| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 3.2% | 3.2% |
Leaven Partners generated a 3.2% return in Q1 2026 despite significant March volatility driven by the Strait of Hormuz blockade. The fund declined 8.4% in March as oil prices surged above $100 per barrel and equity markets broadly declined. The manager implemented hedging strategies in response to escalating Middle East conflict and market uncertainty. Japan faces particular exposure given its 95% dependence on Middle East oil imports, though strategic petroleum reserves provide temporary buffer. The manager emphasizes that volatility is not the enemy of long-term investors - overpaying is. Discipline around valuation remains the foundation of the investment approach. The fund's hedging strategy should help maintain resilience while focusing on long-term compounding. The manager expresses gratitude for partners who understand that patience is a competitive advantage in investing, viewing the current environment as reinforcing the importance of disciplined value investing with a long-term perspective.
Disciplined value investing with patience as a competitive advantage, focusing on buying undervalued stocks while using hedging strategies to manage downside risk during periods of heightened volatility and geopolitical uncertainty.
The manager maintains resolve to continue buying undervalued stocks with discipline and patience despite increased volatility and uncertainty. The focus remains on compounding returns over the long haul, with hedging strategies providing near-term protection.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 6 2026 | 2026 Q1 | - | Geopolitical, Hedging, oil, value, volatility | - | Leaven Partners posted 3.2% Q1 returns despite March volatility from Strait of Hormuz disruption. Oil prices surged above $100, triggering defensive hedging. Manager maintains disciplined value approach, viewing volatility as opportunity rather than threat. Focus remains on long-term compounding with patience as competitive advantage. |
| Jan 19 2026 | 2025 Q4 | EFA, HD, HEFA, SPY, VT | Currency, Hedging, Japan, risk management, volatility | - | Leaven Partners gained 4.2% in Q4 2025, driven by successful Japanese yen hedging that contributed 5% as the yen weakened 6.5% versus the dollar. The manager employs systematic trend-following currency hedging to manage foreign exchange risk from Japanese stock holdings, viewing this as essential risk management rather than macro speculation while focusing on stock selection. |
| Oct 13 2025 | 2025 Q3 | 7422.T, EWJ | Bitcoin, diversification, international, Japan, Outperformance, small cap, value | 7422 JP | Leaven Partners gained 11.0% in Q3 2025, led by Japanese holdings as international markets begin outperforming after 14+ years of US dominance. Manager Jackson advocates international diversification, particularly small-cap Japanese equities, arguing US outperformance was driven by valuation expansion rather than earnings growth. Value approach demonstrated through successful Toho Lamac trade. |
| Jul 21 2025 | 2025 Q2 | 6930.T, 7229.T, 8617.T, 9479.T, 9867.T | Delisting, Japan, liquidation, small caps, turnover, value |
7229 JP 6930 JP 9479.T 7229.T 6930.T |
Japanese small-cap value fund delivered 6.7% in Q2 through successful exits from companies going private. Strategy targets firms trading below liquidation value with improving operations. Manager capitalizes on Tokyo Stock Exchange pressure driving delistings while maintaining disciplined turnover approach. Despite U.S. market overvaluation concerns, focus remains on attractively priced Japanese securities with strong fundamentals. |
| Apr 12 2025 | 2025 Q1 | 3027.T, 6715.T | Japan, liquidity, risk, small caps, tariffs, value, volatility | 6715.T | Strong Q1 performance driven by Japanese small-cap value investing, particularly a 130% gain on Nakayo tender offer. Manager warns of extreme market volatility from tariff uncertainty and potential liquidity crisis. Maintains patient value approach focused on undervalued Japanese companies trading below liquidation value while emphasizing risk mitigation in current uncertain environment. |
| Jan 12 2025 | 2024 Q4 | 8732.T | AI, global, Hedging, risk management, underperformance, Valuations | 8732.T | Leaven Partners underperformed significantly in 2024 with +5.8% returns versus S&P 500's +25.0%, struggling against bubble-like market dynamics. The manager maintains hedging strategies amid concerns about historic valuation extremes and AI speculation. Focus remains on finding global opportunities while protecting against potential 50-70% market corrections that extreme valuations historically precede. |
| Oct 11 2024 | 2024 Q3 | DBO, QQQ, SPY | Currency, Hedging, Japan, risk management, valuation, volatility | - | Leaven Partners fell 1.4% in Q3 as Japanese holdings were hammered by the Nikkei's 12% single-day crash from yen carry trade unwinding. Hedging strategies backfired in choppy markets, losing money on whipsaw moves. Manager maintains defensive positioning despite ongoing hedging costs, citing extreme valuations and correlation risks in global markets. |
| Jul 12 2024 | 2024 Q2 | AAPL, NVDA | Carry Trade, Currency, Hedging, Japan, risk management, valuation | - | Leaven Partners employs systematic yen currency strategies and defensive hedging against extreme market valuations. Q2 profits from shorting yen amid $20 trillion carry trade dynamics, while maintaining insurance against corrections given unprecedented market concentration where top 10 S&P stocks represent 35% of market cap but only 23% of earnings. |
| Apr 22 2024 | 2024 Q1 | LSF | Acquisition, Food, Japan, Restructuring, small caps, value | LSF | Concentrated value fund returned 10% in Q1 2024, led by Japanese holdings and successful Laird Superfood exit. Manager targets undervalued companies below liquidation value, emphasizing strategy execution over design. Warns against style drift from chasing performance. Japanese positions strong contributors. Sold Laird Superfood at $2.95 after company achieved profitability, realizing significant gains from $1.62 average cost. |
| Jan 15 2024 | 2023 Q4 | 5363.T, 7399.T, 8628.T | Currency, fundamentals, Hedging, Japan, Mean reversion, value | - | Leaven Partners maintains 50% Japan allocation based on superior fundamentals and attractive valuations despite currency headwinds. Manager views US markets as unsustainably detached from economic reality, having borrowed future returns. Japanese equities offer 6.5% fundamental growth versus 4.5% in US, with yen providing future tailwinds when currency normalizes from current 40% discount. |
| Aug 10 2023 | 2023 Q3 | 0869.HK, 3828.HK | Asia, Currency, Hedge, Japan, value | 0869.HK | Leaven Partners gained 5.7% in Q3 2023, led by Japanese holdings despite yen headwinds. The fund maintains 47% Japan allocation, exploiting chronic under-allocation by other managers. Sold Playmates Toys after successful value realization from deeply discounted to fair value. Strategy focuses on finding undervalued assets with strong balance sheets while managing currency risk through partial hedging. |
| Jul 16 2023 | 2023 Q2 | EFA, EWJV, SPXTR, VT, XBI | Biotechnology, Currency, Hedge Strategy, Japan, value |
MTCR STSA |
Value-focused fund returned 4.3% in Q2 driven by Japanese holdings below book value and distressed biotech investments. Manager maintains defensive hedge strategy against overvalued markets while positioning for Tokyo Stock Exchange capital efficiency initiatives. Successfully executed coattail investing in biotech liquidations. Cautious outlook given inverted yield curve recession signal and extreme market concentration. |
| Mar 31 2023 | 2023 Q1 | 7502.T, MUFG, SFTBY, TM | Banking, Japan, Quality, ROIC, small caps, value | - | Leaven Partners focuses on undervalued Japanese small-caps where operational efficiency has dramatically improved since 2015 yet valuations remain depressed. The fund sold four converged positions and added Kato Works, up 31% from purchase. With 40% of Japanese blue chips trading below book value versus 10% in the US, significant opportunities persist in smaller companies. |
| Feb 15 2023 | 2022 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
OilThe Strait of Hormuz blockade drove significant market disruption, with approximately 20% of global oil consumption passing through this critical chokepoint. Oil prices surged above $100 per barrel as the conflict escalated. Japan is particularly exposed, sourcing 95% of its oil imports from the Middle East with 70% passing through the Strait directly. |
Oil Energy Strait of Hormuz Supply Shock Japan |
VolatilityThe fund experienced significant volatility in March, declining 8.4% during the month due to geopolitical tensions. The manager views increased volatility and uncertainty as strengthening resolve to buy undervalued stocks with discipline. Volatility is not seen as the enemy of long-term investors, but rather overpaying is the real risk. |
Volatility Risk Management Discipline Valuation | |
| 2025 Q4 |
PharmaceuticalsHealth care holdings including pharmaceutical and biotechnology companies added meaningfully to returns. Holdings such as Roche, Novartis, and Ionis Pharmaceuticals benefited from new drug approvals, steady and growing earnings, and business models that continue to generate cash through a wide range of economic conditions. |
Pharmaceuticals Biotechnology Healthcare |
Defense SpendingDefense-related holdings such as BAE Systems and Rheinmetall had been standout performers for much of the year but fell back in Q4. While these businesses currently benefit from secular growth in defense spending around the world, share prices have moved ahead of underlying fundamentals, prompting modest trimming. |
Defense Military Aerospace | |
IndustrialsIndustrials were mixed and faced modest headwinds. Some holdings performed well, but returns were held back by weaker results in several more cyclical oriented businesses. CNH Industrial detracted across the Funds, reflecting investors' continued concerns about the downturn of the Ag cycle. |
Industrials Machinery Agriculture | |
AIMarket enthusiasm has led to high valuations, particularly in US equities, with excitement around artificial intelligence and its ability to dramatically impact productivity driving much of the exuberance. However, the managers note that even the most profound technological revolutions aren't one-way streets to prosperity. |
AI Technology Productivity | |
ValueThe gap in valuation between US and non-US equities remains quite significant and should serve the funds well going forward given their non-US-centric postures. The managers believe their funds remain well positioned in financially sound enterprises where company stock prices are more than collateralized by underlying intrinsic value. |
Value Valuation Intrinsic | |
| 2025 Q3 |
JapanJapanese holdings performed well in Q3, with the market up 21.6% YTD. The decade-long underperformance is changing course due to corporate reforms, record stock buybacks, and supportive capital-market policies. Manager expects significant exposure to Japanese equities for quite some time. |
Japan Buybacks Corporate Reform Undervalued Outperformance |
ValueThe fund's strategy focuses on buying cheap companies with improving operations, as demonstrated with Toho Lamac purchase below liquidation value. Value investing approach protects downside and lets uncertain world take care of upside. |
Value Liquidation Value Cheap Downside Protection Fundamentals | |
CryptoPublic companies are increasingly adding Bitcoin to treasury holdings, with over 150 companies globally holding BTC as strategic reserve asset. Manager remains agnostic about Bitcoin's future but acknowledges the treasury revolution phenomenon. |
Bitcoin Treasury Holdings Strategy Inc Digital Gold Reserve Asset | |
| 2025 Q2 |
JapanFund is heavily focused on Japanese equities, particularly small-cap companies trading below liquidation value with improving operational efficiency. Manager notes increasing trend of Japanese companies going private due to Tokyo Stock Exchange pressure to improve capital efficiency and shareholder returns. |
Tokyo Stock Exchange Delisting Capital Efficiency Going Private Small Value |
ValueStrategy focuses on buying stocks at attractive prices, particularly companies trading below liquidation value with improving operations. Manager emphasizes consistent turnover of holdings and rebalancing gains into other undervalued securities rather than buy-and-hold approach. |
Liquidation Value Undervalued Rebalancing Turnover Fair Value | |
| 2025 Q1 |
JapanThe manager highlights Japan as presenting ripe opportunities with many undervalued small-cap companies like Nakayo. Japanese companies are described as sleepy with long histories of profitability, offering attractive liquidation values relative to market prices. |
Value Small Caps Undervalued Liquidation Profitability |
VolatilityMarkets have experienced dizzying volatility with the VIX reaching crisis levels of 60, comparable to COVID-19 and 2008 financial crisis periods. The manager notes extreme single-day moves including a 9.5% surge followed by a 3.5% decline. |
VIX Crisis Uncertainty Market Stress Fear | |
Trade PolicyPresident Trump's geopolitical war on an economic front using tariffs as leverage has introduced significant uncertainty. The manager discusses a 90-day tariff pause announcement and questions whether tariffs are negotiating tactics or permanent policy. |
Tariffs Uncertainty Negotiation Policy Geopolitical | |
| 2024 Q4 |
ValuationsU.S. equity markets have reached lofty valuations with metrics like the Margin-Adjusted P/E ratio at historic highs, surpassing even the tech bubble of 2000. Current elevated prices result from prolonged low interest rates and scarcity of high-quality investment opportunities. The manager references both Cliff Asness and John Hussman's perspectives on extreme valuations and their implications for future returns. |
Valuations Bubble MAPE Buffett Indicator Risk |
AIArtificial intelligence has driven extraordinary price appreciation in related companies, often detached from near-term earnings potential, creating belief in a new era. This dynamic is reminiscent of past speculative frenzies where transformative technology promises fueled outsized gains before fundamentals could catch up. The manager notes that profit margins have remained roughly the same for 70 years despite AI narratives. |
AI Speculation Technology Innovation Fundamentals | |
RiskThe manager emphasizes heightened market risk due to elevated valuations and bubble-like dynamics. The hedging strategy remains a component of risk management approach, designed to protect the portfolio during sustained market downturns. There is recognition that the margin for error is exceptionally thin with substantial potential for downside risk. |
Risk Hedging Downside Protection Caution | |
| 2024 Q3 |
VolatilityThe fund experienced significant volatility during the quarter, particularly from the August 5th Nikkei crash that dropped 12% in one day. The manager discusses how choppy markets with big moves down followed by quick reversals create challenging conditions for hedging strategies. |
Market volatility Nikkei crash Whipsaw Choppy markets Volatility spike |
YenThe Japanese yen carry trade unwinding was identified as the primary catalyst for market volatility. The manager was short the yen at ¥161 but was stopped out at ¥155 as the yen strengthened to ¥143 by quarter end, contributing negatively to returns. |
Yen carry trade Currency strategy Bank of Japan Interest rates Stop loss | |
JapanJapanese holdings were significantly impacted by the Nikkei's steep decline in August. The Bank of Japan's first rate hike in 17 years, coupled with weak US jobs data, triggered the yen surge and market instability. |
Nikkei Bank of Japan Rate hike Japanese equities Market correction | |
| 2024 Q2 |
YenThe fund profited from shorting the Japanese yen as it weakened from ¥152 to ¥161 against the dollar during Q2. The yen is fundamentally undervalued at ¥100-110 but continues trading based on interest rate differentials rather than fundamentals. The massive $20 trillion yen carry trade creates momentum effects where selling begets more selling. |
Carry Trade Interest Rates Currency Japan Dollar |
ValuationMarkets are at extreme valuation levels with significant divergence between winners and losers. The top 10 S&P 500 companies represent 35% of market cap but only 23% of earnings, a divergence not seen since the 1990s. Apple and Nvidia's combined $6 trillion market cap now exceeds all outstanding US Treasury bills. |
Market Cap Earnings Divergence Concentration Extremes | |
Risk AppetiteThe manager maintains a hedging strategy as insurance against severe market corrections despite its drag on performance. Historical data suggests that current extreme market divergence and valuations have typically preceded severe corrections. The strategy is viewed as protection against catastrophic losses. |
Hedging Insurance Protection Corrections Downturns | |
| 2024 Q1 |
ValueManager focuses on acquiring undervalued companies trading below liquidation value or reasonable acquisition multiples. Laird Superfood was purchased when market valuation fell below $20 million despite $32 million estimated liquidation value and $25 million cash position. |
Liquidation Value Acquisition Target Undervalued Cash Position Market Dislocation |
| 2023 Q4 |
JapanJapanese holdings produced strong results contributing 12.8% for the year with allocation near 50% of fund assets. Corporate Japan delivered superior fundamental growth of 6.5% annually versus 4.5% in the US over the past decade. Over half of Tokyo Stock Exchange companies trade below book value despite strong fundamentals. |
Japan Corporate Governance Value Fundamentals Abenomics |
ValueManager emphasizes fundamental analysis over market sentiment, noting that fundamentals historically drive 9.40% of the 9.85% annual market returns. Current market distortion shows stocks trading well above underlying economic fundamentals, suggesting borrowed future returns. |
Fundamentals Value Mean Reversion P/E Multiples | |
YenCurrency headwinds from Japanese Yen weakness negatively impacted reported returns but provided positive carry through currency strategy. GMO calculates the yen trades at approximately 40% discount to fair value, suggesting future tailwinds when yen strengthens. |
Currency Yen Hedging Carry Trade | |
| 2023 Q3 |
JapanJapan sits with the highest allocation at 47% of the fund. Active fund managers chronically under-allocate to Japan despite compelling opportunities. Japanese equities have outperformed in local currency terms but face currency headwinds when expressed in USD due to yen weakness. |
Japan Currency Allocation Value Underweight |
ValueThe fund focuses on finding companies trading below their absolute and relative value. The Playmates Toys investment exemplified this approach, purchasing at a bargain basement price of $38 million when the company had generated $90 million in cumulative operating cash flow over the previous 5 years. |
Value Undervalued Cash Flow Assets Cheap | |
| 2023 Q2 |
JapanJapanese holdings contributed 3.2% to quarterly returns. 100% of Japanese holdings trade below 70% of book value, positioning the fund to benefit from Tokyo Stock Exchange capital efficiency initiatives targeting companies trading below book value. Flow of funds from international investors improving with ¥7.2 trillion net-bought this year. |
Japan Value Capital Efficiency Book Value Tokyo Stock Exchange |
BiotechnologyBiotech industry down more than 50% from February 2021 highs, creating opportunities in busted biotechs trading below cash balances. Successfully executed coattail investing strategy with Metacrine (28% return) and Satsuma Pharmaceuticals (69% return). Currently holds Forte Biosciences at 1.6% position. |
Biotechnology Busted Biotechs Coattail Investing M&A Liquidation | |
ValueGlobal value spreads above 94th percentile indicate bubble territory valuations. Stock market extremely bifurcated with seven mega-caps accounting for 10.5% of S&P 500's 16.8% YTD return despite -4% operating income decline. Focus on companies trading below book value as most inefficient capital allocators. |
Value Valuations Bubble Mega Caps Book Value | |
| 2023 Q1 |
JapanJapan continues to be a fertile hunting ground for value investors with over 40% of blue chips trading below book value compared to 20% in Europe and less than 10% in the US. Japanese companies have significantly improved their operational efficiency with median ROIC now matching the US and exceeding Europe since 2015. The Tokyo Stock Exchange is pushing companies trading below book value to present formal plans for improving capital allocation. |
Japan Value ROIC Book Value Capital Allocation |
ValueThe fund focuses on buying cheap securities and waiting for convergence to intrinsic value over the long term. The manager emphasizes combining value strategy with quality companies using return on invested capital as a proxy for business quality. Multiple positions were sold during the quarter due to convergence of market price to calculated intrinsic value. |
Value Intrinsic Value Quality ROIC Long Term | |
Small CapsThe fund's niche strategy focuses on smaller-sized companies in Japan which provides an even greater disparity between price and value compared to Japanese blue chips. The manager believes they are very well positioned in their core holdings of small Japanese companies. |
Small Caps Japan Disparity Core Holdings |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 13, 2025 | Fund Letters | Brent Jackson | 7422 JP | Toho Lamac Co., Ltd. | Consumer Discretionary | Footwear Retail | Bull | NYSE | balance sheet, cash, Crypto, Footwear, Japan, Revaluation, undervalued, value investing | Login |
| Jul 31, 2025 | Fund Letters | Leaven Partners | 6930.T | Nippon Antenna | Information Technology | Communications Equipment | Bull | Tokyo Stock Exchange | Antenna Technology, Communications Equipment, Double-Dipping, Japan, operational efficiency, Overcapitalized, turnaround, Value | Login |
| Jul 31, 2025 | Fund Letters | Leaven Partners | 9479.T | Impress Holdings Inc. | Communication Services | Publishing | Bull | Tokyo Stock Exchange | Below Liquidation Value, buyout, Japan, operational efficiency, private equity, Publishing, Technology Media, Value | Login |
| Jul 31, 2025 | Fund Letters | Leaven Partners | 7229.T | Yutaka Giken Co. Ltd. | Consumer Discretionary | Auto Parts & Equipment | Bull | Tokyo Stock Exchange | automotive parts, Below Liquidation Value, Honda Supplier, Japan, Operational Momentum, Suzuki Supplier, turnaround, Value | Login |
| Jul 21, 2025 | Fund Letters | Brent Jackson | 7229 JP | Yutaka Giken Co., Ltd. | Consumer Discretionary | Auto Components | Bull | New York Stock Exchange | Auto parts, Japan, liquidation value, Operational Momentum, value investing | Login |
| Jul 21, 2025 | Fund Letters | Brent Jackson | 6930 JP | Nippon Antenna Co., Ltd. | Information Technology | Communications Equipment | Bull | New York Stock Exchange | Cost Controls, deep value, Japan, Net-Net, Overcapitalized Balance Sheet, turnaround | Login |
| Mar 31, 2023 | Fund Letters | Leaven Partners | - | Kato Works | Industrials | Construction & Farm Machinery & Heavy Trucks | Bull | Tokyo Stock Exchange | construction machinery, Heavy Construction Equipment, Industrial Equipment, Japanese Equity, undervalued, Value | Login |
| - | Fund Letters | Leaven Partners | MTCR | Metacrine | Health Care | Biotechnology | Bull | NASDAQ | activist, Biotech, cash-rich, Distressed, Liquidation, Merger Arbitrage, Special situations | Login |
| - | Fund Letters | Leaven Partners | STSA | Satsuma Pharmaceuticals | Health Care | Biotechnology | Bull | NASDAQ | Biotech, CVR, Japanese Acquirer, Migraine, premium, Strategic Buyer, takeover | Login |
| - | Fund Letters | Leaven Partners | 6715.T | Nakayo, Inc. | Information Technology | Communications Equipment | Bull | Tokyo Stock Exchange | balance sheet strength, Catalyst, Communications Equipment, deep value, Japanese Small-Cap, liquidation value, telecommunications, tender offer, turnaround, Value | Login |
| - | Fund Letters | Leaven Partners | 8732.T | Money Partners Group | Diversified Financial Services | Specialized Finance | Bull | Tokyo Stock Exchange | Fintech, FX Trading, Japanese Financial Services, Merger Arbitrage, small-cap, takeover target, Tokyo Stock Exchange | Login |
| - | Fund Letters | Leaven Partners | 0869.HK | Playmates Toys Ltd | Consumer Discretionary | Leisure Products | Neutral | Hong Kong Stock Exchange | asset-light model, cash-rich, COVID Recovery, Entertainment Franchises, Hong Kong, Licensing, Toy Manufacturer, turnaround, Value Investment | Login |
| - | Fund Letters | Leaven Partners | LSF | Laird Superfood Inc. | Consumer Staples | Packaged Foods & Meats | Bull | NYSE | acquisition target, liquidation value, Manufacturing Outsourcing, Operational Restructuring, Plant-based Foods, Superfood, Takeover Speculation, turnaround, Value | Login |
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