Praetorian Capital: Making Money the Hard Way (Again) – Lessons from Harris Kupperman’s Q3 2025 Praetorian Capital Letter

At Buyside Digest, we’ve long admired Harris Kupperman — “Kuppy” to many of us — not just as a brilliant investor, but as a clear-eyed thinker who’s unafraid to call out the absurdities of modern markets. He’s a friend of the independent investment mind — the kind of investor who prefers compounding quietly to chasing the latest “Quantum Ponzi.” His latest Q3 2025 Praetorian Capital Fund Letter reads like a meditation on what it means to stay rational in an irrational era.

View Kuppy’s letter here

Kuppy has a favorite investing mantra: there’s the easy way to make money, and then there’s my way.

In his Q3 2025 investor letter, Kuppy admits that once again, he’s taken the hard road — fighting gravity while the “easy money” crowd chases Ponzi-adjacent dreams, quantum vapor, and whatever “AI adjacency” means this week.

The Praetorian Capital Fund gained +5.7% net in the quarter, bringing YTD 2025 returns to +12.16%. Not a moonshot, but not bad for a guy who refuses to buy anything that ends with “.AI.”

“The easy way,” Kuppy writes, “was to be long Ponzi schemes, companies without earnings, concepts without viable paths to profits, and various AI plays… while shorting businesses that traded at low cash flow multiples.”

In other words, he’s doing the opposite of what works — and still winning.

Grinding Higher the Hard Way

Since 2019, Praetorian has built one of the most impressive track records in hedge fund land — +810% net since inception, with a performance curve that looks like it was drawn by someone on Adderall and Red Bull during the COVID crash.

Here’s how the scoreboard looks going into Q3 2025:

Chart: Fund Performance vs. Market

Here’s the scoreboard since inception:

Source: Fund letters, Bloomberg. Fund inception 2019.

Owning What No One Else Wants

Praetorian’s top five positions are a Kuppy bingo card of unfashionable excellence:

• Sprott (SII – USA) – 35.8%

• St. Joe (JOE – USA) – 15.7%

• B3 (B3SA3 – Brazil) – 3.5%

• XP (XP – USA) – 5.6%

• Allfunds (ALLFG NA – Netherlands) – 6.2% (half-year basis)

Each company actually earns money — a radical concept in 2025. They buy back stock, pay dividends, and post real returns on invested capital.

As Kuppy puts it:

“I like to joke that they should build data centers instead of paying us dividends, but these companies are focused on creating value — not destroying it.”

So while everyone else is rotating into AI memes and “quantum startups” that may or may not exist, he’s buying the boring cash-flow machines that eventually get discovered by the crowd.

Until then? He’s content to wait and get paid.

The Macro Doom Spiral (a Kuppy Classic)

Kuppy’s macro outlook remains about as cheerful as a Florida hurricane forecast.

He sees global economic growth not as a cyclical challenge, but as a policy choice — one that governments have consciously rejected.

“Two of the four major economic blocs are against growth (Europe and Japan), the US barely pays lip service, and China remains obsessed with exports to broke consumers.”

Translation: no one’s steering the ship — they’re all just printing more lifeboats.

He argues that capital isn’t being “redeployed” anymore — it’s being vaporized.

When you price the S&P 500 in gold — his favorite reality check — you discover that the market’s “new highs” are an optical illusion.

“A shiny rock shouldn’t outperform real businesses,” Kuppy writes. “What you see in that chart is the destruction of capital.”

In Kuppyworld, the only constant is the intentional erosion of wealth — a political choice masquerading as macro inevitability.

Owning the Croupiers

Kuppy’s solution? Don’t fight the casino — own the casino.

He calls it the “croupier trade”: owning the picks-and-shovels of the financial bubble.

That means brokers, exchanges, back-office settlement firms — the infrastructure that makes speculative mania possible.

And, of course, St. Joe (JOE) — his recurring favorite, the Florida land play that doubles as a bet on the great migration of rich people fleeing blue-state taxes and urban chaos.

“Every convulsion of urban chaos or tax-the-rich scheming will launch JOE shares higher.”

JOE isn’t just land; it’s leverage on civilization fatigue.

AI, Private Credit, and Other Delusions

If you’re looking for cheerleading about artificial intelligence, you’re in the wrong letter.

Kuppy sees the AI mania as “the craziest bubble of my professional career — and by many metrics, the craziest in human history.”

He believes trillions have been misallocated into “Quantum Ponzis”, Private Equity mirages, and Venture Capital fairy tales that will collapse once the accounting catches up with reality.

He even warns that Private Credit — Wall Street’s new favorite acronym farm — is just the next domino.

When the unwind comes, he predicts “cataclysmic consequences,” though, in classic Kuppy fashion, he shrugs: the timing’s unknowable, but the outcome’s inevitable.

“While the outcome is rather obvious, the timing remains hard to predict. The only certainty is that capital continues to be misallocated, creating bigger fireworks for the future.”

Defensive Positions, Offensive Mindset

For all the macro cynicism, Kuppy isn’t hiding under his desk.

He’s keeping liquidity high, exposures light, and hunting for asymmetric setups.

He’s also holding an unusually large Treasury futures position — a trade he openly admits he hates.

“I think Treasuries will ultimately prove worthless,” he writes, “but in a crash, they’ll see panic buying. I’m holding a ticking bomb with tight stops.”

He’s also rotating further into Emerging Markets, betting that a weak U.S. dollar under the Trump administration could finally act as the long-awaited catalyst for cheap EM assets.

And, of course, the Precious Metals basket remains — not miners, but the infrastructure around them, the companies that profit even if the rocks don’t move.

Cash Is a Position (And a Weapon)

If there’s one line that sums up Kuppy’s worldview, it’s this:

“In investing, the big money is made when you buy the highly discounted pieces after a crash, but you need to have cash at that time.”

So while everyone else is long “AI ecosystems” and “digital metaverse synergies,” he’s long cash, gold, patience, and cynicism — the four horsemen of post-bubble survival.

He calls it “Project Zimbabwe” — the next phase of policy panic where governments inflate their way out of collapse.

When that day comes, Kuppy plans to be there — sitting on dry powder, smirking, and ready to buy what’s left of the wreckage.

Final Thoughts

Praetorian’s Q3 letter reads like Kuppy at his best: cynical, clear-eyed, and fully self-aware that betting on reality in a world addicted to fantasy is lonely, slow, and incredibly profitable over time.

“If we can make a bit when it isn’t working, we can hopefully make a lot when it starts working again.”

He’s not chasing the bubble — he’s positioning for the aftermath.
And if history is any guide, when the mania ends, the guy doing it “the hard way” will once again look like a genius.