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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Harry Qelm Baabsman 2024 Q2 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q2 2024 Letter Analysis

Harry Qelm Baabsman Quarterly Analysis

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

Fund Returns

Digest Analysis

Quick Take

"Value-focused fund down 16.53% in H1 2024 due to AI mania and clean energy oversupply. Portfolio concentrated in quality cloud, e-commerce, and renewable companies trading at deep discounts."

Executive Summary

The Steppe Eagle OEIC declined 16.53% in the first half of 2024 versus a 10.81% gain for the MSCI World Index, bringing since-inception returns to -8.51% versus +33.20% for the benchmark. The manager attributes underperformance to extreme market concentration in AI and mega-cap stocks, weakness in clean energy due to oversupply cycles, and lackluster European stock performance. The portfolio maintains concentrated positions in quality businesses including Salesforce, Signify, Zoom, and Alphabet, alongside clean energy plays like SolarEdge and Canadian Solar. The manager emphasizes that current market conditions mirror the dot-com bubble, with S&P 500 concentration reaching 30% versus 20% during the 2000 peak. Key risks include continued clean energy sector weakness and European market undervaluation. The fund expects recovery in late 2024 and strong performance in 2025 as oversupply issues resolve and market cycles normalize. The manager maintains conviction in the value investing approach, seeking businesses worth $1 for 30 cents while acknowledging prices may decline further before recovery.

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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

72%

CautiousHigh

High Conviction (72%)

High conviction evidenced by concentrated portfolio with named, sized positions including Salesforce (11.42%), Signify (8.32%), and detailed analysis of individual holdings. Manager provides specific price targets for SolarEdge ($110-150) and HelloFresh (14 EUR) with clear thesis explanations. Willingness to add on weakness and hold through volatility demonstrates strong conviction, though diversification across 16+ positions prevents maximum score.

Growth Outlook

38%

BearishBullish

Neutral (38%)

The manager expresses cautious pessimism about current market conditions, comparing them unfavorably to the dot-com bubble with even higher concentration levels. While acknowledging some recovery potential in late 2024 and 2025, the overall tone suggests markets are in an unsustainable mania phase.

Risk Appetite

15%

DefensiveAggressive

Defensive (15%)

The fund maintains concentrated positions in quality businesses and has been selectively adding to positions during declines, showing moderate risk appetite. The manager demonstrates willingness to hold through volatility while maintaining cash at 9.13% for opportunities.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

Moderate deployment activity with systematic buying on declines (every -15% for SolarEdge) and selective position building. Some profit-taking in TPI Composites (reduced by 60%) while loading up on HelloFresh during weakness. Cash level at 9.13% suggests measured deployment rather than aggressive capital allocation.

Forward Guidance

35%

CautiousExpansionary

Cautious (35%)

The manager expresses optimism about deploying capital in the current environment, having already seen improvement in July 2024. Clear expectation that 2025 will be a fruitful period with much more competitive absolute returns, showing positive deployment bias.

Language Signal

10%

BearishBullish

Bearish (10%)

Language is balanced between opportunity and risk. Positive terms like 'wonderful prices,' 'excellent exemplars,' and 'lovely payback' are offset by warnings about 'mania,' 'extreme concentration,' and 'dire' conditions. Net slightly positive due to value opportunity framing.

Perceived Risk

75%

Low RiskElevated

Elevated Risk (75%)

High perceived risk with detailed discussion of systemic threats including market concentration exceeding dot-com bubble levels, clean energy oversupply cycles, and European market dislocation. Manager explicitly warns that extreme market concentration is unlikely to be sustained and compares current conditions to historical bubble periods.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Manager sees selective opportunities in quality businesses trading at deep discounts, particularly in clean energy and European markets. While acknowledging current market difficulties, the value investing approach has identified specific opportunities with named positions and price targets, suggesting moderate opportunity density.

Time Horizon

78%

Short-TermLong-Term

Decade+ (78%)

Strong long-term orientation with explicit 'forever' holding period philosophy following Buffett's approach. Manager discusses multi-year cycles, provides 2-year price targets, and emphasizes that quarterly or yearly results are mere steps. Amazon example illustrates decade-plus investment horizon and willingness to endure significant volatility for long-term gains.