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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Saga Portfolio rebounded 117% in H1 2023 after 85% decline in 2022, validating concentrated secular trend investing approach. Manager targets companies in transitional innovation phases where winners emerge but face uncertainty."
The Saga Portfolio returned 117.3% net in H1 2023, recovering from the 84.9% decline in 2022. Manager Joe Frankenfield maintains a concentrated approach with seven to eight stocks, primarily focused on secular trend investing he calls 'surfing.' The strategy targets companies in the transitional phase of innovation cycles, where winners have emerged but face market uncertainty about future economics. Key holding Roku exemplifies this approach, positioned to benefit as the streaming TV industry consolidates around operating system aggregators rather than content suppliers. The portfolio experienced extreme volatility with some stocks falling 90%, testing conviction but ultimately validating the long-term approach. Frankenfield acknowledges that avoiding future drawdowns through diversification or market timing would limit upside potential. The investment philosophy focuses on identifying companies with durable competitive advantages and long runways, holding through volatility as businesses execute and prove their worth. Future opportunities may emerge in AI and blockchain, but these remain in early fluid phases with uncertain winners.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Extremely high conviction demonstrated through concentrated portfolio of seven to eight stocks with no changes despite 90% drawdowns in some positions. Manager provides detailed analysis of specific holdings like Roku and Apple, explains willingness to hold through volatility, and articulates clear long-term investment philosophy with specific examples and timeframes.
Growth Outlook
Manager expresses constructive optimism about long-term secular trends and innovation cycles, particularly in streaming TV where winners have emerged. While acknowledging market volatility and uncertainty, the outlook focuses on attractive long-term opportunities rather than near-term market concerns.
Risk Appetite
Portfolio maintains concentrated positioning in seven to eight stocks with no changes during the period despite significant volatility. Manager explicitly states preference for maintaining current approach over diversification or defensive positioning, demonstrating high risk appetite for long-term gains.
Capital Deployment
No capital deployment activity reported during the period. Manager states there were no significant changes or new companies added to the portfolio, indicating neutral deployment stance with capital remaining fully invested in existing positions.
Forward Guidance
Manager indicates intention to continue current concentrated approach and secular trend investing strategy. While not explicitly deploying new capital, expresses willingness to add positions if equally attractive opportunities emerge, showing measured but positive deployment bias.
Language Signal
Language balances opportunity-focused terms like 'attractive,' 'mispriced,' and 'long runways' with risk acknowledgment including 'volatility,' 'uncertainty,' and 'drawdowns.' The tone is more analytical than directionally bullish, with significant discussion of both upside potential and downside risks.
Perceived Risk
Manager extensively discusses volatility risks, acknowledging stocks can fall 90% and multiple positions can decline simultaneously. Detailed analysis of drawdown risks, market timing challenges, and the inherent uncertainty in picking long-term winners, while noting that half of public companies get delisted within 10 years.
Opportunity Density
Manager indicates limited new opportunities, stating that when considering current holding prices, few other opportunities look nearly as attractive. Emphasizes the difficulty of finding very attractive opportunities and the extensive research required to understand companies, suggesting a selective and somewhat sparse opportunity environment.
Time Horizon
Explicitly long-term approach with manager stating he buys stocks as if forced to own them for at least 10 years. Discusses holding through multi-year periods of underperformance, references decade-plus investment horizons, and compares thinking about selling at purchase to thinking about divorce on wedding day, indicating very long-term patience.
