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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Pelican Bay Capital Management 2024 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Pelican Bay Capital Management)

Primary Source Intelligence • Q3 2024 Letter Analysis

Pelican Bay Capital Management Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Pelican Bay Capital Management. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+11.8%

Annualized+8.8%

Digest Analysis

Quick Take

"The manager actively repositioned the portfolio, trimming energy exposure while adding to technology and initiating oil services exposure through Schlumberger. Strong stock selection and tactical positioning drove outperformance in an improving value environment."

Executive Summary

Pelican Bay's Concentrated Value portfolio delivered strong Q3 2024 performance, rising 11.8% as value stocks surged and market breadth improved. The portfolio benefited from homebuilder rebounds as interest rates declined, with Builders FirstSource and Toll Brothers contributing 3.8% to gains as two of the largest holdings. The manager trimmed US shale oil positions early in the quarter, mitigating subsequent declines from falling oil prices. Portfolio activity included adding to Cisco and Ulta on weakness, increasing Alphabet exposure, and exiting Altria and CVS due to deteriorating fundamentals. A new position was initiated in Schlumberger to capitalize on expected upstream oil spending increases. The fund maintains its disciplined value approach, seeking high-quality companies with competitive advantages trading at significant discounts to intrinsic value. Management expresses optimism about closing the performance gap to benchmarks by year-end, potentially marking the fourth consecutive year of positive alpha generation.

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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

78%

CautiousHigh

High Conviction (78%)

High conviction evidenced by concentrated portfolio approach with named largest holdings, specific position sizing decisions (300 basis points reduction), explicit entry prices ($43 for SLB), and detailed intrinsic value estimates ($50-96 for SLB, $32-50 for Altria). Manager demonstrates strong conviction through active portfolio management and specific investment theses.

Growth Outlook

50%

BearishBullish

Neutral (50%)

The manager expresses optimism about value stocks and market breadth improvement, noting the waning dominance of Magnificent Seven stocks. However, this is balanced with tactical positioning and selective approach rather than broad market enthusiasm.

Risk Appetite

25%

DefensiveAggressive

Defensive (25%)

Portfolio positioning shows moderate risk appetite with active trimming of energy positions while selectively adding to other areas. The concentrated approach and willingness to exit positions shows measured risk management rather than aggressive deployment.

Capital Deployment

10%

De-riskingDeploying

De-risking (10%)

Portfolio activity shows rotation rather than net deployment - trimming energy positions while adding to technology and initiating oil services. Exiting two positions while adding one new position suggests capital rotation rather than significant net deployment or de-risking.

Forward Guidance

40%

CautiousExpansionary

Neutral (40%)

Manager expresses optimism about closing performance gap by year-end and continuing alpha generation, but maintains disciplined approach to position sizing and stock selection. Forward guidance is constructive but measured.

Language Signal

35%

BearishBullish

Bearish (35%)

Language includes positive terms like 'optimistic,' 'strong performance,' and 'rebounded significantly,' but is balanced with risk management language around trimming positions and exiting holdings. Net positive but measured tone.

Perceived Risk

25%

Low RiskElevated

Low Risk (25%)

Manager acknowledges specific risks around antitrust cases for Capri Holdings and AI threats to Google's search monopoly, but these are company-specific rather than systemic concerns. Limited discussion of broader market or economic risks.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Manager identifies selective opportunities, initiating new position in Schlumberger and adding to existing holdings when prices dipped. The value environment is described as improving with better market breadth, suggesting reasonable opportunity set within their focused approach.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

Investment philosophy emphasizes long-term value realization with focus on durable competitive advantages and intrinsic value. Manager notes that legal proceedings for Alphabet will take years to materialize, indicating multi-year investment horizon typical of value investing approach.