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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Rondure Global Advisors seeks long-term capital appreciation by investing in under-followed, high-quality international and emerging market small-cap companies at attractive valuations. While the portfolio experienced short-term underperformance due to a speculative, narrow US mega-cap growth rally, the manager maintains high conviction in its defensive, bottom-up holdings, positioning the funds to capture substantial upside once global inflation and the US dollar peak."
Rondure Global Advisors' core investment thesis centers on acquiring high-quality, undervalued small-, micro-, and mid-cap companies outside the US that are poised to benefit from long-term secular trends like reshoring and globalization. During Q2 2023, both the Rondure New World and Rondure Overseas strategies underperformed their respective benchmarks due to a narrow, speculative market rally fueled by a few US mega-cap stocks and an artificial intelligence frenzy, which favored deep value and long-duration growth over Rondure's core quality-at-a-reasonable-price (QARPy) holdings. Despite near-term performance headwinds, the manager sees exceptional value within the portfolio, especially in non-China emerging markets like India, Indonesia, Thailand, Mexico, and the Philippines, as well as in niche Japanese small-caps. Key risks include sticky core services inflation, a strong US dollar, and a lack of immediate catalysts. Rondure remains committed to its defensive, bottom-up process, positioning the portfolio to benefit once US inflation and the dollar peak, paving the way for international quality and value to shine.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Conviction is marked at 0.65, reflecting the manager's steadfast adherence to their model-driven process despite recent underperformance, coupled with detailed structural arguments for their core Japanese and Indian holdings.
Growth Outlook
Rondure rates the market outlook at 0.25 (Cautious) because they see several valuation gaps, overvalued narratives (especially around AI/tech), and expect the Fed will need to force a painful correction to curb persistent core services inflation.
Risk Appetite
Risk appetite is scored at 0.50 as the manager is sticking to their bottom-up discipline and holding onto high-quality international/emerging small-caps, avoiding speculative tech plays while selectively adding to beaten-down names in China.
Capital Deployment
Capital deployment is scored at 0.50 as the portfolio remains mostly steady, with only minor incremental additions to existing Chinese consumer names and a list of Indian follow-on candidates teed up for future buying opportunities.
Forward Guidance
Forward guidance is rated at 0.50 since the manager's primary instruction is to 'stay the course' and follow their established process rather than initiating significant strategic shifts or major capital reallocation.
Language Signal
Language signal is scored at 0.50, balancing optimistic value-oriented terminology ('excellent model returns,' 'strong value,' 'inexpensive and profitable') with persistent macro worries ('political banter,' 'disappointing post-Covid opening,' 'sticky inflation').
Perceived Risk
Perceived risk is rated at 0.75 due to substantial concerns surrounding systemic macroeconomic threats, including the Fed potentially triggering a correction, the risk of sticky core services inflation, and high US asset valuations pulling capital away from emerging markets.
Opportunity Density
Opportunity density is set at 0.70 because, while the broader market indices are narrow and expensive, the manager believes the international small- and micro-cap universe presents some of the most compelling valuation opportunities they have seen since the fund's inception.
Time Horizon
Time horizon is rated at 0.80, aligned with the manager's multi-year investment framework and their explicit reference to the 'tortoise catching the hare' when long-term quality and supportive valuations are given time to compound.
