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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Tactile Fund targets global small-cap companies with extraordinary physical assets and permanent competitive advantages. The strategy focuses on essential materials, agricultural processing, and trophy leisure assets across developed markets."
Tactile Fund launched in January 2025 with a strategy focused on owning global companies with extraordinary physical assets. The fund returned 0.7% net in Q1 versus -4.8% for the MSCI World Small+MicroCap benchmark, benefiting from high cash balances during gradual deployment and strong performance in an adverse environment. The strategy targets providers of essential materials and services with permanent advantages like cost position, quality, geographic proximity, or barriers to entry. Key themes include agricultural land and processing assets, building materials like cement operating in stable oligopolies, and trophy leisure assets backed by solid cash flows. The portfolio spans 20+ countries with 52.5% in top 20 holdings including cement, food processing, luxury resorts, and infrastructure companies. A notable development was the buyout of Svitzer Group for a 35% gain, though the manager preferred long-term ownership. The investment approach emphasizes extremely low turnover and multi-decade holding periods to capture steady value accumulation rather than short-term catalysts.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The manager demonstrates very high conviction in the core thesis of owning physical assets with permanent advantages. Strong conviction is evident in the concentrated portfolio (top 20 holdings at 52.5%), explicit preference for decades-long holding periods, and clear articulation of investment themes. The manager shows unwavering belief in the long-term value creation potential despite short-term market volatility.
Growth Outlook
The manager expresses cautious optimism about the long-term opportunity set for physical asset investing, noting that concerns about dollar sustainability and persistent inflation create a favorable environment for their strategy. However, the outlook is tempered by acknowledgment of current market pessimism and uncertainty about whether macro concerns represent temporary worries or fundamental shifts.
Risk Appetite
The fund is gradually deploying capital with high average cash balances, indicating measured risk-taking rather than aggressive deployment. The manager expresses satisfaction with performance in adverse conditions and confidence in the positioning, but maintains a disciplined approach to capital allocation rather than rushing to deploy.
Capital Deployment
The fund is in moderate deployment mode, gradually putting capital to work from high cash balances. The manager notes they are 'gradually put our capital to work' and attributes some Q1 performance to high average cash balance, indicating measured rather than aggressive deployment. No specific cash level changes are provided, but the language suggests steady, disciplined deployment.
Forward Guidance
The manager provides clear forward guidance about continuing to invest in companies with extraordinary physical assets and maintaining extremely low turnover. There's explicit confidence about agricultural productivity trends and value accrual to asset owners, with stated preference for long-term ownership over short-term gains.
Language Signal
Language is generally positive about the strategy and holdings, with terms like 'extraordinary physical assets,' 'superior performance,' and 'strong case for investing.' However, the tone is measured and professional rather than enthusiastic, with acknowledgment of market challenges and uncertainty about macro developments.
Perceived Risk
The manager acknowledges moderate risks including potential dollar debasement, persistent inflation, and the possibility that holdings may be acquired against their will due to asset quality. However, these are viewed more as structural challenges to navigate rather than acute threats, and the manager expresses confidence in the strategy's resilience during adverse market conditions.
Opportunity Density
The manager sees good opportunity density in the physical assets space, having already invested across 20+ countries in diverse industries from cement to luxury resorts. The ability to find attractive investments globally across multiple sectors suggests a reasonably rich opportunity set, though the focus on companies with 'extraordinary' assets implies selectivity.
Time Horizon
The strategy explicitly emphasizes multi-decade investment horizons, with the manager stating preference to own companies 'for decades' and noting that value accumulation has been ongoing 'for decades or even centuries' at many holdings. The extremely low turnover approach and focus on long-term asset value creation rather than short-term catalysts indicates maximum patience in capital deployment.
