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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Kathmandu Capital 2024 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Kathmandu Capital)

Primary Source Intelligence • Q2 2024 Letter Analysis

Kathmandu Capital Quarterly Analysis

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

Fund Returns

Digest Analysis

Quick Take

"Five-position portfolio includes recovering Cambodia casino monopoly NagaCorp, dominant Kazakhstan payments platform Kaspi.KZ, and European retail tech VusionGroup."

Executive Summary

Kathmandu Capital generated -0.40% net returns in Q2 2024, primarily impacted by oil price volatility following OPEC+ production cut announcements. The fund maintains a concentrated five-position portfolio focused on undervalued small-midcap businesses in inefficient Asian and emerging markets. Key holdings include NagaCorp, showing tourism recovery with traffic approaching pre-COVID levels and 100%+ upside potential by 2029; Kaspi.KZ, generating 20%+ growth as a dominant Kazakhstan payments platform positioned for AI era benefits; and VusionGroup, targeting €1 billion sales with margin expansion opportunities. Despite operating in an environment unfavorable to small-midcap international value strategies, with market concentration at historic highs and Shiller P/E at 36.1x, the manager believes the market pendulum will swing back. The fund employs 3:1 upside/downside margin of safety requirements, avoids leverage, and focuses on businesses with strong balance sheets. Manager expects their patient, research-driven approach to outperform as valuations normalize and emerging markets regain favor.

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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

82%

CautiousHigh

High Conviction (82%)

Extremely high conviction demonstrated through concentrated five-position portfolio maintained since inception. Manager provides specific price targets (100%+ upside for NagaCorp by 2029), detailed position sizing discussions, and explicit commitment to holdings despite volatility. Clear thesis articulation for each named position with willingness to hold through short-term challenges.

Growth Outlook

25%

BearishBullish

Bearish (25%)

Manager acknowledges challenging current environment with stretched valuations and market concentration, but expresses optimism about future pendulum swing back toward their strategy. Sees signs of shift with emerging markets showing resilience and small-midcap rising faster than large cap.

Risk Appetite

50%

DefensiveAggressive

Balanced (50%)

Portfolio remains fully invested in concentrated five-position structure since inception. Manager actively searching for new additions while considering potential exit from oil positions. Maintains risk-on positioning despite acknowledging market challenges.

Capital Deployment

10%

De-riskingDeploying

De-risking (10%)

Portfolio remains fully invested with same five positions since inception. Manager actively searching for new additions but no new capital deployed during quarter. Considering potential exit from oil positions represents rotation rather than net deployment. Slight positive bias due to search for new opportunities.

Forward Guidance

40%

CautiousExpansionary

Neutral (40%)

Manager expresses confidence in long-term approach but acknowledges near-term headwinds. Considering exit from oil positions post-election while continuing to search for new opportunities. Selective deployment bias with patient approach to adding positions.

Language Signal

30%

BearishBullish

Bearish (30%)

Language balances opportunity identification with risk acknowledgment. Uses terms like confident, excited, and outperform, but also discusses mistakes, volatility, and challenging environment. More constructive than bearish overall but measured in tone.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

Manager identifies multiple specific risks including stretched market valuations with Shiller P/E at 36.1x (third highest in history), historic low market breadth with only 24% of S&P 500 outperforming, and significant valuation gaps. Acknowledges challenging environment for their strategy and discusses potential oil price disruption scenarios.

Opportunity Density

45%

ScarceAbundant

Selective (45%)

Manager characterizes current environment as challenging for their strategy, noting difficulty for active managers in current market conditions. However, continues searching for new additions to concentrated portfolio and sees specific opportunities in existing holdings. Selective opportunity set requiring patience and deep research.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Manager demonstrates multi-year investment horizon with specific 2029 price target for NagaCorp and emphasis on patient capital. Discusses holding through short-term volatility and focuses on long-term absolute returns as primary benchmark. Willing to wait for market pendulum to swing back to favor their approach.