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Spree Capital Advisers’ Q2 2019 Investor Letter

Spree Capital Advisers recently released its Q2 2019 Investor Letter, a copy of which can be downloaded below. The fund is managed by Thatcher Martin and focuses on undervalued companies where its investments can aggregate capital over the long term. Thatcher Martin is a qualified Chartered Financial Analyst (CFA) and Chartered Market Technician (CMT). Prior to Spree Capital Advisers, he served Wolf Hill Capital Management as Senior Analyst for 1 year. Before that, Thatcher Martin worked for Capstone Investment Advisors in long/short credit and equity sectors.

In the letter, the fund provided its Q2 Review that showed a 6.35% market sell off in May, followed by a 7.05% recovery in June caused by increasing tariffs from President Donald Trump on imports from China. The fund also reported that its Spree Capital Advisers Composite Index gained 0.69% net of fees during the quarter, compared to 4.30% that brought the S&P 500, and it discussed Covetrus Inc (NASDAQ: CVET), BlackBerry Ltd (NYSE: BB), and QUALCOMM, Inc.(NASDAQ: QCOM) in the letter.

Q2 Review

In the second quarter of 2019, President Trump abruptly raised tariffs on imports from China. This action led to a 6.35% market sell off in May, followed by a 7.05% recovery in June, on the expectation that the European Central Bank and the Federal Reserve would ease monetary conditions.

Early in the year, we made the conscious decision to not to try to outtrade the market on every new trade war headline or tweet. Our view is that while it is tempting to try to find a signal in the noise, we get a far higher return on invested time by understanding the macro landscape and then constantly reassessing that landscape with any conflicting or supporting actual news. On the macro landscape front, our research suggests that the recent weakness we are seeing in our proprietary leading indicators is primarily a result of businesses curtailing capital expenditures as they wait for clarity on President Trump’s trade war. We believe that the posturing between the US and China will continue long after President Trump leaves office. However, in the near term, financial markets are more likely to be driven by a preemptive cut in interest rates by the Federal Reserve, and by President Trump’s desire to boost stock prices ahead of the 2020 elections by means of a trade deal, capital gains tax cut, and less likely, an infrastructure spending deal. While we are aware that we may be exposed to wider market systemic pressure and second derivative effects from geopolitical posturing in the near term, we are, as always, sticking to our process of researching great businesses with growing competitive advantages and secular tailwinds that drive meaningful shareholder return over the long term. We are excited about the portfolio, and the businesses we are vetting for future inclusion, several of which we discuss below.”

You can download a copy of Spree Capital Advisers Q2 2019 Investor Letter here:

Spree Capital Advisers’ 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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