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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Hosking Partners 2024 Q1 Investor Letter | Buyside Digest

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Primary Source Intelligence • Q1 2024 Letter Analysis

Hosking Partners Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Hosking Partners. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

Digest Analysis

Quick Take

"Hosking Partners continues strong performance with capital cycle investing approach, benefiting from momentum unwind as zero weights to Apple and Tesla drive returns."

Executive Summary

Hosking Partners delivered another positive quarter with gross returns of 20.9% over three quarters versus 16.0% for MSCI ACWI, marking what appears to be the beginning of the long-awaited momentum unwind. Performance came despite a 20% underweight to North America, with contributions from Japan and emerging markets offsetting this drag. The Japanese market renaissance continued with over 50 names adding value through corporate activity and industrial consolidation. Emerging markets saw notable additions including Indonesian financial, Indian gold-loan, and Turkish warehouse positions, while Sri Lankan holdings rose 17% as the economy showed first positive growth since Covid crisis. Zero weights to Apple and Tesla were top contributors, highlighting index concentration unwinding. Mining investments focused on copper supply constraints rather than China demand speculation. The portfolio continues its decade-long reorientation from expensive US markets toward undervalued emerging markets, Japan and Europe, positioning for a multi-year normalization period following market excesses.

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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

72%

CautiousHigh

High Conviction (72%)

High conviction is demonstrated through concentrated geographic positioning with significant underweights to North America and overweights to specific regions. The manager maintains zero weights to major names like Apple and Tesla while making targeted additions to emerging markets. The decade-long portfolio reorientation and specific thesis around capital cycle investing shows strong conviction, though the diversified nature across 50+ Japanese names and multiple emerging market positions prevents a higher score.

Growth Outlook

65%

BearishBullish

Bullish (65%)

The manager expresses constructive optimism about being at the beginning of the beginning of the momentum unwind and describes the emerging outperformance as the arrival of Spring for capital cycle investors. However, this is tempered by acknowledgment of occasional cold nights ahead and the multi-year nature of the normalization period.

Risk Appetite

45%

DefensiveAggressive

Balanced (45%)

The portfolio maintains significant underweight to North America (20%) and zero weights to major names like Apple and Tesla, indicating selective risk appetite. New positions were added in emerging markets and mining, but turnover was modest at 2.8%, suggesting measured rather than aggressive positioning.

Capital Deployment

25%

De-riskingDeploying

De-risking (25%)

Modest deployment activity with 2.8% turnover and notable purchases in emerging markets and mining sector. New positions were added in Indonesian financial, Indian gold-loan company, and Turkish warehouse operator, plus additions to copper basket. However, no cash level changes are mentioned and the activity appears selective rather than aggressive deployment.

Forward Guidance

55%

CautiousExpansionary

Neutral (55%)

The manager indicates continued deployment into emerging markets and mining while maintaining underweights to expensive US markets. The Spring metaphor suggests optimism about the path ahead, though they acknowledge the normalization will take many years and there will be occasional setbacks.

Language Signal

60%

BearishBullish

Balanced (60%)

Language is predominantly positive with terms like renaissance, gratifying, encouraging signs, and Spring arrival. However, this is balanced by references to bloodbath in EVs, pressure on returns, and occasional cold nights, creating a cautiously optimistic tone overall.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

Moderate risk acknowledgment focused on Chinese economy and housing bubble deflation affecting commodity prices, plus concerns about Magnificent Seven companies becoming less capital light. The manager recognizes market excesses of the past decade but frames current positioning as avoiding rather than being exposed to major risks.

Opportunity Density

70%

ScarceAbundant

Abundant (70%)

The manager sees significant latent value in Japanese holdings with industrial consolidation becoming reality, bright investment outlook in Sri Lanka with foreign institutions still largely absent, and encouraging signs in copper supply constraints. Multiple specific opportunities are identified across emerging markets, Japan, and mining sectors.

Time Horizon

75%

Short-TermLong-Term

Decade+ (75%)

Explicitly long-term orientation with references to decade-long portfolio reorientation and multi-year normalization period ahead. The capital cycle investment approach inherently requires patience, and the manager describes this as a work in progress over many years. The Spring metaphor suggests they are prepared for a multi-season journey rather than expecting immediate results.