CMTOY - Alluvial Capital Management Q4 2024 Letter To Partners

2025-01-28 08:10:00 ET

Summary

• Alluvial Fund ended the year up 16.4%, outperforming benchmarks, with steady performance amid high volatility, reflecting its 8-year history of stability.
• Net Lease Office Properties, the fund's largest holding, is impressively reducing debt and selling properties, with shares deeply discounted against asset value.
• McBride Plc and Zegona Communications Plc, UK-listed stocks, show promising performance, with McBride's strong trading update and Zegona's operational turnaround progressing well.
• New significant holdings include Titan Cement International SA and CBL & Associates Properties, both offering attractive valuations and potential for long-term gains.

Dear Partners,

Alluvial Fund completed the year in quiet fashion, rising 0.7%, ahead of the Russell 2000 ( RTY ). For the full year, Alluvial Fund finished up 16.4%, outpacing benchmarks. While the small gain might suggest that calm prevailed in the quarter, small-cap indexes flailed wildly, rising 11% in November before plunging 8% in December. Alluvial Fund was positively plodding in comparison, up 3.3% in November and down 0.3% in December. This steady performance in the face of high volatility is consistent with Alluvial’s 8-year history, during which we have watched the market swing from exuberance to dejection and back over and over again. Our holdings, mostly far from the spotlight, tend to spend most of their time going sideways, only moving on fundamental data contained in press releases and earnings reports. I am more than happy to manage a boring fund in a frenetic world. I sleep well....

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