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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Kathmandu Capital's concentrated emerging markets strategy delivered strong Q1 performance through oil and gas exposure and undervalued small-cap positions. The fund maintains conviction in secular energy supply shortages while identifying deep value opportunities like NagaCorp's gaming recovery story."
Kathmandu Capital delivered 17.80% net returns in Q1 2024, significantly outperforming benchmarks, driven primarily by oil and gas positions amid rising crude prices. The fund maintains a concentrated five-position portfolio focused on undervalued small to mid-cap companies in emerging markets, areas bypassed by passive indexes due to size and illiquidity constraints. Key holdings include NagaCorp, a gaming company transitioning to higher-margin business segments while trading at decade-low valuations, and Kaspi.KZ, positioned for multiple expansion as institutional coverage increases. The manager increased oil and gas exposure to 60% of the portfolio based on conviction that secular supply shortages will sustain strong pricing and cash flows. While acknowledging elevated market valuations driven by AI enthusiasm and passive flows, the strategy emphasizes patience arbitrage and fundamental analysis to identify compelling long-term value opportunities. The portfolio remains fully invested as the manager searches for additional excellent businesses meeting strict value criteria in underserved emerging market segments.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Extremely high conviction evidenced by concentrated five-position portfolio with 60% allocation to oil and gas sector. Manager provides detailed thesis for each holding with specific catalysts and maintains positions despite market volatility. Clear position sizing and unwavering commitment to strategy despite market headwinds.
Growth Outlook
Manager acknowledges market optimism from Fed rate cut expectations and AI enthusiasm but expresses caution about elevated valuations and inevitable bull market end. Mixed view balances constructive elements with meaningful concerns about current pricing.
Risk Appetite
Portfolio remains fully invested with concentrated five-position structure and increased oil and gas exposure to 60%. Manager actively seeking new additions while maintaining high conviction positions, indicating selective risk-on positioning.
Capital Deployment
Portfolio remains fully invested with no cash level changes mentioned. Manager increased oil and gas exposure in prior quarter but current period shows stability. Actively searching for new additions indicates deployment readiness but no actual deployment occurred.
Forward Guidance
Manager continues searching for new portfolio additions and maintains conviction in existing themes, but emphasizes patience and selectivity. Forward guidance is constructive but measured, focusing on long-term value creation rather than aggressive deployment.
Language Signal
Language balances opportunity-focused terms around oil, gaming recovery, and undervalued small-caps with risk-aware commentary about elevated valuations, bull market cycles, and market momentum ignoring fundamentals.
Perceived Risk
Manager acknowledges elevated valuations, AI bubble concerns, and inevitable bull market end but doesn't express systemic alarm. Risk discussion is measured and philosophical rather than urgent, focusing on market cycle awareness rather than immediate threats.
Opportunity Density
Manager sees selective opportunities in undervalued small to mid-cap emerging market companies bypassed by passive flows. While acknowledging challenging broad market conditions, maintains conviction that patient research can uncover compelling long-term value in specific segments.
Time Horizon
Strong emphasis on long-term investment horizon with patience arbitrage strategy. Manager discusses multi-year catalysts like tourism recovery and business model transitions. Commitment to holding through volatility and focus on intrinsic value convergence over time indicates extended time horizon.
