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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Buckley Capital's small-cap value strategy delivered exceptional Q2 performance driven by the Neogames acquisition at 120% premium. The fund targets undervalued companies with recurring revenues and organic growth, currently underwriting 30% IRR over five years."
Buckley Capital delivered strong Q2 2023 performance with the fund up 11.4% for the quarter and 27.4% year-to-date, significantly outpacing small-cap benchmarks. The standout performer was Neogames, the fund's second-largest position, which was acquired by Aristocrat at a 120% premium to Buckley's purchase price. Neogames dominated the North American iLottery market with 67% market share and benefited from the projected 30%+ CAGR growth in the sector. Other key holdings include Griffon, whose building products business showed sustained profitability improvements with EBITDA 90% higher than 2021 levels, and Marlowe, a UK-based testing and compliance business trading at significant discount to fair value. The portfolio faced headwinds from Dentalcorp and Xponential Fitness, though both remain attractive long-term opportunities. Buckley is underwriting a 30% IRR over the next five years, confident in their process of identifying undervalued small-cap companies with recurring revenue models and strong organic growth potential.
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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 evidenced by concentrated portfolio with named, sized positions including 'second largest position' in Neogames. Manager provides specific IRR targets (30% over 5 years), detailed valuation analysis for each holding, and willingness to hold through volatility. Clear thesis articulation with specific catalysts and timeframes demonstrates strong conviction.
Growth Outlook
The manager expresses strong optimism about the portfolio prospects, underwriting a 30% IRR over the next 5 years and stating excitement about opportunities. The successful Neogames acquisition validates their thesis and they see continued strong outperformance ahead.
Risk Appetite
The fund maintains concentrated positions in small-cap value names with clear conviction. They are willing to hold through volatility as evidenced by maintaining positions in Dentalcorp and Xponential despite recent challenges, showing moderate risk appetite.
Capital Deployment
No explicit cash level changes mentioned. The letter describes maintaining existing positions and conducting due diligence rather than aggressive new deployment. The Neogames position was exited via acquisition, but no indication of how proceeds were redeployed.
Forward Guidance
The manager is actively deploying capital with confidence, underwriting specific IRR targets and maintaining positions despite short-term headwinds. They express clear intent to continue generating strong outperformance through their repeatable process.
Language Signal
Language is overwhelmingly positive with terms like 'very excited', 'attractive', 'strong outperformance', 'significant upside', and 'validates our analysis'. Risk language is minimal and mostly related to external financing conditions rather than portfolio concerns.
Perceived Risk
Moderate risk acknowledgment focused primarily on external financing market conditions affecting M&A activity. Manager notes difficult financing environment but frames this as temporary. Individual position risks are acknowledged but not emphasized as systemic concerns.
Opportunity Density
Manager sees abundant opportunities in small-cap value space, maintaining multiple attractive positions and expressing confidence in finding undervalued companies with strong fundamentals. The successful Neogames exit validates their ability to identify mispriced assets.
Time Horizon
Multi-year investment horizon evidenced by 5-year IRR underwriting and willingness to hold through short-term volatility. Manager discusses 3-5 year value realization timeframes for holdings like Griffon and focuses on long-term business fundamentals rather than near-term catalysts.
