Our latest thoughts

Dear Partner, We are proud of how we have executed our strategy through the last few years’ turmoil; mostly, I am pleased with how this year unfolded and how the returns were generated. We can best explain our year’s good fortune by thinking of it in three layers: 1) staying the course in a good strategy; 2) leaning into more technology shares in 2022 when it was considered out-of-favor to capture the strong recovery; 3) picking off a select few opportunities uniquely positioned for strong...

Dear Partner, After such a strong start to the year, the third quarter’s relapse was not entirely unexpected. A sell-off in long-term Treasury bonds triggered broad risk aversion and valuation compression across most asset classes. Notably, bonds are now in their third consecutive year of losses, an unprecedented event in modern financial history. The recent eighty-four basis point surge in yields represents the largest quarterly increase in...

Dear Partner, Overall, the portfolio continues to perform well, because our companies adapted to a changing economy and reported solid earnings, while market sentiment also shifted to a more sanguine assessment of inflation and the economy. Surprising to many, equity markets experienced one of the best first halves on record, in defiance of the incessant calls for a recession and more stock losses after a tough 2022.  However, Bowie benefits from our collective experience...

Dear Partner, Debates rage regarding hyper-inflation versus a deflationary bust; soft economic landing versus a hard landing; rapidly rising interest rates versus predictions of interest rate cuts; isolated bank runs versus systematic issues in the global banking system. Bad news seemingly lurks around every corner.  It may surprise you then that our portfolio’s value has rallied in the past six months as these...

Dear Partner, By most any measure, last year was a tough year.   After three (even five) years of outsized returns, a valuation reset was due, and we were not immune.  For context, financial assets such as stocks and bonds both declined the most in any year since the financial crisis.  Even so, this market felt even worse than the numbers would indicate because the sell-off has been longer, and sustainably more volatile, than at any time in the past decade...

Dear Partner, Consistent with the prior two quarterly letters, financial markets continue to struggle with the prospect of higher interest rates with both stocks and bonds experiencing one of their worst years on record.  The speed of interest rate increases (fastest in almost forty years) and thus the valuation compression are so swift that companies do not have enough time for earnings to outgrow the valuation multiple decline.  This process has...