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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Kathmandu Capital 2023 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Kathmandu Capital)

Primary Source Intelligence • Q3 2023 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

"Portfolio dominated by oil/gas positions on supply constraints, Cambodian gaming monopoly, Kazakhstan fintech super app, and electronic shelf label leader. Manager demands 3:1 upside/downside ratios while maintaining conservative stance amid macro uncertainty."

Executive Summary

Kathmandu Capital delivered 6.46% net returns in Q3 2023 versus -3.27% for the S&P 500, maintaining a concentrated portfolio of 5 holdings plus 14% cash. The fund targets deep value opportunities across global markets, with oil and gas positions representing over half the portfolio based on structural supply constraints and permanent capacity loss. Key holdings include Nagacorp, a Cambodian gaming monopoly trading at 6.3x forward P/E despite real estate worth more than market cap; Kaspi.KZ, a Kazakhstan fintech super app with 44% margins trading at 8.5x earnings; and SES-imagotag, the global electronic shelf label leader acquired after a 60% selloff from a short report. Manager Vincent Lo emphasizes asymmetrical risk-reward with minimum 3:1 upside/downside ratios, leveraging extensive due diligence including on-ground research. The strategy focuses on underfollowed, high-quality businesses with pristine balance sheets trading at significant discounts, while maintaining conservative positioning amid macro uncertainty and readiness to deploy cash opportunistically.

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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 concentrated portfolio with only 5 named holdings, each with detailed thesis and specific valuation metrics. Manager provides explicit upside targets (100%+ for multiple positions), discusses extensive due diligence including on-ground research, and states minimum 3:1 upside/downside requirements. Strong declarative language about position sizing and conviction levels.

Growth Outlook

38%

BearishBullish

Neutral (38%)

Manager states neither developed nor emerging markets look particularly attractive, citing China's Covid recovery issues, U.S. inflation and labor strikes, and emerging market governance problems. Language emphasizes caution and macro uncertainty rather than optimism about market conditions.

Risk Appetite

15%

DefensiveAggressive

Defensive (15%)

Portfolio maintains 14% cash position indicating some caution, but manager expresses comfort with concentrated 5-holding structure and willingness to invest with conviction when opportunities arise. Positioning is selective but not defensive, with over half the portfolio in oil and gas showing some risk appetite.

Capital Deployment

5%

De-riskingDeploying

De-risking (5%)

Portfolio maintains 14% cash position with no indication of recent deployment activity. Manager describes being selective and waiting for opportunities while earning 4% on cash. No evidence of significant new capital deployment or cash level changes during the quarter.

Forward Guidance

10%

CautiousExpansionary

Cautious (10%)

Manager states they will actively seek opportunities to deploy capital as they arise and continue hunting for bargains globally. However, emphasis on selectivity, patience, and maintaining conservative stance suggests measured rather than aggressive deployment bias.

Language Signal

45%

BearishBullish

Balanced (45%)

Language contains significant risk-focused terms including 'precarious house of cards,' 'systematic corruption,' 'value traps,' and 'macro uncertainty.' While opportunities are discussed, the overall tone emphasizes caution and challenges more than bullish opportunity language.

Perceived Risk

72%

Low RiskElevated

Elevated Risk (72%)

Manager identifies multiple specific macro risks including China's real estate issues with cascading default potential, U.S. inflation and rate impacts, emerging market governance problems, and systematic corruption. Describes investing as 'precarious house of cards' and emphasizes idiosyncratic risks and value traps throughout the letter.

Opportunity Density

35%

ScarceAbundant

Selective (35%)

Manager states opportunities 'appear to be few and far between' and describes the need for extensive selectivity. While specific opportunities are identified in portfolio holdings, overall characterization suggests sparse opportunity set requiring patience and meticulous selection process.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Manager emphasizes long-term investing with conviction, mentions 2030 targets for Nagacorp, 2-3 year outlook for Kaspi, and 4-5 year horizon for SES-imagotag. Uses permanent capital language and discusses holding through volatility, indicating multi-year thesis timeframes rather than catalyst-dependent short-term positioning.