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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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L1 Capital International Fund 2024 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (L1 Capital International Fund)

Primary Source Intelligence • Q2 2024 Letter Analysis

L1 Capital International Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, L1 Capital International Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD-3%

Annualized+12.2%

Digest Analysis

Quick Take

"L1 Capital's global equity fund underperformed in Q2 due to avoiding Nvidia's AI-driven rally, but maintains disciplined value approach. Key opportunity highlighted in AerCap aircraft leasing at 8x P/E amid industry supply constraints."

Executive Summary

L1 Capital International Fund returned -3.0% in Q2 2024, underperforming the benchmark's 0.3% return, primarily due to not owning Nvidia which alone contributed 30% to S&P 500 gains. The fund's core thesis centers on investing in quality companies at attractive valuations while maintaining valuation discipline. Key detractors included building materials companies CRH and Eagle Materials, which faced weather disruptions and housing softness but now trade at attractive 13-14x P/E ratios. The manager added to AerCap Holdings, highlighting the aircraft lessor's compelling 8x P/E valuation amid structural industry supply shortages. Macroeconomic conditions remain mixed with slowing growth and persistent inflation, while the Fed risks falling behind the curve on rate cuts. The portfolio benefits from geographic diversification across North America, Europe, and Asia-Pacific, with exposure spanning large-cap quality names in technology, healthcare, financials, and materials. Despite near-term headwinds, the manager maintains conviction in their quality-focused approach to deliver risk-adjusted returns through market cycles.

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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

68%

CautiousHigh

Moderate (68%)

The manager demonstrates moderate-high conviction through concentrated portfolio of 20-40 positions with named holdings and specific position sizing. Detailed analysis of AerCap as top 10 holding and willingness to add during weakness shows conviction, though hedged language around macro conditions prevents higher score.

Growth Outlook

38%

BearishBullish

Neutral (38%)

The manager expresses cautious views on markets with mixed economic data, slowing growth globally, and concerns about central bank policy errors. While not deeply bearish, the outlook acknowledges significant headwinds and risks.

Risk Appetite

25%

DefensiveAggressive

Defensive (25%)

Portfolio remains largely invested with cash at only 4%, and the manager is selectively adding to positions at attractive valuations. However, maintains valuation discipline by selling Danaher above fair value, showing measured risk appetite.

Capital Deployment

15%

De-riskingDeploying

De-risking (15%)

Cash reduced slightly to 4% with selective additions to existing holdings and three new 2% positions. This represents modest net deployment but primarily reflects rotation rather than aggressive new capital deployment.

Forward Guidance

0%

CautiousExpansionary

Cautious (0%)

The manager takes a balanced approach to future deployment, topping up existing holdings at fair value while maintaining selectivity. No clear bias toward aggressive deployment or defensive positioning.

Language Signal

45%

BearishBullish

Balanced (45%)

Language includes more risk-focused terms like 'slowing growth,' 'behind the curve,' 'acute tensions,' and 'under pressure' than bullish language, though opportunities are also highlighted in specific names.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

Manager identifies multiple specific risks including slowing growth, central bank policy errors, market concentration, geopolitical tensions, and credit stress among sub-prime borrowers. Risks are named and discussed with meaningful detail throughout the letter.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

Manager sees selective opportunities, particularly in European businesses trading at attractive valuations and specific names like AerCap. However, emphasizes the need for selectivity and patience in the current environment, suggesting moderate opportunity density.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The manager explicitly references long-term investment horizons, discusses multi-year infrastructure spending cycles, and emphasizes looking through short-term pressures. AerCap analysis focuses on long-term industry dynamics and compounding returns over time.