| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 22.5% | 22.5% |
Sandbrook Capital delivered strong March performance through successful earnings trades, with OKTA long, CRWD short, and ZGN long contributing most to gains. The fund maintains an 80%+ batting average on earnings trades and has generated approximately 900bp of annual alpha since 2022 inception through their earnings overlay strategy. Technology and consumer discretionary coverage areas underperformed broader markets through March, creating attractive entry points. The manager plans to increase net exposure from beta-neutral positioning, running more long-biased given poor risk/reward in shorting at current levels. Key opportunities exist in names with historically extreme valuations, strong cash generation, and derisked estimates that represent 18-24 month doubles. Three major catalysts being monitored include EU retaliation on big tech, companies withdrawing guidance, and major layoff announcements. The proprietary AlphaRepo platform provides real-time estimate tracking and revision insights, supporting their systematic approach to earnings-driven alpha generation. Forward focus shifts from multiple compression to earnings growth as valuations normalize.
Focus on high-conviction earnings trades and catalyst-driven alpha generation in technology and consumer discretionary sectors, leveraging proprietary AlphaRepo platform to maintain 80%+ batting average while flexing net exposure higher at attractive entry points.
Manager sees compelling entry points in quality names trading at historically extreme valuations with strong fundamentals. Plans to increase net exposure and run more long-biased given poor risk/reward in shorting. Focus shifts from P/E compression to earnings growth as multiples normalize. Monitoring three major catalysts: EU tech retaliation, guide withdrawals, and layoff announcements.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 7 2025 | 2025 Q1 | APP, CRWD, OKTA, ZGN | consumer, earnings, Long/Short, software, technology, valuation | - | Sandbrook delivered strong March performance through high-conviction earnings trades, maintaining 80%+ batting average. Technology and consumer underperformance creates compelling entry points in quality names with extreme valuations and strong fundamentals. Manager shifting from beta-neutral to long-biased positioning, targeting 18-24 month doubles while monitoring EU tech risks and earnings guidance trends. |
| Jul 11 2024 | 2024 Q2 | BBWI, GTLB | alpha, consumer, earnings, Long/Short, Performance, software | - | Sandbrook Capital had its worst month since launch in June due to net long software positioning during sector underperformance. However, strong earnings strategy execution generated 92bp from two positions and over 6% YTD returns. Manager continues focusing on quality software and consumer names, taking duration amid relative underperformance. |
| Apr 17 2024 | 2024 Q1 | AI, EWCZ, FIGS, HCP, JMIA, LULU, LVMH, NYT, YETI, ZG, ZGN, ZM | alpha, Catalyst, earnings, Long/Short, small caps, software | - | Sandbrook generated Q1 alpha through tactical earnings strategies and factor selection while maintaining neutral net exposure. The fund delivered 186bp from overnight earnings plays and ICR trades, offset by poor short book beta performance. Manager remains patient on long-term positions given unsupportive valuations, focusing on software sector opportunities and continuing quarterly earnings alpha generation. |
| Feb 2 2024 | 2023 Q4 | EWCZ, FIGS, VSCO, ZGN | consumer, DTC, healthcare, Long/Short, SMID Cap, software, value | FIGS | Long/short SMID cap fund targeting idiosyncratic opportunities in consumer and software. Added FIGS scrubwear position with 22% IRR target on TAM expansion thesis. Current software longs are lower quality names positioned for fundamentals recovery. Running conservative gross exposure due to limited attractive opportunities, with systematic approach to scaling into higher quality ideas when risk/reward improves. |
| Apr 17 2023 | 2023 Q1 | AMZN, BILL, BOX, CFLT, CRM, CROX, CRWD, ESTC, ETSY, GOOS, HCP, HIMS, MSFT, NKE, RH, SNAP, SNOW, SPT, VRT, ZM | consumer, Long/Short, Macro, risk management, software, technology | SONO | Sandbrook underperformed Q1 2023 due to overly defensive positioning despite strong stock picking. Manager ran negative net exposure most of the quarter, missing tech rally in core holdings. Solid individual name performance with 75% long batting average. Strategy remains opportunistic and selective given limited attractive long-term opportunities and weak consumer data suggesting challenging 2H acceleration. |
| Dec 1 2023 | 2022 Q4 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q1 |
EarningsManager focuses heavily on earnings trades with 80%+ batting average on earnings prints. The earnings overlay strategy has added approximately 900bp of alpha annually since inception in 2022. They maintain live sector sheets of forward estimates across their coverage universe using their AlphaRepo platform. |
Earnings Trades Alpha Generation Forward Estimates Batting Average Catalyst Strategy |
SoftwareTechnology, mainly software, is one of their two primary coverage areas. The manager notes software has fared considerably worse than the market through March 31st but sees opportunity in historically extreme valuation multiples with strong cash positions and derisked estimates. |
Software Coverage Technology Sector Valuation Multiples Cash Generation Forward Momentum | |
| 2024 Q2 |
SoftwareManager maintains a net long software bias despite sector underperformance. Focus on higher quality names in core coverage areas where duration can be taken given relative underperformance. Software positioning contributed to June performance challenges. |
Software Technology Duration Quality Coverage |
EarningsStrong execution on earnings print strategy, adding 92bp from GTLB and BBWI earnings in June. YTD earnings strategy has realized over 6% returns. Manager expects similarly rich earnings alpha period for Q2 and Q3. |
Earnings Alpha Strategy Returns Execution | |
| 2024 Q1 |
EarningsManager generated significant alpha through overnight earnings strategies, contributing 186bp during Q1 earnings season. The fund focuses on earnings-driven catalyst plays with significant deltas to street numbers 3-6 quarters out, particularly in software where gross retention headwinds are rolling off. |
Catalyst Alpha Beats Misses Season |
SoftwareThe software sector is becoming more interesting on the long side after lagging post Q4 prints. Manager sees mechanical beats potential as gross retention headwinds roll off for several names and net new bookings have substantial upside in 2H. |
SaaS Retention Bookings Beats Recovery | |
| 2023 Q4 |
E-commerceManager discusses FIGS as a DTC scrub provider with strong cohort economics and brand leadership. The thesis centers on TAM penetration growth, team business expansion, and success in non-scrubwear categories with higher ASPs and increased attach rates among loyal customers. |
DTC Brand Customer Acquisition Cohort Economics Digital |
CloudPortfolio includes enterprise software Core Longs viewed as having high beta to recovery in enterprise software fundamentals, including consumption/cloud trends and Net New ARR/ACV trends via increased selling capacity. Manager characterizes these as lower quality companies valued attractively. |
Enterprise Software ARR SaaS Fundamentals Recovery | |
ApparelSignificant focus on FIGS scrubwear and VSCO activewear positions. FIGS thesis involves TAM expansion in healthcare worker market, while VSCO represents catalyst play based on PINK product refresh, new bra launches, and loyalty program initiatives. |
Scrubs Healthcare Activewear Product Refresh Loyalty | |
| 2023 Q1 |
TechnologyManager focused on large cap tech and growth software names, particularly beaten-up tech stocks in January. Positioned in CRM, CRWD, ZM, SNOW, BILL, AMZN, MSFT, and ESTC as top contributors. Also shorted tier 2 high growth software names where multiples had run above long-term averages. |
Software Cloud SaaS Growth Large Cap |
ConsumerFocused on consumer discretionary as a core area, particularly SMID cap profitable consumer companies. Shorted long cycle, housing adjacent consumer companies where significant downside to estimates was seen. Consumer card data and alt data panels showed weakness heading into 2H. |
Consumer Finance Retail Housing Discretionary | |
Risk ManagementEmployed systematic shorting guardrails including 3% position limits, 20% stop losses, minimum $30mn ADV requirements, and avoiding cult shareholder bases. Focused on adding absolute returns through mispriced near-term catalysts rather than valuation-based shorts. |
Hedging Short Selling Risk Controls Volatility |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Feb 2, 2024 | Fund Letters | SandbrooK Capital | FIGS | FIGS Inc | Consumer Discretionary | Textiles, Apparel & Luxury Goods | Bull | NYSE | Brand Leadership, Customer Acquisition, DTC, Equity, healthcare apparel, international expansion, Medical Scrubs, Team Business | Login |
| - | Fund Letters | SandbrooK Capital | SONO | Sonos Inc | Consumer Discretionary | Consumer Electronics | Bear | NASDAQ | ASP Headwinds, Audio Equipment, Bear, Channel Inventory, consumer electronics, margin compression, Product Mix, Promotional Activity, Short Position | Login |
| TICKER | COMMENTARY |
|---|---|
| OKTA | We batted well with our earnings trades this month: OKTA on the long side |
| CRWD | We batted well with our earnings trades this month: CRWD short |
| ZGN | We batted well with our earnings trades this month: ZGN long contributed the most to our earnings overlay strategy |
| APP | The majority of gains this month came from adding positive net to momo basket names (think APP) |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
