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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
Buyside Digest is not affiliated with, and does not endorse, Stenham Asset Management. This analysis is provided for institutional research purposes only and is not investment advice.
"Stenham outperformed in Q1 2023 despite banking sector turmoil, driven by technology and luxury holdings. The manager has strategically repositioned away from disruptive technology toward durable businesses with 70-year average age, including railroads, luxury brands, and infrastructure plays."
Stenham delivered strong Q1 2023 performance with the fund returning 10.0% versus 7.3% for the MSCI World Index, driven by contributions from ASML, Microsoft, and LVMH. The quarter saw significant market volatility with banking sector stress including Silicon Valley Bank's collapse and Credit Suisse turmoil, while growth sectors like technology outperformed value segments. The manager discusses the challenge of investing in an era of rapid technological change, highlighting how AI's emergence exemplifies the accelerating pace of disruption that is driving shorter investment horizons. In response, Stenham has repositioned the portfolio over the past 18-24 months toward businesses with demonstrated durability and lower susceptibility to technological disruption. Key holdings include North American railroads Canadian Pacific and Canadian National, luxury companies LVMH and Ferrari, and aircraft engine manufacturer Safran. The average age of portfolio companies is now around 70 years. While maintaining exposure to technology through back-end infrastructure plays like Universal Music Group and Visa/MasterCard, the strategy emphasizes owning businesses where the rate of technological disruption is lower, enabling longer-term ownership and sustainable competitive advantages.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction demonstrated through concentrated portfolio with named, sized positions including 7.2% Microsoft, 4.8% LVMH, and 4.5% Danaher. The manager articulates clear thesis for each holding with specific reasoning around durability and competitive positioning. Strong conviction in the strategic repositioning toward durable businesses over the past 18-24 months.
Growth Outlook
The manager acknowledges market strength in Q1 but emphasizes significant risks including banking sector stress and technological disruption. While noting equity market outperformance, the tone is cautious about predicting future sector leadership and emphasizes the difficulty of positioning for macro changes.
Risk Appetite
The portfolio has been defensively repositioned over 18-24 months, reducing exposure to disruptive technology sectors and focusing on durable, lower-risk businesses. This represents a clear risk-off positioning despite maintaining equity exposure.
Capital Deployment
The manager has been reducing exposure to technology and communications sectors over 18-24 months, representing a measured de-risking from disruptive sectors. While adding new positions like Safran, the overall trend is toward more defensive positioning rather than aggressive deployment.
Forward Guidance
The manager expresses intention to continue the current strategy of focusing on durable businesses but shows no urgency to deploy capital or add risk. The approach is patient and selective, waiting for extraordinary companies that meet their durability criteria.
Language Signal
Language is balanced between acknowledging opportunities in quality businesses and emphasizing risks from technological disruption and market short-termism. Risk-related language around disruption and uncertainty is offset by confidence in the long-term durability thesis.
Perceived Risk
High perceived risk from technological disruption, with detailed discussion of how AI and rapid change are calling business outlooks into question. The manager extensively discusses systemic risks including shortened investment horizons, company lifespan decline, and the difficulty of underwriting long-term business prospects in a rapidly changing environment.
Opportunity Density
The manager characterizes the opportunity set as requiring significant selectivity, focusing only on extraordinary businesses that meet strict durability criteria. The emphasis on finding companies with 70+ year track records suggests a sparse opportunity set that meets their high standards.
Time Horizon
Extremely long-term orientation with focus on businesses that can be owned indefinitely. The manager discusses 100-year railroad bonds, companies surviving for centuries, and explicitly states intention to be long-term shareholders. The average portfolio company age of 70 years and focus on durability across decades demonstrates a permanent capital mindset.
