Mutoro Group Partners, LP
“The Noah rule: Predicting rain doesn’t count; building arks does.” — Warren Buffett (2001)
|
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% |
|
2024 |
23.8% |
22.0% |
10.4% |
6.1% |
3.2% |
|
Q1 2025 |
(7.2%) |
(7.6%) |
(0.4%) |
5.2% |
2.3% |
|
Aggregate |
68.0% |
26.7% |
67.0% |
||
|
Annualized |
5.2% |
2.3% |
5.1% |
||
Dear Partner,
For the first quarter of 2025 our fund declined 7.2 percent gross and 7.6 percent net of fees. We ended the period with stakes in 13 companies—two immaterial—leaving 11 core holdings in our concentrated portfolio.
We finished 2024 holding 4.5 percent in cash; by the close of Q1 2025 that figure had risen to 22 percent. This should surprise few given the cash buffers we have historically carried and the warning I sounded in my Q3 2024 Letter of November 15, 2024:
The national political climate is moving toward greater levels of uncertainty, with misguided ideas gaining new ground and suggesting a negative economic and social outlook. These include tariffs; mass deportations; appeals to white supremacy and misogyny; cuts to environmental regulations; and reductions in social programs for disadvantaged Americans. The choices we make have consequences, though the magnitude of those consequences isn’t always clear when we make them. Elections—choices made en masse—do too. On top of all of this, broad equity indices are approaching valuation peaks not seen since the late 1990s tech bubble, while higher inflation and interest rates seem back on the table.
As expected, the turnover in Washington pushed chaos, incompetence, and cruelty to center stage, fertile ground for volatility. Between January 29 and March 13, 2025, we increased cash by exiting one financial-services position and trimming two overweight tech holdings, each offering limited additional upside. Since then we have been steady net buyers, not because broad valuations suddenly look sensible, nor because we have newfound faith in the stability, integrity, or thoughtfulness of today’s political leaders, but because a handful of businesses we study began trading at genuinely attractive prices relative to their likely long-term value.
One example is Mytheresa, which I featured in my 2024 Annual Letter published on February 15. Between that date and April 5, three days after the so-called “Liberation Day,” Mytheresa’s shares declined more than 40 percent; they have since rebounded significantly. We kept buying throughout. The stock moved from deeply undervalued to ridiculously undervalued, and back to deeply undervalued. As owners of the company's shares since 2021, we are accustomed to such swings, especially after the 2022 to 2024 shake-out in digital luxury that eliminated nearly all its competitors. External drama from Washington has not derailed the company: On April 23, Mytheresa completed its acquisition of Yoox Net-a-Porter and soon after rebranded as LuxExperience (ticker LUXE). Mytheresa represented 13.9 percent of our portfolio at quarter-end, up from 12.0 percent at year-end.
*****
On May 3, I had the good fortune of being in Omaha to witness history in-person: Warren Buffett announced his intention to step down as CEO of Berkshire Hathaway after 60 years at the helm. The Mutoro Group might have never existed had I not learned of Buffett 17 years ago. I have often sprinkled his words and wisdom throughout these letters the last ten years. As I wrote in an essay last year titled Equity in Equities:
In my early 20s, working my first job out of school, I received a promotion and a large, unexpected cash bonus. The day before the payment hit, I checked my bank accounts. I had a negative net worth and a total of $667 to my name. 'One dollar more than the devil,' I thought to myself. Overnight, I paid off my college loans, set up an emergency fund, and funded a brokerage account. I then purchased a book that changed the course of my life: Roger Lowenstein’s “Buffett: The Making of an American Capitalist” (1995). I learned of the book after reading an interview with the Black fund manager John W. Rogers Jr., who recommended it strongly. In those pages, I saw the blueprint of the life I wanted to lead.
Buffett waited until the final five minutes of a four-hour Q&A before revealing his news to the 40,000 attendees gathered in-person and the many more watching online or via TV. I was choked up. The extended standing ovation that followed honored not just one of history’s greatest investors but one of America's finest citizens and a model of principled capitalist leadership.
The table below shows the composition of our portfolio at the end of the quarter.
Portfolio Holdings
Thank you for your continued 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