NN - Laughing Water Capital Q2 2024 Letter

2024-07-19 07:32:00 ET

Summary

• Laughing Water Capital is a concentrated, long biased investment partnership open to accredited investors. Our interests are fully aligned with our partners as nearly all of our personal wealth is invested in our strategy.
• For Q2 2024, Class A interests in Laughing Water Capital returned approximately 2.5%, bringing our year-to-date returns to 11.1%.
• According to Bank of America, 2024 is on pace to see the largest spread between inflows to passive strategies and outflows from active strategies on record.

Dear Partners,

For Q2 2024, Class A interests in Laughing Water Capital ("LWC") returned approximately 2.5%, bringing our year to date returns to 11.1%. In the 2nd quarter the SP500TR and R2000 returned 4.3% and -3.3%, bringing year to date returns to 15.3% and 1.7%, respectively. ⁱ As always, please check your individual statements for the most accurate reading on returns as performance can vary based on class, fund, and timing.

If you pay attention to the financial press (which I suggest you don't), you are aware that the headline performance of the SP500 does not tell the whole story, as the market's strength has become concentrated in a select few mega cap stocks. In fact, during the 2nd quarter, stocks related to "artificial intelligence" in the SP500 rose 14.7%, while the rest of the SP500 lost 1.2%. ⁱⁱ Unfortunately, we do not own these AI stocks. Instead, I focus on the hidden corners of the market, confident in the belief that over longer periods of time combining a contrarian streak with businesses that are dealing with some sort of optical, operational, or structural problem that is likely to be temporary can lead to significant outperformance. I consider this belief to be logical, rational, and supported by 100+ years of evidence…...

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