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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Recurve declined 8.0% in March amid Iran war-driven oil supply shocks, bringing YTD performance to -18.2%. Manager made no trades, holding concentrated positions led by 47.7% Carvana allocation."
Recurve Capital experienced a challenging March 2026, declining 8.0% net versus 5.1% for the S&P 500, bringing year-to-date performance to -18.2% net. The Iran war created supply shocks affecting up to 20% of global oil volume through the Strait of Hormuz, driving stagflation fears across markets. Manager Aaron Chan made no portfolio changes during the month, refusing to sell positions in drawdowns to buy others similarly affected. The fund maintains a concentrated portfolio led by Carvana at 47.7%, which continues growing 40% year-over-year despite trading at attractive 20x 2026 EBITDA multiples. Chan expects the geopolitical crisis to create only transitory cost pressures rather than permanent earnings damage. The portfolio targets companies with competitive advantages, strong operating leverage, and differentiated business models capable of growth regardless of macro conditions. Market volatility has increased significantly, with 20-30% monthly stock moves becoming common, attributed to levered hedge fund activity magnifying price swings while containing index-level volatility.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The manager displays extraordinary conviction, maintaining highly concentrated positions with Carvana representing an incredibly large 47.7% allocation of the fund. He explicitly rejects the idea of selling during deep drawdowns, emphasizing a long-term approach and an absolute refusal to engage in panic selling, which is supported by declarative, unhedged language.
Growth Outlook
The manager's outlook is neutral to balanced. While he expects the direct impacts of the geopolitical conflict in Iran to be transitory rather than permanent, he clearly acknowledges headwind risks such as downstream demand destruction, widespread inflationary pressures, and consumer affordability concerns.
Risk Appetite
The fund sustains a high risk appetite, maintaining massive, concentrated exposure to single-stock volatility. The manager is highly tolerant of significant drawdowns, preferring to accept intermediate capital declines rather than de-risking and potentially missing out on sharp multi-year upward moves.
Capital Deployment
Capital deployment is neutral as the manager explicitly states that the fund executed zero trades during the month of March 2026. Cash levels are stable, and the existing portfolio composition remained unchanged.
Forward Guidance
The manager demonstrates a neutral action bias, choosing to keep existing positions completely steady. He explicitly outlines a low-turnover philosophy and a refusal to adjust the portfolio on a day-to-day basis in response to changing news cycles.
Language Signal
The language is slightly positive, driven by strong expressions of optimism regarding core holdings ('happy owner', 'attractive valuations', 'significant appreciation potential'). However, this is balanced by extensive discussions of macro risks like 'stagflation', 'drawdowns', and 'affordability shocks'.
Perceived Risk
The manager highlights meaningful macroeconomic risks, including potential stagflation, energy supply shocks at the Strait of Hormuz, and broader consumer demand destruction. While he downplays long-term structural war impacts, he remains highly sensitive to secondary inflationary threats.
Opportunity Density
The manager notes that 20-30% monthly stock movements driven by levered hedge funds create strong opportunities when stocks overshoot. However, he is highly selective, focusing on holding current positions and evaluating opportunities relative to existing concentrated assets.
Time Horizon
The fund operates with an explicit multi-year investment horizon. The manager is comfortable tolerating steep double-digit drawdowns over months to capture expected 50%+ returns over a multi-year timeframe, showing high patience.
