PDD - Upslope Capital's Q4 2024 Investor Letter

2025-01-17 06:50:00 ET

Summary

• Upslope aims to deliver equity-like returns with reduced market risk; Q4 was challenging due to underperforming longs and dragging shorts, compounded by process errors.
• Key mistakes included slow de-grossing, a research miss with Barry Callebaut, and an overweight in Europe, which led to significant losses.
• New long positions in Charles River Labs, V.F. Corp, and QinetiQ reflect optimism despite market challenges, focusing on undervalued sectors and turnaround potential.
• 2025 presents a mix of exuberance and pessimism; Upslope remains focused on quality and well-positioned cyclical European businesses trading at discounts.

Dear Fellow Investor,

Upslope’s objective is to deliver attractive, equity-like returns with significantly reduced market risk and low correlation versus traditional equity strategies. Q4 was the most challenging quarter for Upslope since early 2021 (peak of the SPAC/meme stock bubble). Longs underperformed and shorts dragged. Month-to-date performance has been similarly challenging (approximately -4% as of this writing). ¹ In addition to a tough market environment, I made mistakes that made things worse. I’ll elaborate below....

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