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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Ayalon (4D) Global Stocks Fund achieved a 24.83% net return in 2023 by focusing on deeply undervalued international small-caps and high-quality compounders while fully avoiding bubbly US mega-cap tech stocks."
The fund operates under a rigorous value-oriented investment philosophy focused on identifying exceptional compounders with high returns on equity and a demonstrated ability to reinvest profits at attractive rates of return. During the 2023 fiscal year, the Ayalon (4D) Global Stocks Fund generated a strong net return of 24.83%, significantly outperforming its benchmark, the Russell 2000 Index, which returned 21.37%. Performance remained positive into the first half of 2024, achieving a 7.62% gain. The fund maintains a strict policy of 100% equity exposure, primarily held within tax-advantaged Individual Retirement Accounts (IRAs) to maximize compounding without market-timing friction. Geographically, the manager prioritizes international equity markets outside the US and Israel—such as Canada, Europe, and Japan—where high-quality companies trade at significant valuation discounts. Conversely, the manager avoids popular, expensive mega-cap technology companies, characterizing the valuations of the 'Magnificent Seven' as bubbly and warning that unrealistic growth expectations pose major downside risks to index-driven investors.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The manager focuses on a highly concentrated list of core holdings (including EXOR, IAC, KKR, and newly added compounders), explicitly outlining their multi-year investment thesis and committing to holding them through short-term market declines.
Growth Outlook
While highly positive on global and small-cap stocks, the manager is notably cautious about the US index heavyweights, dragging down the overall market outlook to a moderately constructive rating.
Risk Appetite
Operating with a mandate of 100% equity exposure and rejecting cash holdings or 'alternative' hedges, the fund demonstrates a structurally aggressive risk posture focused entirely on equity compounding.
Capital Deployment
The fund remains nearly 100% invested in equities, actively deploying accumulated cash into newly identified compounders (like TASE, CSU, and TVK) and increasing stakes in asset managers and insurers during 2023.
Forward Guidance
The manager provides clear action bias toward expanding his portfolio of compounders, actively recommending additions to high-quality international stocks and insurance firms.
Language Signal
The tone is highly optimistic regarding the opportunity set in global small-caps and compounders ('bargain prices', 'undervalued'), balanced by cautious, risk-aware language when evaluating US mega-cap tech valuations ('bubbly', 'unrealistic').
Perceived Risk
The manager explicitly recognizes risks including localized war in Israel, geopolitical stressors globally, and overvalued tech sectors, but believes these represent opportunities for long-term investors rather than structural threats.
Opportunity Density
The opportunity set is deemed highly abundant, particularly in specific out-of-favor regions and small-cap segments where high-quality companies trade at significant discounts to intrinsic value.
Time Horizon
The fund operates with an exceptionally long time horizon, explicitly framing their process as a marathon requiring at least 5 years of patience and citing Munger's philosophy of sitting on great investments for years.
