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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, Longriver Investment Partners. This analysis is provided for institutional research purposes only and is not investment advice.
"Longriver Partners Fund posted a 3.1% gain in Q2 2023, bringing YTD net returns to 13.5%. The manager is deploying capital into high-conviction global leaders like TSMC and BFF Bank, while maintaining caution on China's recovery and utilizing Berkshire Hathaway as the ultimate hurdle for portfolio inclusion."
The Longriver Partners Fund generated a net return of 3.1% for the second quarter of 2023, underperforming its benchmark, the MSCI AC World USD Index, which returned 6.2%. Year-to-date and since-inception net returns reached 13.5%, close to the benchmark's 13.9%. In his letter, portfolio manager Graham F. Rhodes contrasts the surprisingly resilient US economy—supported by infrastructure, clean energy, and semiconductor legislation alongside an AI-driven tech rally—with China's disappointing reopening. China faces a prolonged period of slow growth due to zero-COVID consequences and real estate deleveraging, leading the fund to adopt a cautious stance on allocating capital there despite cheap valuations. During the quarter, the fund deployed new client subscriptions into high-conviction holdings including BFF Bank, Techtronic Industries, and TSMC, praising their strong competitive moats and attractive valuations. Conversely, the manager trimmed the fund's position in AMD to manage valuation risk amid the AI market surge. Rhodes outlines his disciplined investment process, which leverages a strict filter focused on return on equity and per-share earnings growth. Crucially, the fund employs Berkshire Hathaway as its baseline opportunity cost hurdle, ensuring that every holding must offer superior returns on time and capital to justify its spot in a concentrated 15-stock portfolio.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Conviction is rated at 0.85, supported by a highly concentrated structure of just 15 holdings, with the top 10 names representing 85% of total assets. Additionally, the manager utilizes a strict opportunity cost filter based on Berkshire Hathaway.
Growth Outlook
Market outlook is scored at 0.50, reflecting balanced conditions. The manager acknowledges strong US legislative spending and AI tailwinds, but highlights impending risks from higher refinancing rates and structural slowing in the Chinese economy.
Risk Appetite
Risk appetite is scored at 0.75, as the fund is fully invested with only 5% cash and continues to allocate capital into high-conviction equities like TSMC and Techtronic Industries, while strategically avoiding hedges or broad macro-driven defensive cash hoarding.
Capital Deployment
A score of 0.60 reflects moderate capital deployment activity. The fund received new subscription inflows during the quarter and channeled them directly into core long holdings (BFF, Techtronic, TSMC), while trimming AMD as AI valuations expanded, leaving a steady 5% cash balance.
Forward Guidance
Forward guidance is scored at 0.50, indicating a neutral bias where the manager advocates for extreme inactivity and waiting. He emphasizes 'doing nothing' until opportunities directly justify displacing Berkshire Hathaway, rather than suggesting aggressive near-term portfolio changes.
Language Signal
The language signal is slightly positive at 0.55. The manager is highly constructive about his core holdings, using phrases like 'exciting value' and 'moats,' but tempers this with caution regarding China's stagnant reopening and US refinancing challenges.
Perceived Risk
Perceived risk is scored at 0.65. The manager details structural threats from China's real estate deleveraging and impending debt-refinancing cliffs in the US, indicating that macro environments are fraught with medium-term risk.
Opportunity Density
Opportunity density is marked at 0.45. While the manager sees cheap valuations in China, he is cautious about allocating capital, stating that the hardest part of global investing is having to say 'no' to the vast majority of opportunities in order to maintain extreme selectivity.
Time Horizon
Time horizon is set at an exceptional 0.90, as the manager encourages partners to view their fund holdings as long-term illiquid assets like real estate. He explicitly references Warren Buffett's 20-slot 'punch card' approach to target lifetime multi-baggers.