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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Langdon Global Smaller Companies 2024 Q1 Investor Letter | Buyside Digest

Back to Fund Profile (Langdon Global Smaller Companies)

Primary Source Intelligence • Q1 2024 Letter Analysis

Langdon Global Smaller Companies Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Langdon Global Smaller Companies. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+5.1%

Annualized+9.6%

Digest Analysis

Quick Take

"Led by four holdings up 30-40% but hurt by Watches of Switzerland's 50% decline. The manager doubled down on Royal Unibrew as the new top holding, viewing current valuations as attractive given temporarily depressed returns from recent acquisitions and inflation."

Executive Summary

Langdon Global Smaller Companies Portfolio returned 5.1% in Q1 2024, driven by strong performance from Topicus, Hypoport, Aritzia, and Medpace (all up 30-40%), partially offset by a 50% decline in Watches of Switzerland. The manager increased the position in Royal Unibrew, making it the top holding, based on the belief that the Danish beverage company's returns on capital are temporarily depressed due to inflation and recent acquisitions. Royal Unibrew has made 11 acquisitions in three years, spending over $900 million, while input costs increased 50%. The company trades at its lowest cash earnings multiple since 2013 despite being a fundamentally better business. Watches of Switzerland lowered guidance after weak holiday sales and unfavorable product mix, but the manager maintains conviction given the company's track record and expected mid-teens growth post-2024. The team conducted extensive field research including visits to Royal Unibrew acquisitions and Medpace facilities, reinforcing conviction in their investment approach focused on undervalued smaller companies with strong competitive positions.

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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 making Royal Unibrew the top holding after extensive research including visits to three acquired companies and meetings with management in three countries. The manager maintained positions through volatility (Watches of Switzerland) and provided specific sizing language. Named positions with clear thesis summaries and multi-year investment horizons demonstrate strong conviction.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The manager expresses cautious optimism about specific opportunities while acknowledging broader uncertainty. References to 'uncertainty in the global economy' and consumer recession risks are balanced by confidence in specific holdings and attractive valuations in quality businesses.

Risk Appetite

50%

DefensiveAggressive

Balanced (50%)

The manager increased the position in Royal Unibrew to make it the top holding and maintained conviction in Watches of Switzerland despite its 50% decline, demonstrating selective risk-taking. This shows a moderate risk appetite focused on specific opportunities rather than broad market exposure.

Capital Deployment

45%

De-riskingDeploying

Net Neutral (45%)

The manager increased the investment in Royal Unibrew to make it the top holding, representing selective deployment. However, no cash level changes were disclosed and the activity appears to be rotation rather than net new capital deployment. The increase in Royal Unibrew position suggests moderate deployment activity.

Forward Guidance

40%

CautiousExpansionary

Neutral (40%)

The manager expresses confidence in specific holdings like Royal Unibrew's multi-year value creation and Medpace's bright future, while acknowledging mistakes with Watches of Switzerland. The tone is selectively optimistic with continued deployment into high-conviction names.

Language Signal

30%

BearishBullish

Bearish (30%)

Language includes positive terms like 'attractive risk-reward,' 'unequivocally better business,' and 'bright future' balanced against risk language including 'uncertainty,' 'mistakes,' and 'weak' performance. The net balance is mildly positive but measured.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

The manager acknowledges 'uncertainty in the global economy' and potential for consumer-led recession, while also discussing specific company risks like Watches of Switzerland's guidance cut. Risk discussion is present but not central to the letter, with risks balanced against opportunities.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

The manager identifies selective opportunities including Royal Unibrew trading at lowest multiples since 2013 and Watches of Switzerland at attractive valuations. References to finding new investment ideas during travel and maintaining conviction in existing holdings suggest a moderately rich opportunity set in specific areas.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The manager discusses multi-year value creation for Royal Unibrew ('years to come'), long-term competitive advantages, and maintaining positions through short-term volatility. The investment approach focuses on fundamental business quality over multiple years rather than near-term catalysts, indicating a long-term orientation.