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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Microcap value fund targeting businesses below intrinsic value, particularly community banks with Emergency Capital Investment Program funding and expert market securities. Portfolio trades at 5.1x forward earnings with 27% expert market exposure."
Cedar Creek Partners delivered 6.4% net returns in Q1 2023, underperforming the NASDAQ's 16.8% recovery but maintaining its long-term outperformance with 14.4% annualized returns since 2006 inception. The fund focuses on microcap value investing with portfolio holdings trading at extremely attractive 5.1x forward earnings and 4x earnings net of cash. Key positions include community banks Citizens Bancshares and M&F Bancorp, both Emergency Capital Investment Program recipients trading at 6-7x earnings with acquisition potential. The fund maintains 27% exposure to expert market securities including PD-Rx Pharmaceuticals, purchased below cash and receivables minus liabilities. Manager Tim Eriksen exited BM Technologies after recognizing industry misunderstanding, demonstrating disciplined risk management. Cash increased to 16% from capital inflows while continuing to add to high-conviction positions. The concentrated portfolio benefits from regulatory capital programs and defense spending tailwinds, with Solitron Devices positioned for multi-year government stockpile revenue growth.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evidenced by concentrated portfolio with detailed position sizing and basis costs disclosed. Manager names specific holdings, provides precise valuation metrics, and continues adding to positions. Clear thesis articulation for each major holding with specific earnings expectations and catalysts.
Growth Outlook
Manager expresses mild optimism about market recovery noting NASDAQ's bounce back, but focuses more on individual security selection than broad market commentary. No strong directional market views expressed.
Risk Appetite
Fund maintains concentrated positions and continues adding to high-conviction names like PDRX and ROYTL. Cash increase to 16% was driven by inflows rather than defensive positioning, and manager initiated new positions during the quarter.
Capital Deployment
Cash increased from 6% to 16% but primarily due to capital inflows rather than defensive positioning. Manager continued adding to existing positions and initiated new community bank position, indicating modest net deployment activity.
Forward Guidance
Manager states having more attractive ideas than capital and sees room for additional investment, indicating deployment bias. Expects earnings growth from bank acquisitions and defense revenue visibility from government programs.
Language Signal
Language emphasizes attractive valuations, ridiculously cheap prices, and favorable positioning, but balanced with risk acknowledgment around deposit costs and industry understanding mistakes. More opportunity-focused than risk-focused overall.
Perceived Risk
Moderate risk acknowledgment around rising deposit costs for banks and expert market liquidity constraints. Manager admits to industry misunderstanding with BMTX but frames risks as manageable rather than systemic concerns.
Opportunity Density
Manager explicitly states having more attractive ideas than capital and sees plenty of room for new investment. Portfolio metrics show abundant undervalued opportunities with businesses trading below cash and receivables minus liabilities.
Time Horizon
Multi-year investment horizon evidenced by holding through volatility, expecting bank acquisition catalysts over time, and Solitron's multi-year government contract visibility through 2028. Patient capital approach with long-term value realization expectations.
