GRFS - White Falcon Capital Q1 2025 Partner's Letter
2025-04-23 10:50:00 ET
Summary
- The White Falcon portfolio underperformed due to losses in larger positions, despite gains from gold and silver royalties; Converge Technologies was acquired at a premium.
- Market volatility increased post-quarter due to President Trump's tariff announcements; the portfolio remains well-positioned, focusing on high-quality businesses with intrinsic value.
- Strategic allocation to smaller-cap businesses and international equities is emphasized, presenting compelling value opportunities; recent tariff-induced market conditions are seen as temporary.
- Grifols SA, a leading plasma-derived therapies company, is undervalued due to past mismanagement; new management and operational improvements present a significant buying opportunity.
Dear Partners,
While individual client returns may differ based on their inception dates, consolidated performance of all accounts for the period ending March 31, 2025 is as follows:
Q1 2025 |
2024 |
2023 |
2022 |
2021* |
White Falcon (net of fees) |
-6.7% |
14.4% |
36.0% |
-9.3% |
-1.5% |
S&P 500 TR (CAD) |
-4.4% |
35.2% |
23.2% |
-12.6% |
3.3% |
MSCI All Country TR (CAD) |
-1.2% |
26.3% |
18.5% |
-11.9% |
1.5% |
S&P TSX TR |
1.5% |
21.7% |
11.8% |
-5.8% |
-0.6% |
*Performance is from Nov 8 - Dec 31, 2021 |
Our recent quarter's performance was below expectations, as gains from our gold and silver royalty holdings were insufficient to compensate for losses in some of our larger positions. Positively, during the quarter, our portfolio company Converge Technologies ( CTS:CA ) was acquired at a significant premium. This marks the fourth acquisition of a White Falcon portfolio company in the past three years. Subsequent to the quarter end, market volatility increased due to President Trump's tariff announcements. We believe the portfolio is well positioned and will discuss current positioning and our perspective on the tariff situation later in this letter.
The White Falcon portfolio's construction diverges significantly from popular market indexes. Our primary benchmark for success is generating positive absolute returns adjusted for risk over a complete market cycle, rather than simply mirroring or outperforming a specific index. Notably, over the past 12 to 18 months, we have strategically increased our allocation to smaller capitalization businesses which form a very small part of the indices mentioned above. We have also allocated incremental capital to international equities. We believe that these areas of the market currently present some of the most compelling value opportunities....
White Falcon Capital Q1 2025 Partner's Letter