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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Saga Portfolio delivered 204.6% returns in 2023 after severe 2022 drawdown. Manager maintains conviction in core holdings Carvana, Redfin, and Roku, which demonstrated operational improvements and path to profitability despite challenging conditions."
The Saga Portfolio increased 40.2% net in H2 2023 and 204.6% for the full year, though cumulative returns since 2017 inception remain below the S&P 500 at 69.3% versus 141.4%. Manager Joe Frankenfield emphasizes that 2022's drawdown primarily came from companies he still considers promising long-term opportunities - Carvana, Roku, Redfin, and Meta Platforms. The investment approach focuses on finding misunderstood companies trading below intrinsic value, expecting returns from long-term cash generation rather than selling to others at higher prices. Key holdings made significant progress in 2023: Carvana cut over $1 billion in costs while reaching positive EBITDA, Redfin launched a new agent model reducing fixed costs, and Roku grew to 80 million accounts with positive EBITDA ahead of schedule. The manager believes these companies emerged stronger from 2022's challenges while competitors weakened, creating attractive long-term opportunities despite current market underappreciation of their improved prospects.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
Very high conviction demonstrated through concentrated portfolio, detailed company analysis, and willingness to hold through severe drawdowns. Manager provides specific position sizing language and extensive fundamental analysis for each major holding. Clear thesis for each investment with specific catalysts and timeframes.
Growth Outlook
Manager expresses cautious optimism about long-term prospects but acknowledges challenging market conditions. Believes companies have improved fundamentally but market hasn't recognized this yet. No explicit bullish market commentary, more focused on individual company prospects.
Risk Appetite
Portfolio remains concentrated in core holdings with high conviction. Manager sold Meta but maintains significant exposure to volatile growth companies. Positioning suggests moderate risk appetite with willingness to hold through volatility for long-term gains.
Capital Deployment
Limited deployment activity with only one major sale (Meta) mentioned. Manager describes being highly selective about new investments and requiring wide margins of safety. Suggests patient approach to capital deployment rather than active buying or selling.
Forward Guidance
Manager expects to continue holding current positions and looking for similar opportunities. Selective about new investments, requiring wide margin between market price and intrinsic value. Moderate deployment bias toward attractive long-term opportunities.
Language Signal
Language emphasizes opportunity and attractive valuations for portfolio companies, but balanced with acknowledgment of risks and volatility. More opportunity-focused than risk-focused but not overwhelmingly bullish in tone.
Perceived Risk
Manager acknowledges significant risks including volatility, market misunderstanding, and operational challenges. Discusses drawdown risks and emotional pressures but frames these as manageable within long-term strategy. Moderate risk awareness without alarm.
Opportunity Density
Manager emphasizes difficulty of finding attractive opportunities, stating it's extremely rare to find companies with solid understanding of future that market underappreciates by wide margin. Suggests selective opportunity set requiring patience.
Time Horizon
Explicitly long-term approach with focus on companies' remaining life cash flows rather than short-term price movements. Manager discusses multi-year investment horizons and willingness to hold through volatility. Emphasizes permanent ownership mentality and long-term intrinsic value.
