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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Hosking Partners 2023 Q1 Investor Letter | Buyside Digest

Back to Fund Profile (Hosking Partners)

Primary Source Intelligence • Q1 2023 Letter Analysis

Hosking Partners Quarterly Analysis

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

Fund Returns

Positioning StanceConstructive

GeographyGlobal, US, Emerging markets

Digest Analysis

Quick Take

"Hosking Partners' Q1 underperformance stemmed from banking crisis rotation favoring growth over value. Key catalysts emerging: Japan's TSE mandating corporate value creation and Sri Lanka's IMF-backed recovery."

Executive Summary

Hosking Partners experienced disappointing Q1 2023 underperformance primarily due to March banking crisis involving Silicon Valley Bank and Credit Suisse, combined with unfavorable sector rotation. The portfolio's overweight to Financials and underweight to Information Technology produced over 100% of relative underperformance as markets favored growth stocks over cyclical value names. However, the manager sees encouraging developments in key portfolio bets. Japan's Tokyo Stock Exchange has mandated that companies trading below book value provide revaluation plans, creating a catalyst for value outperformance through share buybacks. In emerging markets, they added Sri Lanka exposure following IMF stabilization agreements, positioning for multi-year tourism-led recovery. The manager questions market consensus on three fronts: central bank competence, inevitability of lower rates, and recession probability. They argue inflation may remain elevated, rates could continue rising, and economies may prove resilient. Despite Q1 setbacks, they maintain confidence in their diversified portfolio of undervalued securities, expecting to recover performance as banking concerns subside and their long-term thesis plays out.

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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

68%

CautiousHigh

Moderate (68%)

The manager demonstrates moderate-high conviction through their willingness to maintain positioning despite underperformance, specific thesis on Japan's TSE catalyst, and addition of Sri Lanka exposure. They articulate clear views contrary to market consensus and maintain confidence in their diversified value approach, though they don't name specific individual positions or provide detailed sizing.

Growth Outlook

38%

BearishBullish

Neutral (38%)

The manager expresses cautious skepticism about market consensus, questioning three key market convictions (central bank competence, lower rates, recession probability). While not entirely bearish, they highlight significant uncertainty and potential for market disappointment, suggesting a mildly negative market outlook.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

Despite Q1 underperformance, the manager maintains their positioning and added exposure to Sri Lanka. They express confidence in their diversified portfolio and show willingness to hold through volatility with their ten-year average holding period, indicating moderate risk appetite.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

The manager made additions to Sri Lanka exposure during the quarter and has been making purchases in Japan over the last 12 months. However, no specific cash level changes are mentioned, and the activity appears selective rather than aggressive deployment, indicating modest net deployment activity.

Forward Guidance

50%

CautiousExpansionary

Neutral (50%)

The manager expects their portfolio to more than recover Q1 losses and sees encouraging signs in Japan and emerging markets. They maintain conviction in their approach while acknowledging near-term uncertainty, showing selective optimism about future deployment and performance.

Language Signal

10%

BearishBullish

Bearish (10%)

Language is mixed with both opportunity-focused terms (attractive, undervalued, encouraging signs, clarion call) and risk-focused language (crisis, underperformance, uncertainty, painful). The balance slightly favors neutral to mildly positive directional language despite acknowledging significant challenges.

Perceived Risk

75%

Low RiskElevated

Elevated Risk (75%)

The manager explicitly discusses high uncertainty levels, banking crisis risks, potential for further banking accidents, and questions about whether current issues are systemic. They identify multiple macro risks including policy tightening effects and inflation persistence, demonstrating high awareness of environmental risks.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

The manager sees specific opportunities in Japan due to TSE reforms and in emerging markets like Sri Lanka, while maintaining confidence in their diversified portfolio of undervalued securities. They describe being on the lookout for extended runway opportunities, suggesting a moderately rich opportunity set in their focus areas.

Time Horizon

80%

Short-TermLong-Term

Decade+ (80%)

The manager explicitly states they have a ten-year average holding period and are always looking for investment opportunities with extended runway but high potential payoffs. They reference their experience navigating the TMT bubble and express willingness to hold through volatility, indicating a long-term investment horizon.