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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Militia Capital's multi-manager transformation is working exceptionally well, with uncorrelated strategies delivering 13.2% returns while improving risk metrics. The new PM provides negative correlation during speculative surges, boosting combined Sharpe ratios."
Militia Capital delivered 13.2% returns in the first two months of 2024, significantly outperforming the S&P 500's 6.9% gain, with 1% from longs and 12.2% from shorts. The fund is currently 190% long and 115% short. The key development is the successful implementation of a multi-manager strategy, with a new portfolio manager showing negative correlation to the main strategy, particularly during speculative market surges when ARKK and IWM spike. This uncorrelated approach has improved the combined Sharpe ratio from 3.64 to 3.98 despite the new PM managing only 9% of AUM. Manager David Orr is offering extremely generous terms to attract top talent, including 60% of performance fees for the first three years and potential 90% partnership stakes thereafter. The goal is to maintain strong absolute returns while reducing risk and drawdowns through diversified alpha generation. Orr believes this approach will scale better than traditional single-manager strategies and has additional high-quality PMs lined up to join the platform.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
The manager demonstrates high conviction through concentrated positioning (190% long, 115% short), specific performance attribution (1% from longs, 12.2% from shorts), and decisive strategic pivoting to multi-manager approach. The willingness to offer extremely generous terms to attract talent and the definitive statements about future performance indicate strong conviction in the strategy.
Growth Outlook
The manager expresses strong optimism about market opportunities, particularly in the context of his multi-manager strategy working well. He mentions being 'the most excited I've been since April 2018' and believes future results could be as strong as in the past, indicating a constructive market view.
Risk Appetite
The fund maintains aggressive positioning at 190% long and 115% short, indicating high risk appetite. However, the focus on risk management through uncorrelated strategies and the emphasis on reducing drawdowns shows some risk consciousness, preventing a higher score.
Capital Deployment
While no specific cash level changes are mentioned, the manager is actively deploying capital into the multi-manager strategy with a new PM managing 9% of AUM. The active recruitment of additional PMs and willingness to accept more money from current LPs suggests moderate deployment activity, though specific cash deployment metrics are not provided.
Forward Guidance
The manager is actively deploying capital into the multi-manager strategy, has additional PMs lined up to join, and is actively seeking new talent. The language around scaling up and expanding the platform indicates strong deployment bias and growth intentions.
Language Signal
The letter is dominated by positive language around opportunities, excitement about the strategy working, and optimistic projections about future performance. Terms like 'powerful,' 'excited,' and 'strong results' outweigh the limited risk discussion, though the tone is more analytical than euphoric.
Perceived Risk
Risk discussion is minimal and primarily focused on operational risks like 'large, hidden tail end risks or tilty behavior' from PMs. The manager briefly mentions monitoring for these risks but doesn't elaborate on systemic or market-wide concerns. Most of the letter focuses on opportunities rather than risks.
Opportunity Density
The manager sees abundant opportunities in the multi-manager approach, has additional high-edge PMs lined up, and is actively seeking new talent. The success of the current strategy and plans for expansion suggest a rich opportunity set in terms of both talent acquisition and strategy implementation.
Time Horizon
The manager explicitly discusses a three-year evaluation period for new PMs, partnership structures designed for long-term relationships, and references to wanting LPs invested 'for many years.' The focus on building a sustainable platform rather than short-term gains indicates a multi-year investment horizon.
