| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 10.6% | 11.7% |
| 2023 |
|---|
| 11.7% |
MCJ Capital Partners delivered 10.58% returns in Q4 2023 and 11.65% for the full year, underperforming the S&P 500 but outperforming since inception with 58.41% total returns versus 45.39% for the S&P. The manager maintains focus on serial acquirers, companies that systematically acquire small niche businesses and redeploy cash flows at high rates of return. The letter provides extensive analysis of serial acquirer business models, examining three key constraints: pipeline capacity, management integration capabilities, and capital redeployment discipline. Current holdings include Constellation Software, Judges Scientific, and Lifco, all exemplifying different approaches to the serial acquisition model. The manager notes persistent valuation disconnects between large/small companies and international/US securities as ongoing opportunities. The investment approach emphasizes understanding business model constraints and system design for capital allocation, viewing serial acquirers as offering durable return profiles across different geographies and time periods.
Focus on serial acquirers as a specialized investment strategy, targeting companies that systematically acquire small, niche businesses and redeploy cash flows at high rates of return through disciplined capital allocation.
Manager heads into 2024 noting the persistent valuation disconnect between large/small companies and international/US securities, suggesting continued focus on these areas of perceived opportunity.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 31 2024 | 2023 Q4 | CSU.TO, JDG.L, LIFCO.B.ST | Capital Allocation, international, Serial Acquirers, small caps, value | - | MCJ Capital Partners specializes in serial acquirers, companies that systematically buy small niche businesses and redeploy cash flows at high returns. Despite underperforming in 2023, the fund maintains conviction in this strategy, holding Constellation Software, Judges Scientific, and Lifco while targeting persistent valuation gaps between small/large caps and international/US markets. |
| Oct 31 2023 | 2023 Q3 | CPRT, CSU.TO, JDG.L, KSI.TO, KUT.V | international, Patience, Process, small caps, value |
CSU.TO KUT.V JDG.L KSI.TO |
MCJ Capital Partners focuses on historically cheap small-cap and international companies despite Q3 underperformance. Portfolio companies like Constellation Software and Judges Scientific continue strong execution with aggressive acquisition strategies. Manager emphasizes process over results amid macro headwinds including rate impacts and consumer stress from student loan resumption and declining savings rates. |
| Jul 31 2023 | 2023 Q2 | AAPL, AMZN, CPRT, CSU.TO, GOOGL, LIFCO.B.SFB, MSFT, NVDA | Continuous Improvement, Quality, small caps, technology, value | - | MCJ Capital Partners focuses on small-cap companies that excel through continuous improvement rather than hyper innovation. While mega-cap AI stocks dominated Q2 returns, the fund champions businesses like Lifco, Constellation Software, and Copart that build durable advantages through marginal gains and iterative learning, creating compound growth over time. |
| Apr 30 2023 | 2023 Q1 | CSU.TO, JDG.L, KPG.AX, LIFCO-B.ST | Banking, Business Models, Distribution, global, Housing, international, value | - | MCJ Capital Partners returned 4.83% in Q1 2023, focusing on superior business models like distributors and serial acquirers across international markets. Johnson analyzes housing affordability concerns and banking sector instability while maintaining conviction in companies like Constellation Software and Lifco that demonstrate transferable competitive advantages across fragmented industries. |
| Jan 3 2023 | 2022 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2023 Q4 |
ValueManager notes persistent disconnect between large and small company valuations, and international securities relative to S&P 500 counterparts. This valuation gap represents an ongoing opportunity for value-oriented investors. |
Value Valuations Small Caps International |
| 2023 Q3 |
Small CapsPortfolio is primarily made up of smaller companies trading at historically cheap levels relative to large-cap counterparts. Only during the dotcom bubble has small been cheaper on a relative basis to large-cap stocks. Manager views this as an opportunity in unbeloved asset groups pushed to cheapest levels in recent history. |
Value Relative Valuation Historical Opportunity Contrarian |
ValueManager focuses on companies trading below intrinsic value with strong business fundamentals. Emphasizes patience and process-driven investing, comparing approach to Olympic archery where focus on technique matters more than immediate results. Portfolio companies continue growing intrinsic value despite market price volatility. |
Intrinsic Value Process Patience Fundamentals | |
| 2023 Q2 |
AIManager discusses AI as driving excitement and innovation in mega-cap stocks, particularly noting how Apple, Microsoft, Alphabet, Amazon, and Nvidia powered index returns on the heels of AI excitement. However, the manager positions this as market commentary rather than expressing a direct investment view on AI. |
Innovation Technology Mega-caps |
Small CapsManager emphasizes their focus on small-cap investing, noting their median market cap of $172 million versus Apple's $3 trillion market cap. The manager views this size differential as creating opportunity through the aggregation of marginal gains rather than relying on hyper innovation. |
Value Concentration Opportunity | |
QualityManager champions businesses that focus on continuous improvement and marginal gains over time, citing examples like Lifco's continuous improvement culture, Constellation Software's best practice sharing, and Copart's incremental efficiency gains. These represent durable, stable business models. |
Continuous Improvement Durability Compounding | |
| 2023 Q1 |
DistributionManager provides extensive analysis of the distributor business model, explaining how distributors thrive in fragmented markets with low purchasing power customers. Discusses threats and defensive strategies, highlighting the model's longevity and transferability across industries. Notes portfolio exposure through Lifco's dental distribution business. |
Distribution Business Models Supply Chain Fragmentation Network Effects |
InternationalManager notes the persistent discount of international equities to U.S. counterparts, with MSCI All Country World excluding U.S. trading at roughly two standard deviations below its 20-year historical average versus the S&P 500. Portfolio majority is positioned in companies trading outside the U.S. |
International Valuation Geographic Discount Opportunity | |
HousingManager analyzes housing affordability crisis, noting median home prices rose 96% since 2010 while household income rose only 50%. Current home price-to-income ratio of 7.54 approaches levels seen during the Great Financial Crisis. Expresses concern about potential impact if labor market softens. |
Housing Affordability Mortgage Real Estate Economic Risk |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 31, 2023 | Fund Letters | MCJ Capital Partners | CSU.TO | Constellation Software Inc | Information Technology | Systems Software | Bull | Toronto Stock Exchange | Canada, capital allocation, growth, serial acquirer, Software, technology, Vertical Markets | Login |
| Oct 31, 2023 | Fund Letters | MCJ Capital Partners | KSI.TO | Kneat.com Inc | Information Technology | Application Software | Bull | Toronto Stock Exchange | First Mover, Ireland, pharmaceuticals, regulatory compliance, SaaS, small-cap, Validation Software | Login |
| Oct 31, 2023 | Fund Letters | MCJ Capital Partners | JDG.L | Judges Scientific PLC | Health Care | Life Sciences Tools & Services | Bull | London Stock Exchange | growth, life sciences, Niche markets, scientific instruments, serial acquirer, technology, UK | Login |
| Oct 31, 2023 | Fund Letters | MCJ Capital Partners | KUT.V | Redishred Capital Corp | Industrials | Environmental & Facilities Services | Bull | TSX Venture Exchange | Canada, capital allocation, consolidation, Cyclical, Document Shredding, Recycling, small-cap | Login |
| TICKER | COMMENTARY |
|---|---|
| CSU.TO | Constellation Software pushes capital redeployment decisions down within the organization. This allows better redeployment at higher rates of returns in smaller targets for longer. |
| JDG.L | Companies like Lifco and Judges Scientific have clear hurdle rates on acquisition multiples and communicate this target constantly. This system design creates clarity for internal leadership along with public accountability. |
| LIFCO.B.ST | Companies like Lifco and Judges Scientific have clear hurdle rates on acquisition multiples and communicate this target constantly. This system design creates clarity for internal leadership along with public accountability. |
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