Mutoro Group Partners, LP
“The secret of getting ahead is getting started.”
– Mark Twain
|
Annual % Change |
Compound % Change |
||||
|
MGP, LP (Gross) |
MGP, LP (Net) |
HFRI Fund Index |
MGP, LP (Gross) |
MGP, LP (Net) |
|
|
2015 |
(3.5%) |
(5.0%) |
(1.1%) |
(3.5%) |
(5.0%) |
|
2016 |
24.5% |
18.9% |
5.4% |
9.6% |
6.3% |
|
2017 |
(3.3%) |
(4.7%) |
8.6% |
5.1% |
2.5% |
|
2018 |
(0.9%) |
(2.4%) |
(4.7%) |
3.6% |
1.2% |
|
2019 |
30.0% |
23.9% |
10.4% |
8.4% |
5.4% |
|
2020 |
34.2% |
25.7% |
11.8% |
12.3% |
8.6% |
|
2021 |
8.5% |
5.5% |
10.2% |
11.8% |
8.1% |
|
2022 |
(44.8%) |
(45.7%) |
(4.3%) |
2.3% |
(0.8%) |
|
2023 |
21.6% |
19.9% |
8.1% |
4.3% |
1.3% |
|
Q1 2024 |
4.6% |
4.3% |
4.9% |
4.7% |
1.7% |
|
Aggregate |
53.0% |
17.1% |
59.5% |
||
|
Annualized |
4.7% |
1.7% |
5.2% |
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Dear Partner,
For the first quarter of 2024, our fund returned 4.6% on a gross basis. Net of fees and expenses, it returned 4.3%.
I have long found the business origin stories of investors fascinating. Take, for example, Warren Buffett’s. As a boy, he delivered newspapers in Washington, D.C., with industrial efficiency. Or Ed Thorp’s. In his late 20s, he used his mathematical skills to beat Vegas blackjack tables, transforming those skills into a successful book on the subject and investment strategies in the public markets. These early life stories suggest preternatural entrepreneurial instincts that led to their future success.
I have rarely told my own story. With its twenty-year anniversary this spring, now seems an appropriate time to share it. While I had a newspaper route growing up, I doubt that set me on my path today. My story seems a bit different than any I have read.
Twenty years ago, as a first-year student at Williams College, I did a somewhat clever and unusual thing: I read and audited my college’s tax returns. Every year, a student was granted access to the school’s controller—its top financial accounting executive—to interview her and write an article for the student newspaper on the financial happenings of the institution. Because tax returns and the word “audit” generally elicit yawns as wide as the Grand Canyon, most years this article drew little interest. As a result, it usually left little impact. It was typically a fluff piece featuring trivia such as the compensation of the college president and the names of top-paid professors. Unsure if I wanted to become a student journalist, but interested in this assignment, I raised my hand for the job. I wanted to take it more seriously.
I thought it would be fun to ask the controller a few more questions than usual. I was curious to see what I could learn. At first, everything seemed up to snuff, and I filed an article no different than those before mine. But as I reflected on the experience and discrepancies in the answers to my questions, I learned more. And what I learned shocked the campus in a big way. I uncovered that the college was illegally taxing the student body. And it had been going on for decades.
Essentially, the college had charged students a sales tax on purchases in campus cafés and dining halls, even though Massachusetts state law explicitly forbade it. This had cost students, in the aggregate, several thousands of dollars each year in unnecessary taxes.
After a back-and-forth with the controller’s office revealing my findings, I successfully repealed the sales tax, saving my classmates money every day. Without the tax, each student could now, with their daily meal plan, for example, buy an extra drink. It was as though I had gifted all 2,000 students a free drink every single day. For my efforts, I earned the trust of my peers and was later elected Student Body Treasurer and then President, unprecedentedly without any opposition.
I learned three critical lessons from this experience that have served me well since:
The quality of our lives expands and contracts by the quality of the questions we ask the world and ourselves.
The value of digging through dry, ignored documents. In doing so, you could find benefits for yourself and for your community.
Some institutions may be wealthy and powerful, yet they are filled with humans, making their operations inherently fallible. Mistakes made by such institutions can have meaningful consequences, and questions posed toward “boring” topics can be revelatory. If good people run the ship, they do not shy from the questions or the consequences of what those questions uncover. Not everyone in the college administration was good—a story for another day—but I think the controller was. She acknowledged the problem non-defensively and helped me overturn it. When I graduated a few years later, I walked by her office. She stuck her head out and quipped, “I’m so glad you’re graduating. We’re still afraid of you.” We both laughed.
The whole experience thrilled me. I was hooked. Though I would only learn what I was hooked on a few years later. I eventually learned about Warren Buffett and value investing. In how investors like him closely studied company fundamentals, posed questions, and stood with their convictions, I saw a philosophical structure for the intrinsic behaviors I had demonstrated in my collegiate audit adventure.
Twenty years later, I have found a vocation doing much of the same through The Mutoro Group: Asking questions, digging through dry, ignored documents, and not letting the wealth and power of an institution intimidate me from learning what’s really going on. Occasionally, it benefits me and my community.
In related news, the strategic advisory firm I founded, Pioneer Strategy Group (or “PSG”), has continued its early success in solving client problems. I am increasingly optimistic about its future and how it will benefit our investments and operations, both in our public company portfolio and future private company investments. After its first 29 months of consistent operations, PSG is approaching $2 million in revenue.
The table below shows the composition of our portfolio at the end of the quarter.
Portfolio Holdings
Thank you for your ongoing partnership and confidence. I welcome your thoughts and questions. If you would like to add to your investment or know someone who might like to join us, please feel free to reach out.
Sincerely,
Godfrey M. Bakuli
Founder & Managing Partner