Livermore Partners update for the year ended December 31, 2021, titled, “The Great Unwind Has Begun.”
Q4 2021 hedge fund letters, conferences and more
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy Read More
The Great Unwind Has Begun
A major "market rotation" is finally occurring to start 2022. With Livermore early on the call that higher inflation will be very sticky, and that overvalued tech, many trading at 30X sales would be negatively impacted by an unwind of ultra loose monetary policy by the FED. With that, capital is now moving into value stocks and select commodity producers. It's about time!
For 2021, Livermore's event-driven hedge fund ended with a gain of 15.89%. Mainly due to our heavy investment in select energy companies such as: Jadestone Energy (LON:JSE) and Vista Oil and Gas (NYSE:VIST). Copper also produced strong gains (i.e. Solgold LON:SOLG) as we continued to hold positions in the red metal. Including some out of favor and deep-value plays such as gold miners. One's that produce strong cash flows and trade at 10X FCF multiples, or even exploration led miners with huge upside potential (AEX GOLD LON:AEXG).
We held a very limited short book as hedges during the year since many short sellers were badly hurt due to the memes trade frenzy. Where it was downright dangeous to be short. Still, Livermore tread carefully and focused on larger tech as short targets. Ones that could witness strong downside as multiple compression occurred. Therefore, we realized gains on our publicly named shorts in Cathie Wood's "bubble basket" of a mutual fund (NYSEARCA:ARKK) as well as social media giant, Meta (Facebook NASDAQ:FB) in 2021.
For 2022, it's all about yields and the pace of tightening. With the big question of whether the FED will remain behind the curve or become more aggressive on an interest rate path lift off. As of today, and even with indexes negative to start 2022, Livermore is up 3%+ YTD.
I think it is important to note that many of our market comments have been public and in print. So it's great to see that it has been a correct call and helped our hedge fund prosper. In fact, Livermore just finished our sixth full-year and now sports an annualized 22.5% gain over those six years.. A very nice feat for any hedge fund in such a challenging global investment environment.
This week, we will take part in some market events and will make sure to pass along clips from the programs.
Until then, warm wishes and let's hope for another strong year for the fund!