Bonhoeffer Capital Management’s Q1 2019 Investor Letter

Bonhoeffer Capital Management is a Rochester, New York-based long-only value-oriented investment partnership owned by Willow Oak Asset Management, a subsidiary of Sitestar Corporation. Its Bonhoeffer Fund was launched in July 2017, and it is managed by Keith Smith, a CFA charterholder, who has more than 20 years of professional experience in investing. Previously, he worked as a Managing Director of a valuation firm, where he sharpened his investment skills in distressed loan and corporate transactions.

Bonhoeffer Fund mainly invests in companies with market capitalizations from $100 million to $500 million, relying on long-only, concentrated, value-oriented investment principles, covering not only the US but also the UK and other emerging markets. Recently, Bonhoeffer Capital Management released its Q1 2019 Investor Letter, a copy of which you can download below. Among other things, the fund reported a return of 4.0% net of fees in the quarter, underperforming its international benchmark, MSCI ACWI ex-US, which posted 10.5% gains for the same quarter.

Dear Partner,

Bonhoeffer returned 4.0% net of fees in Q1 2019, compared to 10.5% for the MSCI ACWI ex-US, an international benchmark. As of March 31st, our securities have an average earnings/free cash flow yield of 20.0% and an average EV/EBITDA of 3.3. The difference between the portfolio’s market valuation and my estimate of intrinsic value is at one of the largest gaps since inception. I do not know when this gap will close but, over time, the gap should converge.

As we settle into spring after a harsh winter in terms of both the weather and the financial markets, I am hopeful that the rest of 2019 will be more stable than the past six months.

Bonhoeffer Fund Portfolio Overview

Bonhoeffer’s investments have not changed significantly in the last quarter. Our largest country exposures include:South Korea, Italy, South Africa, Hong Kong,Norway,and Philippines. The largest industry exposures include: distribution,consumer products, telecom,transaction processing, real estate, and media.”

You can download a copy of Bonhoeffer Capital Management’s Q1 2019 Investor Letter here:


You can also see the list of our 2019 Q1 investor letters and download them on this page.