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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Farrer 36 Asset Management 2024 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Farrer 36 Asset Management)

Primary Source Intelligence • Q3 2024 Letter Analysis

Farrer 36 Asset Management Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Farrer 36 Asset Management. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Annualized-14.31%

Digest Analysis

Quick Take

"Brazilian retailer Assaí disappointed amid rate hikes but thesis remains intact. Portfolio trades cheaper than benchmarks while growing 2.5x faster, positioning for value realization as manager senses turning point ahead."

Executive Summary

Farrer Wealth Managed Solution posted 5.25% returns in USD terms during Q1 FY2025, with 70% of portfolio positions generating positive returns. The concentrated 11-position portfolio focuses on three investment buckets: offline-to-online transitions, resilient offline stalwarts, and toll-taking businesses. Sea Limited led performance with 132% gains as all business segments returned to growth with benign competition. Assaí disappointed with 55% decline due to Brazilian rate hikes, competitive pressures, and currency headwinds, though the manager maintains conviction in 20%+ EPS growth potential. The portfolio trades cheaper than benchmarks while growing 2.5x faster, suggesting valuation gaps should close. Manager allocated spare cash to existing positions rather than adding new names, seeking to reach minimum 12-position target. Despite recent challenges, the manager senses a portfolio turning point and expects solid returns as value unlocks over coming quarters, supported by improving fundamentals across holdings.

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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%)

Manager runs concentrated 11-position portfolio with named holdings and specific performance attribution. Maintains conviction in Assaí despite 55% decline, provides detailed thesis defense, and commits to adding 12th position. Clear position sizing and willingness to hold through volatility demonstrate high conviction, though diversification across 11+ names prevents extreme conviction score.

Growth Outlook

25%

BearishBullish

Bearish (25%)

Manager expresses cautious optimism about portfolio turning point and expects solid returns over next several quarters, but acknowledges road to recovery will not be smooth. Positive on specific holdings but measured in overall market outlook.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

Portfolio remains fully invested with manager allocating spare cash to existing positions rather than raising cash. Maintains concentrated 11-position portfolio and actively seeking 12th position, showing continued risk appetite despite recent challenges.

Capital Deployment

15%

De-riskingDeploying

De-risking (15%)

Manager allocated spare cash to existing positions during quarter and added one new position after quarter end. No cash level changes mentioned but selective deployment to current holdings and commitment to add 12th position indicates modest deployment activity.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

Manager plans to add new positions over next few months and expects value unlocking in coming quarters. Guidance is constructive but tempered by acknowledgment that recovery path will not be smooth.

Language Signal

20%

BearishBullish

Bearish (20%)

Language balances opportunity terms like 'value unlocking' and 'turning point' with risk acknowledgments including 'disappointing' performance and 'trying few years.' Slightly more constructive than cautious overall.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

Manager acknowledges specific risks including Brazilian rate environment, currency volatility, and competitive pressures. Discusses disappointing Assaí performance and admits road to recovery will not be smooth. Moderate risk awareness without systemic concerns.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

Manager sees selective opportunities, actively seeking 12th position and expects to make new additions over next few months. Portfolio bucket framework provides multiple areas for expansion including QSR chains and digital banks, suggesting reasonable opportunity set.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Manager emphasizes long-term approach with multi-year EPS compounding expectations for Assaí and willingness to hold Sea through 90% drawdown to breakeven. Investment strategy focuses on businesses that outperform over time rather than near-term catalysts, indicating patient capital approach.