Market Update

Q2 2021 Market Update

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Fundamentally speaking, all of our Long investments reported strong earnings results and their respective management teams are seeing accelerating profit momentum in their businesses.  Given the robust fundamental trajectory and long runway for structural growth in our portfolio companies, I believe our Partnership is well positioned for substantial future investment returns.

In my first Annual Letter to Investors, I presented my belief that a long-term investment horizon supported by fundamental analysis (i.e. understanding the durability and trajectory of a company’s cash flows), coupled with prudent portfolio management (e.g. a liquid, diversified portfolio and conservative balance sheet) are essential elements to capital preservation and growing wealth.  In a world where market participants are focused on arbitrary benchmarks and chasing short-term returns regardless of asset quality (i.e. not giving proper consideration to long-term prospects and inherent risks), duration is our most strategic advantage.  

Our Long investments collectively reported +42% revenue growth in 1Q21 which is on top of the +25% growth reported during the same period last year – further demonstrating a healthy acceleration in their journey to becoming structurally larger and more valuable businesses.  

A core principle of our long-term mandate is that capital preservation is the primary consideration in our investment process.  Our continuous research and data analysis help to maintain our humility and intellectual honesty as to whether our portfolio companies are meeting our expectations – because if not, we must consider exiting the respective positions.  That said, when shortsighted market participants are selling dominant franchises with accelerating profit growth (especially while exceeding our expectations), we will happily lean on our competitive advantages and invest in those franchises at discounted prices to enhance our Partnership’s long-term profit potential.  

As always, my personal family balance sheet remains fully invested in our Partnership and I am excited about our future.  Thank you for your trust and please feel free to reach out anytime. 

Your partner and fiduciary,

Faris Jafar, Chief Executive Officer

Phone: (734) 678-8562