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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Moerus Worldwide Value Fund delivered strong 2024 performance by capitalizing on distressed opportunities in Argentina and Turkey while avoiding overvalued U.S. mega-cap tech stocks. The unconstrained global approach enabled investments in quality businesses at exceptional valuations during periods of macro chaos, with early economic improvements driving significant outperformance versus international benchmarks."
The Moerus Worldwide Value Fund returned 15.97% in 2024, significantly outperforming its international benchmark (MSCI ACWI ex USA) by over 10 percentage points, though lagging the U.S.-heavy MSCI ACWI due to avoiding mega-cap technology stocks on valuation grounds. The Fund's strong performance was driven primarily by investments in Argentina and Turkey, where macro distress created opportunities to acquire quality businesses at exceptional valuations. Three Argentine holdings - Grupo Financiero Galicia, Despegar.com, and Banco Macro - were among the top five contributors, benefiting from early signs of economic improvement under the Milei administration. Turkish insurer Türkiye Sigorta also contributed significantly as economic policies normalized. The manager initiated new positions in Hong Kong-listed companies, taking advantage of investor exodus from the region. Brazil was the primary detractor due to political concerns and currency weakness. Looking forward, the manager believes the Fund is well-positioned for increased market volatility, with fewer competitors seeking deep value opportunities and continued potential for corporate activity-driven value creation.
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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 positions in specific themes and geographies, with detailed investment cases for individual holdings. The manager provides specific position sizing information, names key holdings, and explains willingness to invest in distressed markets. Clear thesis articulation and specific catalyst identification support high conviction, though diversified portfolio prevents maximum score.
Growth Outlook
The manager expresses cautious optimism about specific opportunities while acknowledging broader market challenges. They see rich valuations in certain pockets (U.S. tech) but identify attractive opportunities elsewhere, particularly in distressed markets. The outlook is constructive but measured, with emphasis on selectivity rather than broad market enthusiasm.
Risk Appetite
The Fund maintains a selective risk-on approach, actively deploying capital into specific opportunities like Argentina and Hong Kong while avoiding overvalued areas. The manager demonstrates willingness to take concentrated positions in distressed markets but emphasizes risk mitigation and margin of safety, indicating balanced risk appetite.
Capital Deployment
Moderate deployment activity with new positions initiated in Hong Kong, Anglo American, and other opportunities, while also eliminating positions through corporate activity and valuation concerns. The manager describes active portfolio management with both additions and sales, indicating selective deployment rather than aggressive cash deployment or significant de-risking.
Forward Guidance
The manager expresses selective deployment bias, continuing to find attractive opportunities in specific markets and themes. However, they emphasize patience and selectivity rather than aggressive deployment, with focus on long-term value creation rather than near-term market timing.
Language Signal
Language is predominantly cautious with selective optimism. The manager frequently discusses risks, volatility, and challenging market conditions while identifying specific opportunities. Risk-related language (volatility, uncertainty, challenging) outweighs bullish language, though specific investment cases are described positively.
Perceived Risk
High perceived risk with detailed discussion of systemic risks including geopolitical conflicts, monetary policy uncertainty, and structural economic changes. The manager extensively discusses macro volatility, concentration risks in markets, and the potential end of the post-GFC low-rate environment, indicating significant concern about environmental risks.
Opportunity Density
Moderate to good opportunity density with the manager finding selective opportunities in specific markets like Argentina, Turkey, and Hong Kong, while noting fewer competitors in deep value space. They describe 'plenty to do' in certain areas but emphasize selectivity, indicating a reasonably rich but not abundant opportunity set.
Time Horizon
Long-term orientation with explicit five-year-plus investment horizon and focus on businesses that can withstand adverse economic paths. The manager emphasizes patience over instant gratification and discusses multi-year thesis development, though some catalyst dependency (corporate activity, economic improvements) prevents maximum score.
