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| # | Fund | Strategy | Style | Geography | AUM | Latest Letter |
|---|---|---|---|---|---|---|
Heptagon Kettle Hill US L/S Equity Fund's core thesis centers on exploiting market dislocations in the US small and mid-capitalization equity space through a contrarian, value-oriented long/short strategy. During the fourth quarter of 2025, the fund generated a return of -0.5% (I USD class) amid a risk-off environment for small-cap equities driven by monetary policy uncertainty and tax-loss selling. This minor decline compared to a 1.6% return for the HFRX Equity Hedge Index. Performance was impacted by a sharp decline in Parsons Corp after it missed out on a key FAA contract, though the manager remains bullish on its long-term secular tailwinds. Conversely, the fund saw gains from its top long position, Unity Software, and its short position in Hims & Hers, while covering its short in Warby Parker for a loss. Going forward, the manager is highly optimistic about the opportunity set, noting that current market dislocations represent excellent entry points. The portfolio remains net long at 51.5% and gross at 91.3%, positioned to benefit from secular themes in artificial intelligence, natural gas pipelines, and selective interest rate-sensitive sectors.
The fund seeks long-term capital growth by identifying and investing in US small and mid-cap stocks that are fundamentally dislocated from their true value due to short-term market distortions and factor flows.
The manager believes the elevated level of stock dislocations sets up the portfolio for strong future returns. They intend to navigate the dynamic environment of technological changes (specifically AI), political shifting, and deglobalization by maintaining a liquid, highly selective long/short portfolio designed to avoid value traps while identifying clear beneficiaries of the shifting global paradigm.
As of Dec 31, 2025
Andrew Y. Kurita, CFA, is the Founder, Managing Member, Chief Investment Officer, and Portfolio Manager of Kettle Hill Capital Management since 2003. With over 24 years of experience in small-cap and hedge fund investing, Kurita has been successfully managing this investment strategy since inception and has been investing in small capitalisation stocks since 1996. He holds a BA in Economics from Williams College (1991-1995), graduated cum laude, and has previous experience as an analyst at Andor Capital Management and Cramer Rosenthal McGlynn.
The fund aims to achieve long-term capital growth through investing primarily in US small-capitalisation stocks. The investment style is fundamental bottom up research, combined with macro awareness and a contrarian value investment strategy to deliver superior rates of return in any market environment. The strategy focuses on small-cap companies ($100 million to $5 billion market cap) in the relatively inefficient segment of the marketplace due to the increased prevalence of under-researched, misunderstood and consequently sometimes mispriced opportunities.
Lead Portfolio Manager
Moderate Conviction Bullish
Market Conviction
The manager exhibits strong belief in specific stock theses (e.g., re-entering Unity and holding Parsons through a selloff) but operates within a somewhat diversified structure that limits maximum concentration scores. Position-specific analysis remains robust and detailed.
Growth Outlook
The manager is constructive on the market cycle and sees excellent setups for future returns, believing the temporary spike in dislocations creates a highly favorable environment for fundamental value investors.
Risk Appetite
With net exposure at 51.5% and gross exposure at 91.3%, the fund maintains an active but risk-managed risk posture. They are actively utilizing both long allocations and short hedges to capture thematic shifts.
Capital Deployment
The manager is moderately active in deploying capital, having re-entered Unity after a pullback, while also applying risk management rules to trim positions like Parsons Corp when needed.
Forward Guidance
The manager clearly signals a buying bias, explicitly urging investors to add capital to Kettle Hill during periods of short-term underperformance. They intend to maintain patience and size positions appropriately to capture target upside.
Language Signal
The overall language is balanced but leans positive, combining expressions of frustration over the macro backdrop with very encouraging outlook terms like 'strong opportunity set' and 'better returns'.
Perceived Risk
The letter outlines clear macro and systemic risks, including shifting trade policies, Fed policy flip-flops, the dissolution of free trade relationships, and unpredictable factor fund flows distorting price discovery.
Opportunity Density
The manager explicitly notes that there are 'more investable dislocations in US SMID-cap stocks than ever before,' suggesting an abundant target universe.
Time Horizon
The fund emphasizes patience to allow value to be ultimately realized, looking past short-term factor cycles and anticipating thematic progress over multiple years.
Top Conviction Themes
Key Catalysts
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