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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Hoisington Investment Management 2024 Q4 Investor Letter | Buyside Digest

Back to Fund Profile (Hoisington Investment Management)

Primary Source Intelligence • Q4 2024 Letter Analysis

Hoisington Investment Management Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Hoisington Investment Management. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Positioning StanceConstructive

GeographyGlobal, US

Digest Analysis

Quick Take

"Global factory capacity utilization has collapsed to recessionary levels while unemployment rises, creating powerful deflationary forces. U.S. capacity utilization at 76.9% sits well below recession thresholds, while foreign economies show similar weakness."

Executive Summary

Hoisington Investment Management identifies a global capacity glut as the dominant factor driving deflationary pressures across major economies. U.S. capacity utilization has plummeted to 76.9%, well below the 82.9% historical recession entry level, while foreign capacity utilization sits at 74.8%, significantly below post-1990 averages. This underutilization of resources coincides with rising unemployment from 3.4% to 4.1%, triggering multiple recession indicators including the McKelvey and Shedlock rules. The global interconnectedness of capacity utilization across the U.S., China, Japan, U.K., and EU demonstrates how China's goods deflation is being transmitted globally through yuan depreciation. World dollar liquidity continues declining to record lows, intensifying the global money squeeze. Despite recent divergence, the historical 71% correlation between thirty-year Treasury yields and inflation suggests fundamental determinants point to lower inflation and a surprising drop in long-term bond yields in 2025. The firm expects these deflationary forces to overwhelm current market pricing.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

78%

CautiousHigh

High Conviction (78%)

High conviction evidenced by the detailed econometric analysis spanning 34 years of data, specific quantitative thresholds for recession indicators, and the definitive prediction of surprising Treasury yield drops in 2025. The manager presents extensive supporting data and makes falsifiable claims with specific timeframes, though no individual positions are named or sized.

Growth Outlook

13%

BearishBullish

Bearish (13%)

The letter presents a strongly bearish market outlook, warning of recessionary capacity utilization levels, rising unemployment triggering recession indicators, and global deflationary pressures. The manager explicitly states that recession risk remains elevated and describes a global capacity glut creating economic headwinds.

Risk Appetite

25%

DefensiveAggressive

Defensive (25%)

While the letter doesn't explicitly describe current positioning, the confident prediction of lower Treasury yields and the analytical framework suggest the manager is positioned for their deflationary thesis. The tone indicates selective risk-taking in bonds rather than defensive cash positioning.

Capital Deployment

0%

De-riskingDeploying

De-risking (0%)

No information provided about cash levels, position sizing changes, or capital deployment activity. The letter focuses entirely on macroeconomic analysis without discussing portfolio changes or positioning adjustments.

Forward Guidance

50%

CautiousExpansionary

Neutral (50%)

The manager provides clear forward guidance with a specific prediction that lower inflation will lead to a surprising drop in thirty-year Treasury bond yields in 2025. This represents active deployment of their thesis rather than waiting on the sidelines.

Language Signal

38%

BearishBullish

Balanced (38%)

Language is mixed with bearish economic terms like recession, capacity glut, unemployment, and deflationary pressures, but also opportunity-focused language around Treasury bonds and surprising yield drops. The bearish economic view is paired with bullish bond positioning language.

Perceived Risk

82%

Low RiskElevated

Elevated Risk (82%)

Very high perceived risk with explicit warnings of recession indicators being triggered, capacity utilization at recessionary levels, and elevated risk of economic contraction. The manager dedicates substantial discussion to multiple recession rules and systemic economic risks.

Opportunity Density

25%

ScarceAbundant

Scarce (25%)

Limited opportunity set implied, with the manager focusing on a single macro theme around Treasury bonds and deflationary forces. The analysis suggests a narrow opportunity set centered on the bond market rather than broad investment opportunities.

Time Horizon

45%

Short-TermLong-Term

Multi-Year (45%)

Medium-term horizon with specific predictions for 2025 Treasury yield movements. The analysis relies on historical correlations and cyclical patterns, suggesting a 1-2 year investment timeframe rather than long-term permanent capital deployment.