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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
As of Oct 18, 2026
Deep Sail Capital Partners LP returned -15.8% net of fees in the third quarter of 2026, bringing year-to-date net returns to -1.6%. The fund underperformed the Russell 2000 and the Russell Midcap Growth Index by 8.6% and 10.8%, respectively, driven entirely by sharp drawdowns across emerging growth long holdings. Portfolio leverage remained elevated, closing the period with 134% long and 43% short exposure (91% net long) across 21 long and 26 short positions. The manager diagnoses a pronounced two-sided market where headline index resilience masks underlying equity weakness. While cap-weighted large-cap indices hover near all-time highs, market breadth has deteriorated severely, with the McClellan Summation Index plunging to two-year lows. Small and micro-cap equities have borne the brunt of this dislocation, trading down to 52-week lows despite intact fundamentals. Deep Sail anticipates an eventual mean reversion and historical rotation toward equal-weighted and small-cap assets. Portfolio turnover included exiting three holdings and initiating three new long positions: Innovative Aerosystems, Mama's Creations, and Theon International. Top long allocations remain concentrated in Mercado Libre (10.4% of NAV), Celestica (9.3%), Supercom (8.9%), and Credo Technologies (8.9%). The short portfolio contributed 7.4% gross to performance by targeting low-quality, long-duration equities, though short exposures were subsequently curtailed due to diminished forward risk-reward.
Deep Sail Capital exploits market dislocations in under-covered small and micro-cap growth companies, utilizing a multi-year holding period to compound capital in businesses with durable competitive moats and attractive unit economics acquired at discounted valuations.
The manager anticipates the extreme performance gap between mega-cap leaders and smaller companies will close through small and micro-cap outperformance, expecting long positions to beat broader markets in Q4 while deeming the short opportunity set unattractive for the rest of the year.
Moderate Conviction Bullish
Market Conviction
Growth Outlook
Risk Appetite
Capital Deployment
Forward Guidance
Language Signal
Perceived Risk
Opportunity Density
Time Horizon
Top Conviction Themes
Key Catalysts
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