I hope this letter finds you and your loved ones safe and well. The COVID-19 pandemic has brought human tragedy, a shut-down of economic activity, fear, panic and uncertainty. My thoughts and prayers go out to the families and front-line heroes combating the disease, as well as those facing economic hardship.
I am optimistic that society’s coordinated response to COVID-19 will stunt the death toll and save lives, however, it is my expectation that the ensuing economic destruction will be deep and prolonged. Please know that our partnership’s long-term mandate and strategy remain unchanged, that is: to grow real economic wealth with capital preservation as a primary consideration. While I am pleased with the Fund’s performance, it would be wise of us to remember our long-term mandate, expect short-term volatility and not to extrapolate on any particular month or quarter. I remain focused on our core principles that I expect will enable our strategy to thrive, namely:
- Investing in dominant franchises with long-term growth trajectories, robust cash flows and strong balance sheets
- Shorting weak businesses with long-term declining cash flows and high levels of indebtedness
- Emphasis on capital preservation (portfolio management)
- Conservative balance sheet (limited-to-no leverage)
- Diversification (position sizes limited to 1-4% at cost)
- Liquidity (ability to convert to cash within a day)
As always, my personal family balance sheet is invested with yours and I am grateful for your trust and partnership. Given the extraordinary circumstances and economic risks ahead, I am more than happy to make myself available to any of your friends or family that are in need of investment advice. Please feel free to share my contact information and reach out anytime.
Your partner and fiduciary,
Faris Jafar, Chief Executive Officer
Phone: (734) 678-8562