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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Farrer 36 Asset Management 2024 Q1 Investor Letter | Buyside Digest

Back to Fund Profile (Farrer 36 Asset Management)

Primary Source Intelligence • Q1 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

"Farrer Wealth underperformed in Q3 due to missing AI rallies but successfully rotated from Blackstone to Apollo Global Management. The portfolio focuses on predictable cash flow businesses, particularly asset managers."

Executive Summary

Farrer Wealth's Managed Solution posted positive returns in Q3 FY2024 but underperformed the benchmark due to missing AI-driven rallies in mega-cap technology stocks. The portfolio maintains selective AI exposure through Alphabet and Digital Bridge holdings. The manager executed a successful exit from Blackstone, realizing a 33% IRR, and redeployed capital into Apollo Global Management, attracted by its differentiated private credit strategy and steady capital inflows through retirement services. The portfolio increasingly focuses on businesses with predictable cash flows, including asset managers and subscription models like eDreams. Basic-Fit faced headwinds from leverage concerns and membership growth challenges, particularly in France. Despite slow recovery from the FY22 drawdown, the manager remains confident in the portfolio's fundamentals, citing strong earnings across holdings and over 90% upside potential against CY25 targets. The portfolio trades at cheaper valuations than the benchmark while growing revenues faster, positioning for eventual relative outperformance as value realization materializes over the 3-5 year investment horizon.

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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%)

The manager demonstrates high conviction through concentrated positioning (12-20 positions), detailed analysis of individual holdings like Apollo, and specific return targets. The willingness to make significant rotations like the Blackstone-to-Apollo trade and detailed fundamental analysis of each position indicates strong conviction in the investment process.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The manager acknowledges challenging market conditions with AI-fueled rallies being difficult to compete with, but maintains a constructive view on the portfolio's prospects. References to strong earnings seasons and eventual value realization suggest mild optimism despite near-term headwinds.

Risk Appetite

15%

DefensiveAggressive

Defensive (15%)

The portfolio maintains selective positioning with some rotation from Blackstone to Apollo, but the manager expresses caution about adding capital to certain positions like Basic-Fit. The approach is measured rather than aggressive, with careful position sizing decisions.

Capital Deployment

5%

De-riskingDeploying

De-risking (5%)

The quarter involved capital rotation from Blackstone to Apollo rather than net deployment. The manager mentions being cautious about adding to Basic-Fit and waiting for better conditions on some positions. This represents neutral activity with slight rotation rather than aggressive deployment or de-risking.

Forward Guidance

35%

CautiousExpansionary

Cautious (35%)

The manager expresses confidence in eventual value realization and mentions over 90% upside potential in the portfolio. While not providing specific deployment plans, the tone suggests selective optimism about adding to positions when conditions are right.

Language Signal

20%

BearishBullish

Bearish (20%)

Language is balanced with some positive terms like 'excellent financials' and 'strong numbers' but also acknowledges challenges like 'excruciatingly slow' recovery and competitive pressures. Overall slightly more constructive than cautious.

Perceived Risk

25%

Low RiskElevated

Low Risk (25%)

Risk discussion is limited to specific company-level concerns like Basic-Fit's leverage and membership issues. The manager acknowledges competitive pressures from AI rallies but doesn't express broader systemic concerns. Risk perception appears moderate and company-specific rather than macro-focused.

Opportunity Density

45%

ScarceAbundant

Selective (45%)

The manager identifies specific opportunities like Apollo and maintains conviction in existing holdings, but also notes the challenge of competing with AI momentum. The approach suggests selective opportunities rather than abundant choices, requiring patience and careful selection.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

The manager explicitly references a 3-5 year investment horizon and mentions that Basic-Fit is a '2025 onward story.' The emphasis on long-term value realization, patience through volatility, and multi-year thesis development indicates a genuinely long-term approach with specific timeframes for value realization.