Mutoro Group Partners, LP
“We’ve survived as well as we have because we keep learning.” – Octavia Butler
As of September 30, 2022. Inception of fund investment activity is January 1, 2015.
Dear Partner,
For the first nine months of 2022, our fund declined by 41.9% on a gross basis. Net of fees and expenses, it fell by 42.6%. In our Q2 letter, I wrote,
The short-term market mood is changing rapidly and unpredictably. It is worth remembering that sudden drops in price do not entail impairment of intrinsic values. Underlying business strength does not typically change as fast. Because of this, as long-term investors, price volatility is our friend.
That was true then and is now.
Our portfolio concentration causes recent price volatility to be more pronounced in our results than warranted by the fundamentals of our underlying holdings. We own 14 companies. Our four largest holdings account for 54.6% of our portfolio. In the first nine months of the year, those four recorded our biggest declines in price, falling between 36.5% to 63.9%. Their prices have fallen because their industries are out of favor. But favor is not fundamentals. While their growth rates have temporarily slowed, they are still improving their business models, competitive positioning, and value.
It is worth recalling that we have in the past weathered substantial declines in the price of our portfolio, both absolutely and relative to our benchmark index. In 2017 and early 2020, we lagged. But we emerged from those periods stronger. Because of the underlying earning power of the companies we own, we will likely rise stronger again. As a result, I continue to increase my limited partner stake.
The table below shows the composition of our portfolio at the end of the quarter:
Portfolio Holdings
Thank you for your ongoing confidence. I welcome your comments or questions.
Sincerely,
Godfrey M. Bakuli
Managing Partner