Praetorian Capital Fund managed a +3.59% net return in Q2. Not terrible, not great, the kind of quarter you report with a shrug while staring wistfully at the S&P ripping to highs on the back of AI tulips and Ponzi coins.
The problem isn’t that the portfolio lost money. The problem is that the strategy’s core book—the thing that’s supposed to deliver asymmetric payoffs—basically took a nap while the event-driven book played goalie and blocked the pain. Investors don’t exactly write checks for “meh, we muddled through.”
And so, Harris Kupperman did the only sane thing: shut the whole thing down for two months. Sold off stagnant positions, sat on cash, and took a vacation from the markets. In baseball terms: benched himself mid-game, because his swing was off.
Hitting the Reset Button
Every investor talks about discipline, but very few actually do the hardest thing: admit when they’re in a slump. Kupperman calls it a “hard reboot”—dump everything, walk away, and come back with fresh eyes.
The last reboot was in Q4 2019. Result: a cleared-up brain just in time for COVID chaos and 2020’s once-in-a-lifetime rocket ship. This time, the hope is that two months of stepping away will have the same effect.
Here’s the truth: in investing, slumps are like hangovers. Pretending you don’t have one just makes it worse. Acknowledge it, hydrate (with cash), and wait it out.
Inflection Investing vs. Despair Buying
Kupperman’s bread and butter has been “inflection investing”—waiting until business fundamentals start to turn and then buying in, even if it means paying up. For years this worked brilliantly, because the market discounted any potential recovery as “fake news” until it became obvious.
But now, the algos front-run everything. The second a company hints at good news, the stock goes parabolic, shorts scramble, and the “cheap entry point” is gone. Inflection investing works… until it doesn’t.
So maybe the new play is “buy despair.” Not buying garbage companies at new lows, but buying great assets when everyone has given up hope, before the inflection is even visible. Contrarian, uncomfortable, and guaranteed to make your LPs question if you’ve lost it. Which is exactly why it might work.
Macro Views: Welcome to Project Zimbabwe (or Brazil, or Turkey)
The big picture isn’t pretty. We don’t have a “real” economy anymore—just asset bubbles feeding the spending habits of the top 10%. Asset prices go up, rich people borrow against them, and voilà, consumption.
Trump’s economic strategy? Inflate the bubbles, toss some tariffs around, sacrifice the middle class. Rinse, repeat. It’s not great for Main Street, but Wall Street is happy to sell Ponzi schemes and fart-coins to foreign capital recycling its sweatshop earnings.
The likely path:
- Phase 1 (Brazil): Rates go up, multiples compress, companies struggle with debt.
- Phase 2 (Turkey): Multiples crater, currency collapses, stocks moon in nominal terms.
- Phase 3 (Zimbabwe): Equities hyperinflate, everyone dances until the music stops.
We’re somewhere between Brazil and Turkey now. Not exactly the stuff of investor roadshow slide decks.
The letter makes one thing clear: the fund got too institutional. Too much data, too many management meetings, too much second-guessing. Kupperman’s actual edge has always been “invest, then investigate.” Gut-driven, nimble, ready to cut positions on a whim.
That’s the plan going forward:
Here’s the scoreboard since inception:
Cash, precious metals, some EM, some Florida dirt, and a whole lot of skepticism about the everything-bubble.
The plan is to wait for the “obvious layups”—set-ups where the risk/reward is so skewed it feels like stealing. Until then, event-driven trades pay the bills while the core book sits idle.
It’s not sexy. It’s not AI mania. It’s a portfolio built for survival while the rest of the market dances on the volcano rim.
Most hedge funds pretend slumps don’t happen. Praetorian actually admits it, nukes the portfolio, and starts over. It’s a humbling process, but it’s also what keeps the fund alive long enough to catch the next big wave.
Because in markets, the only real edge is not blowing up. Everything else is just noise.