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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Sandbrook underperformed Q1 2023 due to overly defensive positioning despite strong stock picking. Manager ran negative net exposure most of the quarter, missing tech rally in core holdings."
Sandbrook Capital underperformed in Q1 2023 due to portfolio management decisions rather than stock selection. The fund maintained negative net exposure for most of the quarter despite strong performance in core focus areas of technology and consumer discretionary. Manager Joey Brookhart acknowledged giving too much credence to macro data and overmanaging net exposure, missing gains in beaten-up tech names like CRM, AMZN, and MSFT. Individual stock selection was solid with 75% batting average on longs and 60% on shorts. The fund successfully managed risk during the SVB crisis, covering most shorts on March 10th. Looking forward, Brookhart remains cautious on market fair value and sees few attractive long-term IRRs currently. The strategy will focus on opportunistic longs and catalyst-based shorts until compelling core long opportunities emerge. Consumer weakness and aspirational 2H estimates in key sectors support continued selectivity. The fund maintains its flexible mandate to swing at fat pitches while employing systematic risk management guardrails.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Manager demonstrates moderate conviction through systematic risk management rules and clear sector focus, but hedges extensively throughout the letter. Multiple scenarios discussed without strong base case commitment. Diversified approach across opportunistic longs and catalyst shorts rather than concentrated positioning. Self-critical tone about decision-making reduces conviction signals.
Growth Outlook
Manager expresses caution about market fair value and sees risk/reward weighted to downside. References upside risks to inflation, weak consumer data, and aspirational 2H estimates. However, acknowledges some opportunities in tech post-SVB and mentions linear thinking around rates supporting tech longs.
Risk Appetite
Fund ran negative net exposure for most of the quarter (positive only 4 days). Manager explicitly chose defensive positioning despite flexible mandate. Covered shorts during SVB crisis but maintained cautious stance. Current positioning described as opportunistic longs and catalyst-based shorts rather than aggressive deployment.
Capital Deployment
Fund maintained negative net exposure for most of the quarter, representing a defensive posture. Manager covered shorts during SVB crisis but did not aggressively deploy into longs. Current strategy focuses on patience and selectivity rather than active deployment, with very few attractive opportunities identified.
Forward Guidance
Manager states fund will remain patient for attractive Core Longs and sees very few attractive LT IRRs currently. Cautious on 2H acceleration with weak consumer data. However, maintains willingness to swing at fat pitches when presented, showing some deployment bias for the right opportunities.
Language Signal
Language is balanced between risk awareness and opportunity recognition. Uses cautious terms like 'aspirational estimates' and 'weak consumer data' but also discusses 'attractive risk/reward' and 'compelling opportunities.' Self-critical tone about missing opportunities balances bearish macro views.
Perceived Risk
Manager identifies multiple specific risks including upside inflation risks, weak consumer spending data, and concerns about forward estimates. Discusses macro headwinds and rate environment impacts. However, risks are discussed analytically rather than with alarm, and manager maintains willingness to take risk when opportunities present.
Opportunity Density
Manager explicitly states seeing 'very few attractive LT IRRs' and describes estimates as 'aspirational' in core sectors. Emphasizes need for patience and selectivity. While willing to swing at opportunities, the current environment is characterized as requiring significant selectivity rather than abundant opportunities.
Time Horizon
Manager discusses both short-term opportunistic trades and longer-term IRR analysis. References LT stories and entry points for tech names, and mentions Core Longs strategy for longer-term positioning. However, current focus is on shorter-term catalyst-driven opportunities until better long-term setups emerge.
