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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Recurve Capital delivered strong first-half net returns of +17% driven by a massive rally in Carvana, despite drag from Cogent and housing cyclicals. The fund has embraced significant concentration, placing 80%+ of exposure in its top five ideas."
Recurve Capital Partners LP reported a gross return of +3% for Q2 2024 and +23% (+17% net) year-to-date through June, outperforming the S&P 500 and Russell 2000 indices over the first half. Performance was heavily driven by Carvana, which gained +143% YTD and contributed approximately 2,800 basis points of gross attribution. Conversely, Cogent (-26% YTD) and home-related holdings RH and Wayfair detracted significantly due to macroeconomic headwinds, sticky inflation, and delayed Federal Reserve rate cuts. The fund has intentionally increased concentration, with its top two holdings (Carvana and Cogent) representing nearly 60% of the portfolio and the top five accounting for over 80%. Founder Aaron Chan highlights that despite macro volatility and AI market speculation, Recurve remains focused on high-conviction Builder Companies trading at attractive free cash flow multiples. Position sizing reflects fundamental confidence and willingness to hold through short-term drawdowns.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The fund exhibits exceptionally high conviction, holding almost 60% of its exposure in its top two names and over 80% in its top five, explicitly backed by declarative statements regarding long-term competitive moats.
Growth Outlook
The manager views the general macro environment as 'hit-and-miss' with ongoing recessionary pressure in consumer and housing sectors due to high interest rates and sticky inflation.
Risk Appetite
The fund is heavily positioned in net long, high-beta, highly concentrated growth cyclicals with nearly 100% gross exposure, reflecting an aggressive position posture.
Capital Deployment
Recurve actively added to its top positions during drawdowns (e.g., adding 70% more shares to Carvana on pullbacks and doubling Cogent over 18 months) while maintaining total gross exposure near 100%.
Forward Guidance
The manager clearly outlines aggressive search efforts for single-digit free cash flow compounders while expressing readiness to build onto existing concentrated bets when market disconnects occur.
Language Signal
The language is highly constructive regarding core portfolio positions and long-term thesis execution, offset by skeptical tone regarding broad AI market hype and persistent macro headwinds.
Perceived Risk
Detailed commentary highlights notable macro risks, including sticky inflation, prolonged elevated interest rates, and over-capitalization/price deflation risks in major tech paradigm shifts.
Opportunity Density
Chan notes aggressively hunting for new ideas but finding none sufficiently compelling to displace current core holdings, leading to higher portfolio concentration.
Time Horizon
The letter stresses multi-year holding periods, intrinsic value compounding, and willingness to tolerate multi-quarter market volatility to achieve long-term cash flow goals.
