The curated database of hedge funds that publish investor letters. Research by geography, strategy, and schools of thought.
| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
This philosophical letter explores what it means to be a true fiduciary, arguing that advisors must optimize for long-term duration rather than short-term returns. The manager critiques the current market focus on the Magnificent 7 tech stocks, noting that while these are exceptional businesses, they trade at rich valuations and history suggests betting on the biggest companies has been a losing proposition. Using mathematical examples, the letter demonstrates how modest but sustainable returns compound dramatically over long periods, far outpacing unsustainable high returns. The manager warns against herding behavior and chasing market excitement, from AI to previous bubbles in cannabis, crypto, and dot-coms. Instead, the focus should be on businesses with measured growth, sustainable margins, resilient balance sheets, loyal stakeholders, and managerial continuity. The letter emphasizes that true fiduciary duty means helping clients achieve good long-term outcomes even at personal expense, requiring patience and discipline to capture the awesome inevitabilities of compounding over time.
True fiduciary responsibility requires optimizing for long-term duration and compounding rather than short-term returns, focusing on sustainable business characteristics and patient capital deployment rather than chasing market excitement and momentum.
The manager emphasizes focusing on long-term duration over short-term returns, suggesting that sustainable business characteristics like measured growth rates, resilient balance sheets, loyal stakeholders, and managerial continuity will drive superior long-term outcomes through the power of compounding.
As of Oct 1, 2023
Portfolio Manager and primary investment lead for Farnam Street.
Lead Portfolio Manager
Neutral / Balanced
Market Conviction
This is a philosophical letter focused on investment principles rather than specific portfolio positions. While the manager expresses strong conviction about investment philosophy and fiduciary responsibility, no individual positions are named or sized, and the letter lacks specific portfolio implications. The absence of concrete positioning details caps the conviction score below 0.50.
Growth Outlook
The manager expresses caution about current market conditions, specifically warning about rich valuations of the Magnificent 7 and drawing parallels to historical bubbles. While not explicitly bearish, the tone suggests concern about elevated prices and unsustainable market dynamics.
Risk Appetite
The letter advocates for patient, long-term positioning over aggressive risk-taking. The manager criticizes short-term focused strategies and suggests a more measured approach to capital deployment, indicating a slightly defensive positioning bias.
Capital Deployment
No information is provided about cash levels, position additions, or capital deployment activities. The letter is entirely philosophical and does not discuss any specific portfolio actions or changes in positioning.
Forward Guidance
The manager provides no specific forward guidance on deployment actions. The letter is philosophical in nature, focusing on investment principles rather than tactical positioning decisions or timing of capital deployment.
Language Signal
The language contains more cautionary and risk-focused terms than bullish ones. Words like 'richly valued,' 'herding behavior,' 'bubble dynamics,' and warnings about historical patterns dominate over opportunity language, creating a mildly negative directional signal.
Perceived Risk
The manager identifies several meaningful risks including rich valuations of mega-cap tech stocks, historical patterns of bubble formation, and the tendency for markets to compete away excess profits. While not expressing systemic alarm, there is substantial discussion of market risks and cautionary historical analogies.
Opportunity Density
The manager suggests that current opportunities are limited, noting that the Magnificent 7 trade richly and emphasizing the need for patience and selectivity. The focus on long-term duration over immediate deployment suggests a sparse near-term opportunity set.
Time Horizon
The letter explicitly emphasizes multi-decade thinking and permanent capital concepts. The manager uses examples spanning 30-100 years, discusses sustainable business characteristics, and advocates for focusing on compounding over long periods rather than short-term returns. This represents a very long-term investment horizon.
Top Conviction Themes
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