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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Alluvial Fund delivered 16.4% returns in 2024 through disciplined value investing in small-cap securities. Portfolio concentrated in deeply discounted holdings like Net Lease Office Properties liquidation and new cement/commercial real estate positions."
Alluvial Fund delivered 16.4% net returns in 2024, outpacing benchmarks through steady performance amid volatile small-cap markets. The fund maintains its value-oriented approach, targeting deeply discounted securities with strong fundamentals across diverse geographies and industries. Key holdings include Net Lease Office Properties, an ongoing liquidation expected to begin shareholder distributions as debt is extinguished, and new positions in Titan Cement International and CBL & Associates Properties reflecting the commercial real estate recovery theme. The portfolio benefits from active capital allocation by management teams, with multiple holdings executing share buybacks including Garrett Motion and United Bancorporation. Manager emphasizes patience and diversification as hedges against unknown risks, noting that the most impactful events are typically unforeseen. International exposure remains significant despite continued US market outperformance. The fund's concentrated approach in illiquid small-caps with capable management teams and robust balance sheets continues to generate attractive risk-adjusted returns through market cycles.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evident through concentrated portfolio with detailed position-specific analysis and explicit valuation targets. Manager provides specific price targets for multiple holdings (Net Lease $45, CBL $40-45, Titan €60) and discusses position sizing decisions. Strong conviction supported by willingness to add to positions during weakness and multi-year holding periods.
Growth Outlook
Manager acknowledges challenging conditions in office markets and slow interest rate declines, but maintains constructive view on long-term opportunities. Discusses infrastructure investment wave benefiting cement producers and gradual commercial property recovery, showing mild optimism tempered by realistic assessment of current headwinds.
Risk Appetite
Portfolio remains fully invested with concentrated positions in value opportunities. Manager added new positions in Titan Cement and CBL while building existing positions like McBride. No indication of defensive positioning or cash raising, suggesting moderate risk-on stance despite market volatility.
Capital Deployment
Moderate deployment activity with two notable new positions (Titan Cement and CBL) and continued building of existing positions like McBride during summer weakness. No cash level changes mentioned, but active position additions suggest selective deployment of available capital into attractive opportunities.
Forward Guidance
Manager expresses specific expectations for portfolio catalysts including Net Lease debt extinguishment and Zegona asset sales in first half 2025. Selective deployment bias evident in new cement and commercial real estate positions, with continued focus on finding undervalued opportunities.
Language Signal
Language balances opportunity identification with risk acknowledgment. Uses positive terms like 'attractive', 'bargain', 'excellent progress' for specific holdings, but also discusses 'headwinds', 'challenges', and unknown risks. Slightly more constructive than cautious overall.
Perceived Risk
Manager acknowledges specific risks including office market headwinds, slow interest rate declines, and emphasizes that unknown risks tend to be most impactful. Discusses historical examples like COVID and Ukraine war as unexpected events. Moderate risk awareness without alarm, focusing on diversification as mitigation strategy.
Opportunity Density
Manager identifies selective opportunities across geographies and sectors, adding new positions while building existing ones. Notes attractive valuations in European cement companies versus US peers and continued value in UK stocks. Suggests reasonable opportunity set requiring selectivity rather than abundance.
Time Horizon
Strong emphasis on multi-year investment horizons with explicit long-term focus. Manager discusses holding Crawford United through 4x appreciation over holding period and expects multi-year value realization for most positions. Patient capital approach evident in willingness to hold through volatility and focus on intrinsic value over market timing.
