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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Spear Advisors 2023 Q4 Investor Letter | Buyside Digest

Back to Fund Profile (Spear Advisors)

Primary Source Intelligence • Q4 2023 Letter Analysis

Spear Advisors Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Spear Advisors. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+28.28%

YTD+88.02%

Positioning StanceConstructive

GeographyUS

Digest Analysis

Quick Take

"With concentrated positions in cybersecurity, AI hardware, and cloud infrastructure leaders like Nvidia, Zscaler, and Snowflake. Enterprise spending has bottomed while AI workloads shift to inference, creating sustainable revenue streams."

Executive Summary

Spear Alpha ETF delivered exceptional performance in 2023, returning 88.02% versus 26.26% for the S&P 500, driven primarily by artificial intelligence as a core investment theme. The fund's concentrated portfolio focuses on three key areas: cybersecurity companies benefiting from enterprise infrastructure changes and AI-driven security risks, AI hardware leaders positioned for the data center upgrade cycle, and cloud/data infrastructure companies capitalizing on massive growth in compute and storage requirements. Key holdings include Nvidia, Zscaler, Crowdstrike, and Snowflake. The manager identified AI as a breakthrough trend early, with workloads now shifting from model training to inference, creating sustainable revenue streams. Enterprise spending bottomed in 4Q23 after prolonged budget tightening, while cloud optimization headwinds are reversing. Despite strong 2023 performance, many holdings remain 50%+ below peak levels, highlighting significant runway ahead. The fund maintains concentrated exposure while actively managing risk through increased idea velocity during market pullbacks, positioning for continued outperformance as the AI infrastructure buildout accelerates.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

78%

CautiousHigh

High Conviction (78%)

High conviction evidenced by concentrated portfolio with named, sized positions across three core themes. Manager explicitly states largest holdings by name and provides specific thesis for each area. Demonstrates conviction through contrarian positioning (SentinelOne) and adding on dips to high-quality names. Portfolio concentration and willingness to maintain exposures through volatility indicates strong conviction, though not at the extreme end due to some profit-taking activity.

Growth Outlook

65%

BearishBullish

Bullish (65%)

Manager expresses confidence for 2024 based on ramping capex, AI scaling, and attractive valuations. Describes being in 'early innings of meaningful Data Center upgrade cycle' and sees 'attractive entry points' being created. However, acknowledges defensive market start to 2024 and interest rate pressures, preventing a more bullish score.

Risk Appetite

45%

DefensiveAggressive

Balanced (45%)

Portfolio remains concentrated in high-conviction technology positions with maintained exposures across software and hardware. Manager took some profits in outperformers but redeployed into new opportunities like Confluent. Positioning suggests moderate risk appetite but not maximum deployment given profit-taking activities.

Capital Deployment

15%

De-riskingDeploying

De-risking (15%)

Manager took profits in Datadog and Cloudflare and redeployed proceeds into Confluent, indicating capital rotation rather than net deployment. No mention of cash level changes or aggressive new position building. Activity described is primarily rebalancing existing exposures rather than putting new capital to work, suggesting neutral to slight positive deployment.

Forward Guidance

55%

CautiousExpansionary

Neutral (55%)

Manager maintains current exposures and expresses confidence in positioning for the cycle ahead. States both software and hardware areas are 'well-positioned to deliver outsized returns throughout the cycle.' However, no explicit language about aggressive new deployment or scaling positions, suggesting selective rather than aggressive forward bias.

Language Signal

70%

BearishBullish

Bullish (70%)

Language is predominantly positive with terms like 'attractive entry points,' 'strong cycle ahead,' 'attractive valuations,' and 'confident for 2024.' Bullish framing around AI adoption, enterprise spending recovery, and upgrade cycles. Some risk language around interest rates and defensive market start, but overwhelmingly constructive tone throughout.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

Manager acknowledges specific risks including interest rate sensitivity, defensive market start to 2024, and software pressure from rising rates. However, risk discussion is balanced with opportunity identification and not central to the letter's thesis. Risks are mentioned as manageable headwinds rather than systemic threats, indicating moderate risk perception.

Opportunity Density

75%

ScarceAbundant

Abundant (75%)

Manager sees abundant opportunities across multiple areas including cybersecurity, AI hardware, and cloud infrastructure. Describes 'attractive entry points' being created in 1H24 and emphasizes being in 'early innings' of upgrade cycle. Multiple named opportunities with specific catalysts and runway for growth, indicating rich opportunity set perception.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

Manager emphasizes being in 'early innings of meaningful Data Center upgrade cycle' and describes 'strong cycle ahead' suggesting multi-year thesis. Holdings remain 50%+ below peaks indicating patience for recovery over time. Focus on fundamental trends like AI adoption and enterprise transformation suggests 2-3 year investment horizon rather than near-term catalyst dependency.