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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Farrer 36 Asset Management 2023 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Farrer 36 Asset Management)

Primary Source Intelligence • Q3 2023 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

QTD-11.29%

Annualized-46.87%

Positioning StanceConstructive

GeographyGlobal

Digest Analysis

Quick Take

"Manager added to Sea and Adyen on weakness while initiating Digital Bridge position."

Executive Summary

Farrer Wealth's Managed Solution returned -11.29% in Q1 FY2024 versus benchmark -2.77%, bringing since-inception returns to -46.87%. The drawdown was primarily driven by weakness in core positions Evolution, IAC, and Sendas Distribuidora despite strong underlying fundamentals. Evolution posted 28.2% revenue growth and 70%+ EBITDA margins but faces RNG business challenges and North American growth slowdown. IAC continues smart capital allocation through buybacks while trading at 8x EBITDA. Sea experienced 46% decline but competitive dynamics improved with TikTok Shop bans. The manager initiated Digital Bridge position, viewing it as mispriced alternative asset manager focused on digital infrastructure benefiting from AI boom. TaskUs and Spotify were sold due to deteriorating fundamentals. Portfolio now trades cheaper than market with faster expected growth, with fair value estimated 114% above current levels. Multiple catalysts expected over next 6-9 months including share buybacks, improved profitability, and regulatory developments in online gambling.

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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 demonstrates high conviction through detailed fundamental analysis of each position, adding to positions during weakness, and providing specific valuation targets. Portfolio concentrated at 12-20 positions with clear thesis for each holding and willingness to increase exposure on drawdowns.

Growth Outlook

25%

BearishBullish

Bearish (25%)

Manager acknowledges tough quarter and market weakness but expresses optimism about clearing horizon and upcoming catalysts. Describes portfolio as trading cheaper than market with faster growth prospects, suggesting constructive but cautious outlook.

Risk Appetite

40%

DefensiveAggressive

Defensive (40%)

Manager actively added to positions during drawdowns (Sea, Adyen) and initiated new position (Digital Bridge) while maintaining conviction in core holdings. Selective risk-taking behavior with position sizing discipline evident.

Capital Deployment

35%

De-riskingDeploying

Net Neutral (35%)

Manager added to Sea and Adyen positions during quarter and initiated new Digital Bridge position while exiting TaskUs and Spotify. Net deployment activity with selective additions to existing positions and new position initiation.

Forward Guidance

50%

CautiousExpansionary

Neutral (50%)

Manager explicitly states expectation for multiple catalyst events over next 6-9 months and describes horizon as 'much clearer.' Actively positioning for value realization with specific timeline expectations for portfolio recovery.

Language Signal

30%

BearishBullish

Bearish (30%)

Balanced language with acknowledgment of frustrating performance but emphasis on attractive valuations, catalyst events, and portfolio quality improvements. More constructive than bearish overall with focus on opportunities.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

Manager acknowledges market weakness, competition risks in payments and e-commerce, and AI threats to BPO industry. Moderate risk awareness with specific industry and competitive concerns identified but not systemic alarm.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Manager identifies attractive opportunities in digital infrastructure, sees value in beaten-down positions, and describes portfolio trading at significant discount to fair value. Selective but meaningful opportunity set with specific sectors and situations highlighted.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

Manager explicitly states 3-5 year timeframe for value realization and emphasizes long-term investing approach. Willing to hold through short-term volatility with multi-year thesis for each position, though some catalysts expected within 6-9 months.