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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Hoisington Investment Management 2023 Q1 Investor Letter | Buyside Digest

Back to Fund Profile (Hoisington Investment Management)

Primary Source Intelligence • Q1 2023 Letter Analysis

Hoisington Investment Management Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Hoisington Investment Management. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Positioning StanceConstructive

GeographyUS

Digest Analysis

Quick Take

"Hoisington argues the Fed's pandemic monetary acceleration created unsustainable financial conditions that must now unwind."

Executive Summary

Hoisington Investment Management argues that financial cycles lead business cycles, with the Federal Reserve's pandemic-era monetary acceleration creating the conditions for the current inflation crisis and future economic instability. The firm traces this pattern through historical analysis from David Hume to contemporary research, showing how excessive monetary policy consistently leads to financial instability. They highlight that real bank credit has declined, other deposit liabilities have fallen double-digits, and visible bank failures signal significant stress in the financial system. With $10 trillion of U.S. debt requiring rollover in 2023-2024, the marginal revenue product of debt is set to decline substantially. The firm expects velocity to turn down later this year, rendering monetary policy ineffective. They anticipate continued recession risk despite first quarter growth, with inflation receding toward the Fed's target in 2024. Their outlook calls for long-term Treasury yields to continue declining as the historical pattern of financial excess leading to economic contraction plays out once again.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

70%

CautiousHigh

Moderate (70%)

The firm demonstrates high conviction through their detailed historical analysis spanning centuries, specific quantitative metrics (double-digit deposit declines, $10 trillion debt rollover), and clear directional calls on Treasury yields and recession risk.

Growth Outlook

20%

BearishBullish

Bearish (20%)

The firm expresses clear bearish views on the economic outlook, warning of rising recession risk, financial system stress, and the need for economic contraction to resolve imbalances created by excessive monetary policy.

Risk Appetite

30%

DefensiveAggressive

Defensive (30%)

While not explicitly stated, the firm's focus on Treasury bonds and warnings about financial system stress suggest a defensive positioning bias away from risk assets toward safe haven investments.

Capital Deployment

0%

De-riskingDeploying

De-risking (0%)

No specific information is provided about cash levels or position changes, and the letter appears focused on macro analysis rather than portfolio activity.

Forward Guidance

25%

CautiousExpansionary

Cautious (25%)

The firm explicitly states that recession risk continues to rise and expects economic conditions to deteriorate, with velocity turning down and monetary policy becoming ineffective.

Language Signal

28%

BearishBullish

Bearish (28%)

The letter is dominated by risk language including crisis, instability, failure, decline, stress, and warnings, with limited positive framing except for their Treasury bond outlook.

Perceived Risk

80%

Low RiskElevated

Elevated Risk (80%)

The firm perceives very high systemic risk, explicitly warning of financial instability, bank failures, recession risk, and comparing current conditions to historical financial crises with detailed analysis of potential adverse outcomes.

Opportunity Density

25%

ScarceAbundant

Scarce (25%)

The firm sees limited opportunities in the current environment, focusing primarily on Treasury bonds while warning about broad financial system stress and economic contraction ahead.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The firm takes a multi-year perspective, analyzing historical patterns over centuries and expecting their thesis to play out over the medium term as financial cycles complete their rotation.