to continue compounding. |
| NKTR | Nektar is another biotechnology company with a drug asset, rezpegaldesleukin ("Rezpeg"), that primarily targets atopic dermatitis (AD, or eczema) and alopecia areata. Right now, many of the most effective treatment offerings for AD are done via JAK inhibitors, but are largely unsafe, which requires patients to use less effective drugs. Rezpeg has shown competitive efficacy with a clean safety profile and, importantly, strong durability and response deepening in maintenance data, along with infrequent dosing (potentially quarterly), positioning it as a best-in-class option for patients who fail first-line biologics. The AD market is large, with over 80 million patients suffering from the disease globally, generating >$50 billion in sales. If Nektar is able to show positive data in its P3 trial, then peak sales could be anywhere from $3 - $5 billion against a current EV of just ~$2 billion. Similar to our ABVX trade, the ideal scenario would be a buyout with commercialization coming second. |
| OSW | OSW is one of the very few names that we revisit from time to time as more of a trade than an investment for us. OSW is a spa operator that largely operates its business on various cruise lines (Carnival Cruise, Norwegian, etc). The reason we trade this name from time to time is that it still consistently gets misunderstood by the market in times of turmoil that mainly affect cruise lines directly, rather than OSW — think rising oil prices or a reduction in consumer discretionary spending. |
| WW | We've been highlighting the opportunity at WW after they emerged from bankruptcy as a leaner weight loss play on the booming GLP-1 market. With >$1 billion of their debt erased from bankruptcy proceedings, the trade here was for WW's conservative forward estimates to represent a good entry point while the transformation into a medication-forward business took shape. We were pleased with just how much their clinical business was estimated to grow in Q1'26 due to the successful launch of the Wegovy Pill (+54% sequential growth), but we were very surprised by the sequential decline in behavioral subscribers during peak season, which has never happened during normal market circumstances as far as we know. Due to risk management decisions, we decided to heavily reduce our position in WW after this announcement and officially exited the position when Tara announced she stepped down as CEO once her employment contract ended on March 31st. |
| REAL | The RealReal is a domestic omnichannel luxury resale retailer that is capitalizing on the second-hand fashion movement that is taking the U.S. by storm. While many investors are worried about traditional luxury retailers facing various headwinds (LVMH just had their worst year since the GFC), and the value-oriented consumer getting squeezed from the opposite end, REAL gets misunderstood as falling into one or both of those categories. We feel like this understanding is incorrect, and REAL operates in its own unique category (second-hand luxury) that is growing almost twice as fast as regular luxury (11.6% vs 5.2%). Even though REAL operates in its own category, the company's business model only works if it's able to expand its supply in order to drive more demand. A delicate balance between the two. REAL has already done well to unlock further supply from customers across the country (tariff-free), which has driven higher gross merchandise value (GMV), revenue, and adjusted EBITDA. With the help of AI being able to increase throughout for product authentications and listings, operating leverage has started to show. The company is once again guiding for a double-digit topline growth year with ~200bps of adjusted EBITDA margin expansion in FY'26. With strong tailwinds, growth in GMV, and margin expansion, REAL should be able to capitalize on the massive consumer shift to second-hand merchandise and the benefits of AI. |
| KITS.TO | KITS is a vertically integrated Canadian-based DTC contact and eyeglass company that does business in both Canada and the U.S. The CEO is having his "second act" with KITS after selling his first optical company (Coastal Contacts) in 2014 for ~$430 million CAD. Unlike other DTC-native companies like Warby Parker (WRBY), KITS started its business by selling low-margin, but high-retention contacts instead of eyeglasses. This allowed them to create a sticky business while slowly building out the higher-margin eyeglass business, all while avoiding building out a capital-intensive retail presence. This has allowed them to grow to $200M CAD in LTM sales in just eight years. With a net cash position, positive adjusted EBITDA, and good capital allocation, we feel that KITS will be able to compound its business for years to come. |
| HIMS | If you've known us for even a little bit, you've most likely known our coverage of this name from a bearish point of view since January 2025. Our continued notes on the name last year, on the company relying heavily on their compounded GLP-1 offering to offset a decelerating core business, allowed for multiple opportunities to realize gains on the short side. Needless to say, Andrew (CEO) eventually did fly too close to the sun and was inevitably sued for IP infringement by Novo Nordisk (NVO) in February of this year. A big psychological win for us. On the day of earnings, we entered into our latest short position in the company and quickly realized gains the following morning on questionable guidance and earnings call hype than reassurance. |
| LNSR | LENSAR was a merger arbitrage trade that was going on for almost the better part of a year. Having approved an offer from Alcon (ALC) for $14/share last March, the deal kept getting pushed back but was still within the window outlined in the original merger agreement. Despite what would be a large share of the femtosecond laser-assisted cataract surgery (FLACS) market, a new FTC under the Trump administration seemed to be pro-merger, especially after allowing the Live Nation (LYV) suit to be settled in a way that largely benefitted the company. However, not even a month after extending the merger, LNSR announced that the deal was being terminated. We exited that position the day after the announcement, but we're still optimistic that the company could get a second chance at life once management gets back on track. |
| SNWV | Sanuwave Health is a medical device company in the wound care space. They help patients who have open wounds — such as ulcers — to speed up the process by using a non-contact ultrasound device called 'UltraMist.' The procedure is largely covered by insurance but has historically operated in an industry where plenty of Medicare fraud occurs (skin grafts). In Q3'25, CMS dropped the hammer on the skin graft fraud by limiting how much could be covered under the old way of doing things. This put pressure on the stock, given the uncertainty on reimbursement rates or changes to CPT coverage codes could affect the business. SNWV got the clarity needed and is now able to take advantage of the changing landscape in its favor going forward. This is on the heels of a highly successful debt refinancing in September of last year, along with a better-than-feared Q4'25, in which other competitors saw deteriorating results. SNWV is small, but has a proven product, a long runway in the wound care space now that CMS guidance has been officially updated, and the CEO looks open to potentially a buyer coming in at some point as an additional call option. |
| TOI | The Oncology Institute is a niche oncology platform that delivers end-to-end cancer care for lower-cost outpatient areas. The business strategy runs on a value-based care (VBC) model, where it assumes risk and is paid for managing total patient outcomes rather than just a standard billing per service model. This allows TOI to align incentives across payers, physicians, and patients, lowering the total cost of care while capturing economics across the full oncology value chain. The stock performance has done well since bottoming in 2024, with new management implementing changes that have directly led to accelerated topline growth via new payer contracts and rapid growth in the pharmacy segment. The company is currently inflecting towards an adjusted EBITDA profitability and is proving that operating leverage can be achieved as their VBC model continues to gain traction. |
| ABVX | Abivax is a small French biotechnology company that released P3 data in July of last year on its ulcerative colitis (UC) drug, obefazimod. Obefazimod appears to be a better option for treating UC than JAK inhibitors or TNF-alpha blockers, given its efficacy, delivery, tolerability, and safety profile. Plenty of rumors have come from French publication La Lettre about a possible buyout of the company from various pharma companies looking to boost their existing UC portfolio. Given the limited number of good drug assets in the market, Abivax seems like an excellent take-out target ahead of maintenance data later this summer. Rumors have circulated that Abivax could fetch between $15 and $20 billion before maintenance data is released. If no deal comes through, commercialization will come next, which is already being prepared with their recent CCO hire. Assuming maintenance data comes in positive, the future looks bright for Abivax, whether the strategy is to get acquired or bring the drug to market. |
| MTY.TO | MTY is a double-edged restaurant play that, on one end, we view it as an improving restaurant franchisor in what was an abysmal year for the restaurant industry. On the other hand, because so many restaurants saw deteriorating fundamentals and thus, steep stock price declines in 2025, private equity has been circling the drain to scoop up improving assets at depressed valuations. We flagged this in our 6 Themes for 2026 report last December. MTY has been an asset with improving fundamentals and garnered potential attraction from buyers. Management reaffirmed that they are still in these talks per their last earnings call, where rumors have suggested that a buyout could fetch >$50 CAD. |
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