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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Small-cap value fund underperformed in 2024 due to declines in three concentrated positions but manager maintains conviction in core theses. New investments in pool construction market at cyclical lows offer significant recovery potential."
McIntyre Partnerships returned 0% net in 2024 versus 8% for Russell 2000 Value, marking first underperformance since 2019. The fund maintains strong long-term track record with 22% net annualized returns over five years and 14% since inception. Underperformance driven by declines in three large positions: SHC (-24%), GTX (-7%), and STHO (-35%), offset partially by strong performance in OSW (+40%) and successful event-driven trades. Manager believes core investment theses remain intact and portfolio well-positioned for 2025. Key new investments include pool construction basket at cyclical lows similar to Great Financial Crisis, with pool starts at 6% of single-family home construction versus 11% historical average. Portfolio concentrated with top five positions representing 76% of assets. Manager implemented market hedges given S&P 500 valuation concerns, trading at 22x earnings near historical highs. Fund closing to new capital given liquidity constraints but existing investors retain priority access.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Very high conviction evidenced by concentrated portfolio with top 5 positions at 76% of assets, detailed individual position analysis, and manager's willingness to maintain positions despite significant declines. Specific position sizing and multi-year thesis development demonstrate strong conviction despite 2024 underperformance.
Growth Outlook
Manager expresses concern about S&P 500 valuations at 22x earnings near historical highs and negative equity risk premium, warning of potential 20% correction if valuations revert to historical norms.
Risk Appetite
Portfolio remains 98% net long with concentrated positions but manager has added market hedges using out-of-the-money puts to reduce correlation with broader market given valuation concerns.
Capital Deployment
Moderate deployment activity with new positions added in pool basket (SWIM, LESL, HAYW) and SEG, while reducing positions in OSW and SPHR after strong performance. No specific cash level changes mentioned but new position additions indicate selective deployment.
Forward Guidance
Manager believes portfolio is well-situated entering 2025 and expects to be rewarded for patience, citing historical pattern of strong performance following down years, while adding new positions in pool construction.
Language Signal
Language balances acknowledgment of poor 2024 performance with optimism about forward prospects, using terms like 'exceptional opportunities' and 'well situated' while discussing risks and underperformance.
Perceived Risk
High risk perception focused on broad market valuations with S&P 500 at historical highs and negative equity risk premium. Manager specifically warns of potential 20% correction and implements hedging strategy, demonstrating significant concern about systemic market risk.
Opportunity Density
Manager sees selective opportunities in less-followed areas like pool construction market and special situations, while noting difficulty in adding to existing portfolio due to liquidity constraints. Emphasis on finding 'one-foot hurdles' in overlooked spaces suggests moderate opportunity density.
Time Horizon
Multi-year investment horizon evidenced by willingness to hold through significant declines, four-year liquidation timeline for STHO, and emphasis on long-term thesis validation. Manager explicitly discusses patience and historical pattern of strong forward returns after down periods.
