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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Vltava Fund targets neglected small-cap value opportunities using disciplined position sizing. Recent moves include selling CVS after management's poor capital allocation and adding OSB Group, a specialized UK buy-to-let lender trading at 0.8x book value despite exceptional fundamentals."
Vltava Fund employs a disciplined value investing approach, maintaining 20-25 concentrated positions sized according to a proprietary three-factor model incorporating expected returns, probability, and risk. The fund sold CVS after management reverted to poor capital allocation practices through expensive acquisitions of Signify Health and Oak Street Health, representing the manager's biggest recent mistake in underestimating management's impact on value creation. The fund also exited Crest Nicholson due to Bellway's takeover offer. New addition OSB Group exemplifies the fund's strategy of targeting neglected small-cap value opportunities. This specialized UK buy-to-let mortgage lender trades at 0.8x book value despite 15%+ ROTE, 30% cost/income ratio, and 7% dividend yield. The manager views current market conditions as ideal, with passive investors concentrating on large index constituents while ignoring smaller, often superior businesses. OSB benefits from large banks retreating from buy-to-let lending and UK tax changes favoring Ltd company property ownership. The fund expects 20% annual returns from OSB through a combination of strong ROE and multiple expansion potential.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evidenced by concentrated 20-25 position portfolio with detailed fundamental analysis and specific position sizing methodology. The manager provides extensive quantitative analysis of OSB (ROE, P/B ratios, expected returns) and demonstrates willingness to hold through volatility while also decisively exiting when thesis breaks down.
Growth Outlook
The manager expresses strong optimism about current market conditions, stating they are 'absolutely ideal' and hoping 'the prevalence of passively invested money in the markets continues as long as possible.' This creates abundant opportunities for active stock selection in neglected segments.
Risk Appetite
The fund maintains a concentrated approach with 20-25 positions and continues deploying capital into new opportunities like OSB Group. However, the manager also demonstrates risk management by selling positions when thesis breaks down, as with CVS.
Capital Deployment
Limited deployment activity with one new addition (OSB Group) and two exits (CVS, Crest Nicholson). The letter describes gradual position changes and cautious rebalancing rather than aggressive capital deployment. No cash level changes mentioned.
Forward Guidance
The manager expresses cautious optimism about OSB returning to normal profitability but provides limited explicit forward guidance on deployment plans or market timing. The tone suggests selective patience rather than aggressive deployment.
Language Signal
Language is balanced between opportunity identification (OSB as 'absolutely ideal,' 'very cheap') and risk acknowledgment (CVS as 'biggest buying mistake'). The manager uses both positive opportunity language and cautionary lessons learned.
Perceived Risk
Low perceived risk with minimal risk discussion. The manager acknowledges the CVS mistake as a learning experience about management risk but otherwise expresses confidence in current market opportunities and portfolio construction methodology.
Opportunity Density
High opportunity density with the manager stating current conditions are 'absolutely ideal' for finding undervalued companies. Passive investing dominance is creating abundant opportunities in neglected small-cap and UK equity segments that active investors can exploit.
Time Horizon
Long-term orientation evidenced by focus on multi-year fundamental analysis, willingness to hold through temporary accounting impacts (OSB), and emphasis on long-term ROE and compounding. The manager discusses expected long-term returns of 20% annually for OSB, indicating multi-year investment horizon.
