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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"VELA International outperformed in Q3 with 7.43% returns while maintaining 9.5% defensive cash position. Added healthcare and consumer names at attractive valuations amid tariff uncertainty."
Bob Sharpe's VELA International Fund delivered 7.43% in Q3 2025, outperforming the MSCI World ex-US Index's 5.33% return, bringing fiscal year performance to 19.67% versus 16.03% for the benchmark. The fund maintains a defensive 9.5% adjusted cash position amid global uncertainty, including unresolved tariff policies expected to fully impact in 2026 and potential threats to Federal Reserve independence. Sharpe added six new positions across healthcare, consumer, financial services, and technology sectors, funded by trimming existing holdings. Key additions include Hikma Pharmaceuticals for tariff-avoidance manufacturing capacity and Tecan Group at significant discount following temporary headwinds. The portfolio's gold mining exposure through Alamos Gold and OceanaGold continues generating strong returns, serving as insurance against credit destruction and declining confidence in financial authorities. Major risks include fiscal dominance concerns, 100% debt-to-GDP ratios, and policy uncertainty. The manager remains disciplined in capital deployment while monitoring evolving macro crosscurrents and maintaining optionality through elevated cash levels.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Manager demonstrates high conviction through detailed analysis of individual positions, clear investment theses for new additions, and strong rationale for gold exposure. Specific valuation metrics, operational details, and strategic reasoning indicate confident decision-making despite cautious market outlook.
Growth Outlook
Manager expresses cautious pessimism about global environment, citing unresolved tariff issues, potential Federal Reserve independence threats, and systemic risks from high debt levels. Uses phrase 'remain buckled-up' indicating defensive market outlook, though acknowledges some positive developments in Japan and Germany.
Risk Appetite
Portfolio maintains elevated 9.5% adjusted cash position indicating defensive posture, though manager is selectively adding new positions. The defensive cash level and risk management approach to gold miners suggests cautious positioning, but active deployment into specific opportunities shows some risk appetite.
Capital Deployment
Cash position decreased from 9.4% to 7.2% (9.5% adjusted), indicating modest net deployment. Added six new positions while trimming others and selling one holding. The activity suggests selective deployment rather than aggressive capital allocation, with defensive cash levels maintained.
Forward Guidance
Manager plans to continue monitoring positions and remain disciplined in seeking opportunities, but emphasizes maintaining optionality and risk management. Forward guidance is cautious with focus on navigating crosscurrents rather than aggressive deployment, though remains open to opportunities.
Language Signal
Language includes significant risk-focused terms like 'uncertainty,' 'buckled-up,' 'threats,' and 'crosscurrents,' balanced against opportunity language around 'attractive valuations' and 'significant discount.' Net balance tilts toward cautious/defensive language while maintaining analytical objectivity.
Perceived Risk
Manager identifies multiple systemic risks including tariff uncertainty, potential Fed independence threats, fiscal dominance concerns, and record debt levels. Extensive discussion of gold as insurance against credit destruction and confidence loss indicates high perceived systemic risk environment.
Opportunity Density
Manager found six new attractive opportunities across multiple sectors and geographies, suggesting moderate opportunity availability. Specific mentions of companies trading at significant discounts to intrinsic value and structural changes creating opportunities, though selective approach indicates opportunities are not abundant.
Time Horizon
Investment approach focuses on intrinsic value, long-term competitive advantages, and multi-year development projects like Alamos Gold's production growth plan. Discussion of companies with 250-year operating histories and patient capital approach to gold miners indicates long-term investment horizon.
