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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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"Zelikovic Investments returned 12.24% in 2024 matching the S&P 500 without owning any Magnificent Seven stocks. The fund focuses on global small/micro cap value investing with significant insurance and asset management exposure."
Zelikovic Investments delivered 12.24% returns in 2024 for their Ayalon Global Stocks fund, matching S&P 500 performance despite having no exposure to the Magnificent Seven stocks. The fund focuses on small/micro cap shares globally with the Russell 2000 as closest benchmark. Manager Yoav Zelikovic emphasizes value investing principles: purchasing financially robust companies at attractive prices while avoiding popular expensive stocks, investing globally including outside Israel and the U.S., and maintaining 100% stock allocation without market timing. The portfolio is divided between compounder stocks for buy-and-hold and micro-cap value stocks rebalanced monthly. Key holdings include insurance companies like Fairfax Financial and asset managers like KKR and Brookfield Corporation. Zelikovic expects small caps to resume leadership after eight consecutive years of underperformance versus large caps, citing historical patterns. The manager avoids the Magnificent Seven due to elevated valuations, instead focusing on international equities and smaller companies where he believes the greatest long-term opportunities exist. Portfolio companies trade at lower multiples with higher expected earnings growth than the S&P 500.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evidenced by concentrated strategy avoiding entire Magnificent Seven despite their market dominance, specific position sizing language including largest holdings, and willingness to increase positions during declines. Manager names specific holdings with detailed thesis explanations and expresses intent to hold for many years, demonstrating strong conviction in selected positions despite market volatility.
Growth Outlook
Manager is cautiously optimistic about long-term prospects but expresses significant concerns about current U.S. market valuations. While believing markets will overcome current challenges and continue long-term upward trends, he warns that elevated P/E multiples will lead to disappointing future returns for U.S. investors.
Risk Appetite
Portfolio maintains 100% stock allocation and manager increased positions in several holdings including IAC and KKR during market declines. However, positioning is defensive relative to popular markets, avoiding Magnificent Seven entirely and focusing on undervalued small caps and international equities rather than momentum plays.
Capital Deployment
Manager increased positions in several holdings including IAC, KKR, and Atkore during market declines, and utilized KKR's early 2025 decline to purchase more shares. However, no specific cash level changes are mentioned and deployment appears selective rather than broad-based, suggesting moderate rather than aggressive deployment activity.
Forward Guidance
Manager expresses clear intent to continue current strategy and hold positions for many years, with selective adding during declines. However, guidance emphasizes patience and waiting for small cap leadership to resume rather than aggressive deployment into current market conditions.
Language Signal
Language is dominated by risk warnings about elevated valuations, bubble dynamics in Magnificent Seven, and expectations of significant losses for U.S. investors. While opportunities are mentioned in small caps and international markets, the overall tone emphasizes caution and risk awareness more than bullish opportunity.
Perceived Risk
Manager extensively discusses multiple systemic risks including elevated P/E multiples at 22x versus historical 16.4x average, bubble dynamics in Magnificent Seven, and warns that U.S. investors will suffer significant losses when multiples revert. Additional concerns about tariff impacts and market concentration risks are detailed throughout the letter.
Opportunity Density
Manager sees selective opportunities in specific areas including small caps after eight years of underperformance, international equities trading at discounts to U.S. markets, and quality insurance companies benefiting from interest rate environment. However, characterizes current environment as requiring patience and selectivity rather than broad opportunity abundance.
Time Horizon
Manager explicitly emphasizes long-term approach with intent to hold compounders for many years, references to buy-and-hold strategy even when stocks become pricey, and focus on companies that can compound over time. Strategy is designed for partners seeking long-term results rather than short-term performance, with patience being described as gold.
