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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Cedar Grove Capital Management 2024 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (Cedar Grove Capital Management)

Primary Source Intelligence • Q2 2024 Letter Analysis

Cedar Grove Capital Management Quarterly Analysis

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

Fund Returns

QTD+0.6%

Digest Analysis

Quick Take

"Cedar Grove Capital's 0.6% Q2 return lagged markets due to an ill-timed Xponential Fitness sale."

Executive Summary

Cedar Grove Capital returned 0.6% in Q2 2024, underperforming the S&P 500's 7.8% return primarily due to a poorly timed sale of Xponential Fitness. The manager emphasizes transparency and accountability in his paid research service, which has grown significantly since launching in May. Market conditions show increasing stress with commercial real estate offloading at significant discounts, rising credit card delinquencies, and personal savings rates below 4%. The banking system faces pressure from CRE exposure and unrealized losses. AI continues driving market returns with the Mag 7 contributing 61% of S&P gains, but this concentration poses risks when capex investments slow. Retail results are mixed with companies like Lululemon down 41% while Abercrombie surged 101%. The manager maintains a long-term investment approach focused on debt-light businesses with strong management, prioritizing stress management over short-term gains. His research on Hims & Hers Health has been widely received, with upcoming revenue model analysis through 2025.

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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

45%

CautiousHigh

Moderate (45%)

The manager discusses individual positions like XPOF and HIMS with specific commentary but provides limited position sizing details or portfolio concentration information. The letter focuses more on macro commentary than specific investment theses, and hedged language about market conditions suggests moderate conviction levels.

Growth Outlook

30%

BearishBullish

Bearish (30%)

The manager expresses significant concern about market stress including CRE problems, banking system pressure, inverted yield curve for 1.5 years, rising credit card delinquencies, and employment warning signs. While not calling a recession, he states 'it seems like things are heating up where the FED is going to need to do something before it's too late.'

Risk Appetite

10%

DefensiveAggressive

Defensive (10%)

The manager maintains his long-term positioning despite market stress, focusing on debt-light businesses with strong management. He acknowledges willingness to 'suffer from some painful drawdowns' but shows no indication of reducing risk or raising cash significantly.

Capital Deployment

0%

De-riskingDeploying

De-risking (0%)

No specific cash level changes or deployment activity mentioned. The manager sold XPOF during the quarter but this appears to be a single position exit rather than systematic deployment or de-risking. No indication of net capital movement in either direction.

Forward Guidance

45%

CautiousExpansionary

Neutral (45%)

The manager shows no urgency to deploy capital or make significant changes, emphasizing patience and long-term approach. He states he can 'sleep well at night' with current positioning and focuses on stress management rather than active deployment.

Language Signal

38%

BearishBullish

Balanced (38%)

Language is dominated by risk-focused terms including 'stress,' 'warning signs,' 'solvency issues,' 'bank failures,' 'painful drawdowns,' and 'one hell of a pop' when AI bubble bursts. Positive language is limited to specific stock research success.

Perceived Risk

75%

Low RiskElevated

Elevated Risk (75%)

The manager identifies multiple systemic risks including CRE stress, banking system pressure, credit card delinquencies at recession-like levels, inverted yield curve for 1.5 years, and concentrated AI bubble risks. He explicitly states 'it seems like things are heating up' and references potential bank failures and market corrections.

Opportunity Density

45%

ScarceAbundant

Selective (45%)

The manager shows selective enthusiasm for specific opportunities like Hims & Hers research but doesn't characterize the overall opportunity set as abundant. Mixed retail results and focus on finding debt-light businesses with strong management suggests a selective, not abundant, opportunity environment.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The manager explicitly emphasizes 'long term' investing multiple times and states willingness to 'suffer from some painful drawdowns on the path' to long-term growth. He contrasts his approach with 'macro trades' and emphasizes sustainable positioning over quarterly trading gains, indicating a multi-year investment horizon.