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Hayden Capital’s Q2 2019 Investor Letter

Hayden Capital, a New York-based investment management firm, released its Quarterly Investor Letter – a copy of which can be downloaded below. Founded by Fred Liu, the company focuses on concentrated, long-term, value investing. Liu held various analyst roles at New Street Research and J.P. Morgan before starting Hayden Capital. He holds a bachelor’s degree from the Leonard N. Stern School of Business at New York University.

In the recent investor letter, Liu reported an 11.98% gain during the second quarter, outperforming S&P 500 and the MSCI World Index. The company’s year-to-date (YTD) performance is currently at +28.48%.

“Dear Partners and Friends,

Our portfolio continued its recovery in the second quarter, and at a stronger pace than the broader market indices. During the second quarter, our portfolio appreciated +11.98% (net of fees), compared with the S&P 500 at +4.30% and the MSCI World index at +3.45%.

This brings our year-to-date performance to +28.48% vs. +18.54% for the S&P 500 and +16.33% for the MSCI World. The performance was led by our newest positions in Sea Ltd and Carvana, which have appreciated +193.6% and +92.3% year-to-date, respectively.”

In the report, Liu admitted that his job as the firm’s portfolio manager has become more challenging during the quarter.

“It seems every investor letter I mention a new low in our cash levels, and this quarter is no different. Our cash exposure averaged 3.70% during the quarter, which includes a small hedging position that was put on recently. Our portfolio is now “fully deployed” (despite it taking us 4.5 years to get here!).

Additionally, this also means my job as your manager has become harder. This is since our opportunity cost for new positions is now our “worst position”, rather than an absolute hurdle rate on available cash.

If I’m doing my job correctly, and pick good companies to invest in, the opportunity cost for even our worst position should be higher than the previous cash hurdle. It’s a good problem to have though, as we constantly aim to upgrade the quality of our portfolio.”

You can download a copy of Hayden Capital’s Q2 2019 Investor Letter here:

Hayden Capital’s Q2 2019 Investor Letter

You can also see the list of our 2019 Q2 investor letters and download them on this page.

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