Livermore Partners Up 7.4% In Q1 2018
Northbrook, IL event-driven activist Livermore Partners published its Q1 2018 investor letter today. AlphaWeek republishes it here, with permission.
2018 started off with continued optimism yet ended with a whimper. As finally, we began to see cracks form within the market's vast run. This was well overdue.
A more hawkish Federal Reserve, Geopolitical concerns, and "peaky" FANG stocks lead the market to a sudden and sharp correction. Our 2017 Q4 letter timing was excellent with our professional boxing reference about a solid upper-cut and our view the market is due to fall. Which ultimately was hit hard in February and has yet to fully recover.
That said, Livermore Partners, and given our focus on special situation stocks (and weighted heavily to commodities and financials) allowed us to capture strong gains of 7.4% percent for Q1. We continue to see value in the likes of small energy producer, Jadestone Energy, British luxury-brand Burberry, and many other global names. Our latest presentation will be released soon and it will provide further details on new opportunities and where we've captured gains these past years.
This is an optimal time for those on the hunt for value.
As we approach Q2, our theme continues to gain as volatility is here to stay. Which finally witnessed the pendulum swing back to active investing. Coupled with Livermore's select activist approach, can work very well as price discovery on sell-offs become overdone and special situations present themselves. Livermore has now run over 9 activist processes and taken 2 Board seats. Which offers Boards a fresh perspective and unique ways to unlock value. We also engage strong operating partners similar to the largest private equity firms. Something I am proud of and which increases Livermore's competitive advantage even further.
Value seeking investors and hedge funds have been hurt these past few years. Very hard. The root cause of which was global central banks massive quantitative easing to spur growth. Which lead to an era of cheap money flooding the system and the ultimate rise of passive ETF's.
As one seeking Alpha, it was never fun to witness or be a part of. Unless of course, you're a market spectator, closed your eyes and just rode the wave (isn't this what they call "flying blind?").
But recently, I stumbled upon Sylvester Stallone's Rocky III on late night cable (no Netflix here), I then recalled Rocky actually lost to Clubber Lang. Which led him to lose his spark and question his abilities. In the end, he sole searched, adjusted, and then defeated the much stronger Clubber with a series of strategic moves. As well as gain help from his new buddy, Apollo Creed. The movie was all about falling from grace, but somehow rediscovering the hunger to re-group, alter one's skill-set, so as to once again thrive. Against all odds...
It was very well done and I recommend it. In the next sequel, the movie took a different route and it was onto Drago! (a Rocky IV reference for anyone younger that 45).
Speaking of Drago; Russia, Syria, China, and North Korea have all been headlines as geopolitics are stoking much headline risk. Trade wars (and potential real wars) are heating up fast. This has recently lifted front month Brent crude and gold. Next to my children, two of my favorite topics for discussion.
So the path forward for Livermore in 2018 remains strong. We will work hard and strive to outperform. I am growing ever-confident in our approach given the shift in tide. The increased volatility is also a godsend. Allowing for better trading and investing ideas to manifest.
Lastly, and on a sad note, I wanted to take the time to mention that my dear friend, client, and mentor Sam Belzberg recently passed away. Sam was a pioneer corporate raider and flat out great investor. Along with being a strong family man and perfect gentleman. (See link to the NY Times story https://nyti.ms/2GnbDz8)
He will truly be missed.
Look forward to our next update and wish you all a great Spring. Chicago remains very cold this April.
"Its not how hard you hit. It's how hard you can "get" hit and keep moving forward-that's how winning is done..."
David L. Neuhauser
Livermore Partners "