TESL - SaltLight Capital Q4 2024 Co-Investor Letter
2025-02-28 02:45:00 ET
Summary
- The SaltLight FR Worldwide Flexible fund returned +20.35% in 4Q24 and +63.24% in 2024, reflecting strong performance in AI infrastructure investments.
- AI is seen as a defining technological epoch with significant long-term investment opportunities, despite current valuation concerns in the US market.
- AI intelligence is rapidly improving, with advancements like reasoning models and AI agents driving productivity and monetization, enhancing the AI Bull thesis.
- SaltLight is focused on AI infrastructure and software opportunities, believing in the transformative potential of AI by 2030, despite potential short-term volatility.
Calendar Year Results: |
Fund Return 1 |
2020 |
3.42% |
2021 |
18.09% |
2022 |
-34.25% |
2023 |
30.82% |
2024 |
63.24% |
Dear Co-Investor
The SaltLight FR Worldwide Flexible returned +20.35% in 4Q24 and +63.24% in 2024.
Year-end letters afford long-term investors to ruminate about where we are and where things could be heading. Too often, our industry’s thinking succumbs to the tyranny of the urgent, mistaking fleeting headlines for enduring trends.
It’s important to think in terms of decades, not quarters. It’s also essential to get the big picture right. Communicating every quarter, we try to illustrate how our thinking evolves. Here is an illustration of how the AI Epoch has unfolded for us:
- 4Q20: We recognised that AI was entering a promising opportunity but highlighted the difficulty in picking early-stage winners and losers in AI models. Our view back then was that “ a more profitable approach in a nascent technological phase is to follow the wise adage of ‘selling shovels to hopeful prospectors in a gold rush’.
- 1Q2021: We wrote an in-depth letter arguing that NVIDIA is the optimal winner in this early phase of the technology, asserting that “ GPUs are structurally superior for AI problems ”.
- 1Q2023: As markets began their recovery, we framed AI as a defining technological epoch, pondering its long-term trajectory and the expansive scope of its impact.
- 1Q2024: We started to become niggly about valuations in the AI infrastructure companies that we had invested in prior years: “ Our investments in AI Infrastructure from three to four years ago have performed admirably for us; however, we became concerned with their high valuations and have pruned them significantly. ”