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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"McIntyre Partnerships fell 17% in Q1 versus 8% for Russell 2000 Value as broad selling hit concentrated special situations portfolio. Largest holding SHC disappointed despite lower cyclical risk while MDRX was resized after failed deal."
McIntyre Partnerships declined 17% net in Q1 2025 versus the Russell 2000 Value's 8% decline, marking the fourth-worst quarterly performance for the benchmark since inception. The underperformance was driven by broad market selling initially triggered by AI spending concerns following the DeepSeek moment, then intensified by recession fears over Trump's tariffs. The concentrated portfolio, focused on complex special situations, was particularly vulnerable to forced selling from margin calls and deleveraging. Key holdings like SHC, the largest position, behaved contrary to expectations despite lower cyclical risk compared to auto parts supplier GTX. Other major losers included SEG, STHO, LESL, MDRX, and FTRE. The manager significantly resized the MDRX position after its 50% decline following a failed sales process, viewing the healthcare software company as undervalued at $4 per share with strong FCF generation potential. Despite frustration with short-term performance, the manager maintains conviction in the portfolio's idiosyncratic ideas with strong catalysts, making only minor adjustments while expecting fundamentals to eventually drive outperformance as they have historically.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Manager demonstrates high conviction by maintaining concentrated positions despite 17% underperformance, making only minor portfolio adjustments, and expressing strong views about portfolio quality and catalyst potential. The detailed MDRX analysis and historical performance confidence indicate strong belief in investment approach.
Growth Outlook
Manager expresses uncertainty about economic recession prospects and market direction, stating he has no clue where markets will go. However, he acknowledges the challenging environment with tariff-induced recession fears and broad market selling, while noting this was the fourth-worst quarterly performance for the benchmark since inception.
Risk Appetite
Portfolio remains concentrated with 111% long, 9% short exposure (94% net long adjusted for hedges). Manager made only minor adjustments despite significant underperformance, maintaining large positions in top holdings. This suggests a cautiously optimistic risk appetite with conviction in current positioning.
Capital Deployment
Manager significantly resized MDRX position during the quarter, suggesting selective deployment into perceived value opportunities. However, overall portfolio changes were described as minor, indicating measured rather than aggressive capital deployment despite market dislocation.
Forward Guidance
Manager expresses strong conviction that portfolio companies have robust balance sheets to survive economic downturns and that idiosyncratic catalysts will play out over time. He specifically mentions MDRX's path to relisting and potential takeout, showing constructive forward-looking positioning despite near-term uncertainty.
Language Signal
Language shows frustration with short-term performance but maintains underlying optimism about portfolio quality and catalyst potential. Terms like strong catalysts, robust businesses, significant upside potential, and historical outperformance recovery suggest net positive directional bias despite current challenges.
Perceived Risk
Manager acknowledges significant risks including recession potential from tariffs, forced selling dynamics affecting concentrated portfolios, and holdings behaving contrary to fundamental expectations. The discussion of margin calls, deleveraging, and macro volatility indicates elevated risk awareness.
Opportunity Density
Manager sees selective opportunities, particularly in MDRX after its 50% decline, but doesn't describe a broadly rich opportunity set. The focus remains on existing concentrated positions with strong catalysts rather than identifying numerous new opportunities across markets.
Time Horizon
Manager emphasizes that catalysts should play out over time and references historical three-year and five-year recovery periods after previous underperformance. The MDRX thesis extends to 2026 relisting, and overall approach focuses on long-term fundamental value realization rather than near-term trading.
