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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Conventum - Alluvium Global Fund is a high-conviction, value-driven global equity fund prioritizing capital preservation. While the manager remains cautious of extreme market concentration in a few AI-driven tech giants, they continue to find compelling, deeply discounted opportunities in robust, cash-generative businesses like Ryanair, Alibaba, and Capri Holdings, holding 11.5% cash to deploy patiently as value emerges."
Conventum - Alluvium Global Fund pursues a disciplined, unhedged, long-only global value-oriented strategy focused on capital preservation and long-term compounding. During the June 2023 quarter, the fund delivered positive performance, driven by standout gains in Thor Industries, McKesson, and HCA Healthcare, along with airline holding Ryanair. However, performance lagged broader indices due to the fund's minimal exposure to the top seven mega-cap technology and artificial intelligence giants, which drove the bulk of market returns. The manager views this extreme index concentration and highly-rated AI euphoria as a key systemic risk, choosing instead to trim tech exposure in Alphabet. Conversely, they added to undervalued positions experiencing temporary setbacks, such as Capri Holdings, Walgreens Boots, and Alibaba. The fund closed the period with 22 high-conviction holdings and an elevated cash buffer of 11.5%, positioning constructively to deploy capital into cheap opportunities while avoiding overvalued market segments.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The fund holds a moderately concentrated portfolio of 22 positions. While this represents a diversified footprint, the manager demonstrates robust conviction by providing extensive, fundamental, bottom-up analyses on core holdings (e.g., Ryanair and Capri) and actively adding to positions on price weakness.
Growth Outlook
A score of 0.25 represents a cautious outlook. The managers express significant concern over extreme stock concentration in the major indices and express surprise that markets remain near all-time highs despite rising interest rates, banking sector collapses, and war.
Risk Appetite
A score of 0.50 represents a balanced risk appetite. The managers are managing risk defensively by trimming fully-priced equity holdings and holding an 11.5% cash buffer, yet they maintain net long equity exposure and actively buy deeply discounted value stocks.
Capital Deployment
A score of 0.45 represents a net neutral to slightly de-risking stance. The fund's cash position increased from 9.5% to 11.5% as cash harvested from trims in Alphabet, HCA Healthcare, and gold miners slightly exceeded capital deployed into buying Capri, Walgreens, and Alibaba.
Forward Guidance
A score of 0.50 represents a monitoring stance with no strong directional bias. The manager is focused on rebalancing existing exposures, harvesting gains in overvalued names, and accumulating out-of-favor value positions, rather than deploying cash aggressively.
Language Signal
The language signal is balanced. The manager uses highly cautious and skeptical terms when describing the 'frothy' and 'perilous' broader index environment, but is highly optimistic and opportunistic when describing specific holdings like Alibaba and Capri as 'remarkably cheap.'
Perceived Risk
A score of 0.75 indicates high perceived risk in the external environment. The manager highlights several systemic risks, including historical levels of private and public debt, geopolitical conflict, rising rate regimes, and index reliance on a handful of highly-priced tech companies.
Opportunity Density
A score of 0.60 reflects selective opportunity density. Broad markets are considered expensive and dominated by AI euphoria, but the manager is finding highly attractive individual value opportunities trading at significant discounts to intrinsic value.
Time Horizon
A score of 0.75 indicates a multi-year investment horizon. The managers evaluate holdings based on multi-year 'maintainable earnings' power and cash flow projections, looking past near-term index volatility and macroeconomic noise.
