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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Rowan Street delivered 102.6% returns in 2023 by maintaining conviction in high-quality growth companies during 2022's market panic. Meta, Spotify, Trade Desk, and Shopify drove outperformance as the Fed pivot created favorable conditions for growth stocks."
Rowan Street Capital delivered exceptional performance in 2023 with a 102.6% net return, driven by concentrated positions in high-quality growth companies including Meta Platforms, Spotify, Trade Desk, and Shopify. The fund's success stemmed from maintaining conviction during 2022's market volatility when investors fled to cash and safe securities. While the consensus expected continued Fed rate hikes and recession, the managers stayed invested in growth businesses trading at attractive valuations below Treasury multiples with substantial growth opportunities. Key contributors included Meta (+194%), Spotify (+138%), and Trade Desk (+60%), validating their patient approach to business fundamentals over market narratives. The fund added one new position in Adyen, the world's best-run payments company, acquired at attractive valuations after a 75% stock decline. The managers emphasize their reductionist investment philosophy of active patience, maintaining low portfolio turnover, and focusing on companies with sustainable competitive advantages and excellent management teams positioned for long-term value creation.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Very high conviction demonstrated through concentrated portfolio of 5-6 core holdings with detailed position sizing and cost basis information. The manager names specific positions, provides exact cost basis for multiple holdings, and explicitly states Meta is their largest position. They maintained positions through significant volatility and added meaningfully to Adyen, showing strong conviction in their investment thesis.
Growth Outlook
The manager expresses strong optimism about the market environment, noting that current valuations in growth businesses offer substantial future opportunities with odds of compounding value at high rates over the next 3-5+ years finally stacked in their favor. They view the Fed's signaling of potential rate cuts and soft landing scenario as creating favorable conditions for growth stocks.
Risk Appetite
The fund maintains concentrated positions in growth companies and added a new position in Adyen, demonstrating high risk appetite. They explicitly state they stayed invested during market volatility rather than going to cash, and believe this is the time to put cash to work selectively in great companies at attractive valuations.
Capital Deployment
Moderate deployment activity with one new position added in Adyen during 2023. The manager emphasizes keeping portfolio turnover to a minimum and maintaining existing positions rather than aggressive new deployment. The addition of Adyen represents selective opportunistic deployment rather than broad-based capital deployment.
Forward Guidance
The manager indicates continued selective deployment with focus on high-quality businesses at attractive valuations. They added one new position in 2023 and maintain their patient approach, suggesting they will continue to opportunistically invest when valuations become attractive rather than aggressive deployment.
Language Signal
The letter contains predominantly positive language about opportunities, attractive valuations, excellent management teams, and substantial future growth opportunities. Risk language is minimal and mostly historical, with the manager framing current conditions as favorable for their investment approach.
Perceived Risk
Low perceived risk with minimal discussion of current threats. The manager acknowledges historical volatility and competitive landscapes but frames current environment as favorable. Risk discussion is primarily retrospective, focusing on lessons learned from past volatility rather than current systemic concerns.
Opportunity Density
High opportunity density with the manager stating there are great growth businesses with excellent management teams trading at attractive valuations not seen in many years. They believe odds of compounding value at high rates are finally stacked in their favor, indicating a rich opportunity set in their investment universe.
Time Horizon
Very long-term horizon with explicit focus on 3-5+ year value creation and emphasis on business fundamentals over short-term market movements. The manager discusses holding Meta for 5 years through significant volatility and emphasizes their patient approach to investing. They reference next decade thinking and permanent capital mentality.
