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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Alluvium's concentrated value strategy outperformed in Q3 2023 despite market headwinds, driven by Capri's takeover premium and strong results from H&R Block and Universal Music. The managers maintained discipline, exiting underperforming positions while adding to quality names at attractive valuations, ending with 16.5% cash for future opportunities."
Alluvium Global Fund delivered a 1.4% return in EUR terms during Q3 2023, outperforming the broader market decline of 3.5%. The concentrated portfolio of 20 holdings benefited from strong performance in Capri Holdings, which received a $57 per share takeover offer from Tapestry, generating a 46.6% quarterly return. Other top performers included H&R Block, Universal Music, and Alphabet. However, the fund faced headwinds from gold mining positions and retail holdings like Dick's Sporting Goods, which struggled with inventory issues and theft. The managers maintained their disciplined value approach, selling positions in Walgreens and Roche due to lost confidence in management execution, while selectively adding to positions like HCA Healthcare and Dick's Sporting when prices fell below their valuations. With rising interest rates creating a challenging environment, the fund ended the quarter with 16.5% cash, positioning for future opportunities while managing downside risk through careful position sizing and valuation discipline.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The fund demonstrates high conviction through its concentrated approach with only 20 holdings, specific position sizing decisions, and willingness to add to positions during weakness. The managers provide detailed rationale for each holding and sizing decision, showing strong conviction in their process.
Growth Outlook
The managers acknowledge challenging market conditions with rising interest rates and reference the potential for rates to continue rising. While they don't express outright bearishness, the tone suggests caution about the current environment.
Risk Appetite
The fund maintains a concentrated portfolio but holds 16.5% cash, suggesting a cautious but not defensive posture. They selectively added to positions when valuations became attractive, indicating measured risk appetite.
Capital Deployment
Cash increased from 11.5% to 16.5% (+5%), indicating net de-risking. However, the managers selectively added to existing positions like Dick's Sporting and HCA Healthcare, showing some deployment activity within existing holdings.
Forward Guidance
The managers express no clear directional bias for future deployment, stating they are 'working away on a few possibilities' but made no new investments during the quarter. They appear to be monitoring opportunities without urgency.
Language Signal
The letter contains more cautious language around challenging conditions, rising rates, and difficult market environment than bullish language, though it's relatively balanced overall.
Perceived Risk
The managers acknowledge challenging market conditions and rising interest rates but don't express alarm. Risk discussion is moderate, focusing on specific company issues rather than systemic concerns.
Opportunity Density
The managers state they are 'working away on a few possibilities' but made no new investments, suggesting limited compelling opportunities in the current environment. The emphasis is on patience and selectivity.
Time Horizon
The fund demonstrates a multi-year investment horizon, holding positions through volatility and making decisions based on long-term valuations rather than short-term performance. The managers reference holding Roche for three years and show patience with underperforming positions.
