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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Stewart Asset Management 2023 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Stewart Asset Management)

Primary Source Intelligence • Q2 2023 Letter Analysis

Stewart Asset Management Quarterly Analysis

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

Fund Returns

QTD+12.89%

YTD+25.59%

Annualized+14.37%

Positioning StanceConstructive

Market CapLarge Cap

GeographyUS

Digest Analysis

Quick Take

"The portfolio focuses on exceptional business leaders with uncommon earnings growth potential over five-year horizons. Strong performers included Nvidia, Adobe, and Amazon."

Executive Summary

Stewart Asset Management's US Concentrated Growth Strategy delivered 12.89% net returns in Q2 2023, outperforming the S&P 500's 8.74% gain. The portfolio advanced 25.59% net in the first half versus the benchmark's 16.89%. The strategy focuses on owning exceptional business leaders capable of producing uncommon earnings growth over long periods, maintaining a five-year investment horizon with the goal of doubling client capital every five years net of fees. Nearly all holdings performed well, with strongest performers including Adobe, Amazon, Floor & Decor, Alphabet, Intuitive Surgical and Nvidia. The manager modestly trimmed Nvidia despite believing in continued rapid earnings growth due to considerable valuation increases. Match Group was sold due to skepticism about regaining previous growth. The portfolio's aggregate earnings have grown faster than the S&P 500 during 18 months of uneven market conditions. Looking forward, the manager forecasts portfolio earnings power could grow over 17% annually over the next five years, providing attractive returns relative to risk-free rates regardless of economic scenarios.

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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 concentrated portfolio of exceptional business leaders, specific 17%+ earnings growth forecasts, and clear five-year doubling goal. Manager provides detailed analysis of individual holdings like Nvidia and maintains long-term perspective despite trimming actions.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The manager expresses mild optimism about portfolio prospects but acknowledges significant macro uncertainties including persistent inflation concerns and potential recession risks. While forecasting strong earnings growth for portfolio companies, the outlook is tempered by economic headwinds.

Risk Appetite

15%

DefensiveAggressive

Defensive (15%)

The manager maintains concentrated positions in growth leaders but shows some risk management by trimming Nvidia on valuation concerns and selling Match Group. The positioning reflects selective risk-taking rather than aggressive deployment.

Capital Deployment

43%

De-riskingDeploying

Net Neutral (43%)

Slight net reduction in risk with modest trimming of Nvidia and complete sale of Match Group. No mention of new position additions or cash deployment, suggesting selective harvesting rather than active deployment.

Forward Guidance

30%

CautiousExpansionary

Cautious (30%)

The manager provides specific forward-looking earnings forecasts and maintains conviction in the strategy's ability to deliver target returns. However, portfolio actions show selectivity rather than aggressive deployment bias.

Language Signal

20%

BearishBullish

Bearish (20%)

Language is balanced between opportunity recognition for portfolio companies and acknowledgment of macro risks. Terms like 'exceptional leaders' and 'attractive returns' are offset by concerns about inflation persistence and recession risks.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

Manager identifies multiple specific macro risks including persistent inflation above Fed targets, unprecedented yield curve inversion signaling potential recession, and various economic headwinds. These concerns receive meaningful discussion throughout the letter.

Opportunity Density

70%

ScarceAbundant

Abundant (70%)

Manager sees attractive opportunities in portfolio companies with forecasted 17%+ earnings growth and good valuations relative to risk-free rates. However, selective trimming and selling suggests opportunities require careful evaluation rather than broad abundance.

Time Horizon

85%

Short-TermLong-Term

Decade+ (85%)

Explicitly states five-year investment horizon with goal of doubling capital every five years. Manager emphasizes long-term perspective and ability to model five-year earnings forecasts, indicating patient capital approach with multi-year thesis development.