2024-06-22 04:35:00 ET
Summary
- Bireme Capital is a Registered Investment Advisor located in the Commonwealth of Pennsylvania and the State of Connecticut. Bireme provides investment advisory and related services for clients nationally.
- Fundamental Value returned -10.9% in the first five months of 2024, significantly underperforming the S&P 500's 11.3% return.
- Today interest rates have normalized, and limited cuts are on the horizon. What justifies high valuations now?
In the first five months of 2024, Fundamental Value returned -10.9% net of fees, significantly underperforming the S&P 500's ( SP500 , SPX ) return of 11.3%. FV is now up 388.0% net since inception in 2016 vs the S&P at 190.7%, an annual outperformance of 7.7%. 1
For monthly performance see our tearsheet .
Our 2024 returns thus far have been extremely disappointing. However, despite this underperformance - in fact, because of it - we are feeling increasingly encouraged about the prospect of strong relative returns in the future. We have doubled down on our strategy of differentiating ourselves from the S&P. We have increased the scale of our investments outside the US, and added to our short book inside the US. Much more below.
Market commentary
In our last letter , we wrote that the market was pricing in an immaculate landing:
Equities are priced for a Goldilocks economic scenario: not too hot, not too cold. A hot economy with stubbornly elevated inflation is a problem for valuations. A cold economy with recession is a problem for earnings. Our personal view is that the too-hot scenario is the most likely - the labor market and hence the consumer remains extremely strong - but either outcome seems possible.
Read the full article on Seeking Alpha
For further details see:
Bireme Capital May 2024 Investor Letter