| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | 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 |
The arbitrage and opportunistic book contributed approximately one-third of total gross returns, with activity spread across single-name catalyst shorts, merger arbitrage, and volatility positions. Notable… |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
ArbitrageThe arbitrage and opportunistic book contributed approximately one-third of total gross returns, with activity spread across single-name catalyst shorts, merger arbitrage, and volatility positions. Notable contributors included Core Scientific/CoreWeave merger arbitrage adding +550 basis points and a long-volatility position in Alphabet contributing +630 basis points. |
Merger arbitrage Volatility Catalyst Opportunistic Trading |
GamingNintendo continues to demonstrate exceptional performance with Switch 2 becoming the fastest-selling console in history, selling 17.4 million units in just 7 months. The company has a historically rich first-party software pipeline and is building new recurring revenue streams through Nintendo Switch Online and its expanding cinematic universe. |
Nintendo Console Software Hardware Entertainment | |
SpaceSpaceX is generating significant value with rapid expansion of Starlink broadband service, deploying vast satellite constellation with substantial user growth. The company has established itself as leading launch provider with reusable technology and is making tremendous progress on Starship rocket. SpaceX represents the fund's largest position at 19.2% of net assets. |
Satellites Launch Starlink Starship Reusable | |
TechnologyThe fund added three technology companies that have each halved over 2025 and hopes to add more. Many tech stocks had become expensive but recent falls present opportunities, though most still aren't cheap enough including Xero. |
Software Valuation Opportunity Selloff |
| 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 | During the quarter AST continued its transition from an R&D-oriented startup to a scaleup — a company that has validated its core technology and is now laser-focused on execution: expanding revenue, headcount, and market reach, all in compounding fashion. The milestone horizon has shifted accordingly, away from technological feasibility and toward launch cadence, manufacturing throughput, and expanded commercial agreements — each of which saw meaningful progress through the end of 2025 and into early 2026. |
| 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 (-26%) |
| GOOGL | In the third quarter, Google, Kairos Power, and the Tennessee Valley Authority announced a major collaboration centered on a novel power purchase agreement. Google followed this announcement with another significant step forward. On October 27, Google and NextEra Energy announced plans to restart the Duane Arnold Energy Center. |
| 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 | Our original cost basis is around $17/share. Strategy operates as the leader in pioneering corporate bitcoin strategy. The company holds the largest corporate bitcoin stash (by far). It monetizes this through fixed-income securities like convertible notes and structured debt. The case for MSTR is leveraged bitcoin upside under proven capital allocators, with a steady software business on the side. 2025 was a tough year for MSTR. The stock declined 47.53% thanks to BTC volatility and market rotation away from high-conviction names. Putting the 'treasury company' hype aside, which now includes many MSTR copycats, I still think the core thesis holds. |
| 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. 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. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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