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.
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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 Lane. 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 than 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.
Article source: https://www.valuewalk.com/2018/04/hedge-fund-letters-q1/