| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
| 2024 |
|---|
| 12.2% |
Zelikovic Investments delivered 12.24% returns in 2024 for their Ayalon Global Stocks fund, matching S&P 500 performance despite having no exposure to the Magnificent Seven stocks. The fund focuses on small/micro cap shares globally with the Russell 2000 as closest benchmark. Manager Yoav Zelikovic emphasizes value investing principles: purchasing financially robust companies at attractive prices while avoiding popular expensive stocks, investing globally including outside Israel and the U.S., and maintaining 100% stock allocation without market timing. The portfolio is divided between compounder stocks for buy-and-hold and micro-cap value stocks rebalanced monthly. Key holdings include insurance companies like Fairfax Financial and asset managers like KKR and Brookfield Corporation. Zelikovic expects small caps to resume leadership after eight consecutive years of underperformance versus large caps, citing historical patterns. The manager avoids the Magnificent Seven due to elevated valuations, instead focusing on international equities and smaller companies where he believes the greatest long-term opportunities exist. Portfolio companies trade at lower multiples with higher expected earnings growth than the S&P 500.
Focus on purchasing financially robust, well-managed companies at attractive prices compared to their economic value, particularly among small caps and international equities, while avoiding popular expensive stocks and maintaining a long-term buy-and-hold approach with quality compounders.
Manager expects small cap shares to resume leadership and outperform after eight years of underperformance, requiring patience while following value investing principles. The greatest opportunities for long-term investments are believed to be within select companies outside the U.S. and smaller cap stocks domestically. Portfolio companies are expected to deliver higher returns than the S&P 500 due to higher earnings growth and lower trading multiples.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Dec 31 2024 | 2024 Q4 | AAPL, AGO, AMZN, ATKR, BN, CNHI, EXO.MI, FFH.TO, GOOGL, IAC, JUVE.MI, KKR, KNSL, MKL, MSFT, NVDA, RACE, STLA, TPL, TSLA | Asset Managers, compounders, insurance, international, long-term, small caps, value | - | Zelikovic Investments returned 12.24% in 2024 matching the S&P 500 without owning any Magnificent Seven stocks. The fund focuses on global small/micro cap value investing with significant insurance and asset management exposure. Manager expects small cap leadership to resume after eight years of underperformance, avoiding expensive U.S. large caps in favor of international equities and quality compounders at attractive valuations. |
| Dec 31 2023 | 2023 Q4 | AGO, APO, CSU.TO, EXO.MI, FFH.TO, IAC, KKR, MKL, TASE.TA, TPL, TVK.TO | compounders, global, insurance, Japan, Quality, ROE, small caps, value |
EXO.MI IAC KKR FFH.TO TPL TASE.TA CSU.TO TVK.TO |
Zelikovic delivered strong 2023 returns of 24.83% through disciplined small-cap value investing focused on high-ROE companies purchased at attractive prices. Portfolio emphasizes insurance companies benefiting from higher rates, global diversification especially Japan, and quality compounders with proven reinvestment capabilities. Warns against Magnificent Seven concentration risks while maintaining 100% equity exposure and long-term patient approach. |
| Dec 31 2023 | 2022 Q4 | BAM, EXO NA, HEI, IAC, KKR, MSFT, ODFL, TPL | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2024 Q4 |
ValueManager focuses on purchasing financially robust companies at attractive prices compared to their economic value while avoiding popular expensive stocks. Emphasizes finding quality companies trading below their intrinsic value, particularly among small caps and international equities. |
Value investing Undervalued Price-to-earnings Intrinsic value Quality companies |
Small CapsPortfolio invests mainly in small/micro market cap shares with closest benchmark being Russell 2000. Manager expects small cap leadership to resume after eight consecutive years of underperformance, citing historical patterns where such disparities led to extraordinary small cap returns. |
Russell 2000 Micro cap Small cap outperformance Market cap focus Size premium | |
InsuranceManager believes insurance companies represent one of the most promising investment pathways. Well-managed insurance companies have dual profitability sources from insurance operations and investment float, with holdings including Fairfax Financial, Assured Guaranty, Markel Corporation, and others. |
Insurance float Underwriting Investment income Property casualty Reinsurance | |
BuybacksMultiple portfolio companies engage in substantial share buyback programs, including TASE completing buybacks and Atkore announcing additional buybacks. Manager views buybacks as effective capital allocation when shares trade at attractive prices. |
Share repurchases Capital allocation Shareholder returns Share count reduction Management execution | |
Asset ManagersSignificant exposure to asset management companies including KKR managing $640B with 18% annual AUM growth, Brookfield with ~20% annual AUM growth, and Apollo Global Management. Manager believes asset management is among the best and most lucrative industries. |
Assets under management Management fees Performance fees Fee-based revenue Alternative assets | |
| 2023 Q4 |
ValueManager focuses on buying stocks of financially stable companies at attractive prices compared to their economic value, staying away from popular and expensive stocks. Emphasizes careful selection based on clear economic measures and purchasing at discount prices. |
Value investing Discount pricing Economic value Financial stability Price earnings ratio |
Small CapsContinues strategy of exposure to small cap companies where many companies with great financials can be found trading at attractive prices. Believes small caps offer the highest chance for money managers to attain alpha for clients. |
Small cap Alpha generation Attractive pricing Outperformance Market inefficiency | |
InsuranceBelieves insurance companies represent one of the most promising investment pathways. Well-managed insurance companies have two sources of profitability: insurance activity and investment of their float. Increased stakes in multiple insurance companies. |
Insurance Float Dual profitability Underwriting Investment income | |
QualityFocuses on companies with exceptional profitability and high return on equity, led by honest, reliable managers with proven track records. Seeks companies with proven ability to re-invest profits at high rates over time. |
Return on equity Profitability Management quality Reinvestment Track record | |
GlobalInvests in stock markets outside the US and Israel, including Europe, Canada, England and Japan. Finds high quality companies trading at 50% discounts compared to US equivalents. Japan was particularly successful after Tokyo Stock Market reforms. |
Geographic diversification International markets Valuation discounts Japan Europe |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jun 30, 2024 | Fund Letters | Zelikovic Investments | KKR | KKR & Co. Inc. | Financials | Asset Management & Custody Banks | Bull | NYSE | alternative investments, asset management, Fee-based Model, High Growth, insider ownership, private equity, Scale Advantages | Login |
| Jun 30, 2024 | Fund Letters | Zelikovic Investments | FFH.TO | Fairfax Financial Holdings Limited | Financials | Property & Casualty Insurance | Bull | Toronto Stock Exchange | Book Value Compounding, Canada, Float Investment, Higher Interest Rates, Insurance Float, Long-term Track Record, Property & Casualty Insurance | Login |
| Jun 30, 2024 | Fund Letters | Zelikovic Investments | TPL | Texas Pacific Land Corporation | Energy | Oil & Gas Exploration & Production | Bull | NYSE | asset-light model, energy infrastructure, High Profit Margins, Land Ownership, Oil Royalties, Permian Basin, Texas, Water Rights | Login |
| Jun 30, 2024 | Fund Letters | Zelikovic Investments | EXO.MI | EXOR N.V. | Financials | Multi-Sector Holdings | Bull | Borsa Italiana | automotive, diversified portfolio, family-controlled, holding company, Industrial Equipment, Italy, long-term investment, Luxury goods, value creation | Login |
| Jun 30, 2024 | Fund Letters | Zelikovic Investments | TASE.TA | Tel Aviv Stock Exchange Ltd. | Financials | Financial Exchanges & Data | Bull | Tel Aviv Stock Exchange | bond trading, defensive characteristics, Financial infrastructure, High Growth, Israel, Monopolistic Business, share repurchases, stock exchange | Login |
| Jun 30, 2024 | Fund Letters | Zelikovic Investments | IAC | IAC/InterActiveCorp | Communication Services | Interactive Media & Services | Bull | NASDAQ | Contrarian Investment, digital media, Long-term Outperformance, Proven Management, Technology Holding Company, turnaround, value opportunity | Login |
| Jun 30, 2024 | Fund Letters | Zelikovic Investments | CSU.TO | Constellation Software Inc. | Information Technology | Systems Software | Bull | Toronto Stock Exchange | 100-bagger, acquisition strategy, Canada, compounder, Free Cash Flow Growth, Mark Leonard, serial acquirer, vertical market software | Login |
| Jun 30, 2024 | Fund Letters | Zelikovic Investments | TVK.TO | TerraVest Industries Inc. | Industrials | Industrial Machinery | Bull | Toronto Stock Exchange | Canada, capital allocation, Diversified End Markets, High Profitability, industrial manufacturing, share repurchases, small-cap, strategic acquisitions | Login |
| TICKER | COMMENTARY |
|---|---|
| EXO.MI | EXOR (EXO.MI), a longstanding family-owned company (and one of our first holdings (we started buying when the share price was ~€30 and today the stock trades above ~€80) demonstrating excellent capital allocation and very successful acquisitions. The company's current market cap is above ~€26B, despite the past few years being very challenging. Among EXOR's holdings are Ferrari (RACE), Stellantis (STLA), heavy farm equipment company CNH Industrial (CNHI), Juventus Football Club (JUVE.MI), luxury footwear company, Christian Louboutin and The Economist newspaper. The company's net asset value increased by 9% in 2024. |
| BN | Brookfield Corporation (BN), a Canadian investment management company that controls a number of subsidiaries, such as Brookfield Asset Management (which we also hold), Brookfield Reinsurance and other companies engaged in the energy, real estate and finance sector. Led by the legendary CEO, Bruce Flatt, the company's stock price increased by an average of 19% since 2002 when he became CEO. Brookfield continues to increase the AUM (Assets Under Management) on average by ~20% per annum. The company has also recently announced the appointment of the young and promising Connor Teskey who will be taking over as CEO instead of Bruce. As company shareholders, we share in the management and success fees that they charge their clients. The stock value in the parent company, BN, increased by over 50% in 2024, concurrently with an almost 20% increase in the company's earnings. |
| IAC | We also hold InterActiveCorp (IAC) in the tech sector, controlled by the famous investor Barry Diller. Its stock value declined by another ~18% last year, but this decline disregards the immense value that the company generated for shareholders over the years. Joey Levin recently resigned from managing the company (and went on to manage the subsidiary, ANGI), but we trust the senior managers led by Barry Diller to continue navigating the ship. Company holdings including Dotdash Meredith (the American media corporation) and many private companies. This company's excellent management has proven its ability to save its subsidiaries from crises. Due to the high discount at which the company trades compared to its Net Asset Value we once again increased our exposure to this company at a bargain price. |
| KKR | We also increased our position in the giant American-global asset management company Kohlberg, Kravis, Roberts (KKR & Co.), which currently manages ~$640B (reflecting an annual growth rate of 18% since its IPO in 2010). Concurrently, the company's stock has risen at a CAGR of over 20% per annum since 2010. The stocks also rose by over 80% in 2024 (with a sharp decline in early 2025, which we utilized to purchase even more shares). I believe that the stock still trades at a substantial discount compared to its long term potential and due to the fact that the asset management industry is among the best and most lucrative industries. |
| FFH.TO | Fairfax Financial Holdings (FFH.TO), which has compounded book value at an almost 18% rate for the past 30 years, and its stock has also returned a CAGR of nearly 18% p.a. over the last 30 years, including an increase of 63% in 2024 (following an increase of over 60% in 2023 as well) and whose investment portfolio has grown to $66B while retaining a high level of profitability in its insurance operations. |
| TPL | Texas Pacific Land Trust's (TPL) stock continued to rise and rose by over 120% in 2024! This company remains very profitable and will continue enjoying royalties from its oil and water reservoirs in Texas. In addition, there is a high probability that data centers will be built on its land, an activity that may generate many million of additional profits per annum in the future. We intend to hold on to it for many years, along with our other Compounders. |
| ATKR | Atkore Inc (ATKR) over the past year, an American company operating in the industrial sector. The company has been operating for over 60 years, engaged in two main sectors – electrical safety and infrastructure. What is unique in this company (in addition to the bargain price at which we purchased its stock) is its outstanding management, which excels in capital allocation and invests a large portion of its profits in company share buybacks (at bargain prices) and in acquiring other companies. When crunching the numbers, the company reported especially high profitability rates with a 50.3% average "Return On Equity" in the last ten years (an average S&P 500 company currently reports ~16%). Despite that and mainly because the company is involved in a cyclical industry, company shares traded at a low P/E multiple of 8 when we bought it. But since we bought it, the company shares continued to decline by almost 50% due to poor financial statements that disappointed the investors. |
| AAPL | Apple, for example, which has a very high weighting in S&P 500 (over 7%) and traded at the end of the year at a very high price/earnings multiple of 30, demonstrated negative profit growth in the last two years. It is not without reason that Warren Buffet continues to divest his holdings in the company. |
| NVDA | Nvidia's market cap alone rallied over 170% last year, contributing to almost ¼ of the S&P 500 increase in 2024 (interesting anecdote – if you neutralize Nvidia's return, the returns of the S&P 500 over the last 2.5 years are identical to those of the European indexes). No doubt, these are wonderful companies with impressive financial robustness, but their current pricing reflects the expectation that they will continue to grow at the high rates in the distant future. Over the last few months, Nvidia has already lost $1T of its market cap. |
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