Mutoro Group Partners, LP
“Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.” — Warren Buffett, Berkshire Hathaway Annual Shareholder Letter, 1991
|
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% |
|
9M 2025 |
5.7% |
4.6% |
9.8% |
6.2% |
3.4% |
|
Aggregate |
91.4% |
43.3% |
84.1% |
||
|
Annualized |
6.2% |
3.4% |
5.8% |
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Dear Partner,
For the first nine months of 2025 our fund increased 5.7 percent gross and 4.6 percent net of fees. We ended the period with ownership stakes in 14 companies.
For reasons beyond the scope of this quarterly update, I have an almost endless curiosity with how people learn things and then unlearn those same things. Learning and unlearning encase an in-between period of sorts. In that period, three factors, time, chance, and self-reflection, can work like a grain of sand in an oyster’s shell to form a pearl of wisdom. Sometimes, though, the pearl that emerges from the in-between is not of wisdom but of folly. I could write hundreds of pages about this topic but here a simple example will serve.
I wrote at length in the 2024 Annual Letter about the luxury goods e-commerce market and our position in Mytheresa. I encourage you to read the full letter if you have not already, but a brief excerpt might help re-orient us:
A new chapter in Mytheresa’s story began in October 2024, when it announced plans to acquire all of its last-standing competitor Yoox-Net-a-Porter (YNAP) from luxury house Richemont. It had been rumored in the business and fashion press since last spring. The transaction, scheduled for final regulatory approval this year, will combine under one group Mytheresa with (a) complementary luxury e-commerce sites Net-a-Porter and Mr Porter and (b) the off-price sites Yoox and THE OUTNET. Strategically they complement each other. Financially, the deal’s structure includes a significant capital infusion for the enlarged business, with YNAP’s parent company providing a €100 million 6-year revolving credit facility and €555 million of cash, in exchange for 33.3 percent of the combined entity. The new, multi-platform group will have revenues increase from a standalone €900 million of Mytheresa sales today to €3 billion post-close. Management seems eager to still let each brand maintain its distinct identity, particularly important given Mytheresa’s focus on high-spending clients versus YNAP’s broader range of price points. To this end, the parent company for Mytheresa and the YNAP stable of companies will change its name to “LuxExperience” and its stock ticker to “LUXE.”
But no deal is without challenges. There could be integration hurdles, ranging from migrating YNAP to Mytheresa’s in-house tech platform, to sorting out off-price inventory for Yoox, which has been a considerable loss-maker, to ensuring brand partners stay enthusiastic about a broader portfolio. Historically, these transitions can run over budget or lead to customer confusion if not managed with care. And there will probably be volatility in the prices of Mytheresa’s shares. That said, Mytheresa’s measured operating track record, its newly limited competitive field, and its much-improved balance sheet suggest a favorable runway. If Mytheresa can preserve its high-end service during the consolidation, it stands poised to become the definitive luxury e-commerce leader in the world.
In the nine months since I wrote that passage, much has developed at Mytheresa and in the luxury industry broadly. In April, the YNAP transaction closed and the company adopted its new name, LuxExperience. In May and again in September, it reported strong operating results. In October, it sold THE OUTNET, the off-price platform acquired in the deal, for €30 million. That same month, luxury bellwethers LVMH and Kering reported better than expected operating results, suggesting that the sector is recovering from a post-pandemic slowdown. So far, we have not seen meaningful integration problems surface in company disclosures, media coverage, or conversations around the business.
On its most recent quarterly earnings call in September, LuxExperience management reminded investors of the company’s new financial strength:
At the end of June 2025, LuxExperience had a total available liquidity of €784 million, including cash at hand of €604 million and no bank debt, just a small utilization of our revolver of €20.2 million. We expect the turnaround to require funds in total of no more than €350 million to €450 million, and we expect to report positive operating cash flow for the group in two to two and a half years.
Management also reaffirmed targets:
Medium term, we expect to grow LuxExperience to €4 billion revenues with adjusted EBITDA of around €320 million at an adjusted EBITDA margin of around 8% at the levels we have proven to achieve in the past. As the clear leader in global digital luxury, we have the track record of multi-year growth at CAGR’s well above 12%.
My personal aversion to managerial forecasts and use of EBITDA aside, taken together, these updates are positive. None of this sounds like a business fighting for survival. At quarter end, LuxExperience was 14.9% of our portfolio. Yet its shares have not reached anything near intrinsic value. Why might that be?
In a world with several companies valued north of $1 trillion drawing attention constantly, LuxExperience, at around $1 billion of market value, is small enough to be nearly invisible. On the buy side, a company that size, with its illiquid shares, attracts little attention from large asset allocators. It would rarely appear in the standard screens that drive many portfolio construction decisions. On the sell side, attention is also meager. Only two analysts participated in the company’s most recent quarterly earnings call. That is not the sort of ecosystem of feedback and sponsorship that usually accompanies a revaluation.
The industry backdrop also works against it. The bankruptcy of Farfetch and struggles at other online luxury platforms helped many investors learn a simple, durable story: “luxury e-commerce doesn’t work.” When a narrative like that takes hold, even if incorrect, the marginal investor becomes wary of transformations. This happens no matter how well they are executed and irrespective of the company having more liquidity than it needs to return to positive free cash flow generation.
Then there is the way markets process information. Many quantitative and index-driven strategies rely on delayed or incomplete data feeds for companies of this size and do not always fully incorporate capital structure changes, disposals, or new targets that are only explained in press releases and conference calls. While we may be gradually becoming an AI-augmented society, we are also unfortunately becoming an increasingly illiterate one with short attention spans. And if you do not do the reading yourself, you are not able to catch the blunders your AI-agent is making or what it is ignoring.
At the same time, there is genuine uncertainty about global consumer demand and the health of the United States luxury buyer, not helped by noisy economic data and shifting guidance from policymakers. When you combine these factors with a hedge fund portfolio-management landscape that is, according to one large recent study, about 97% male-led, and a core customer base at LuxExperience that is 80% female, you get a clear mismatch. The shopping experience loved by clients might be underappreciated by the people who allocate capital.
Finally, LuxExperience is unlikely to benefit from the kind of speculative retail enthusiasm that can sometimes reprice a small stock overnight. Its customers buy $2,000 handbags, not $20 movie tickets. That makes the path to a fairer valuation depend less on sudden Reddit meme-style excitement and more on the gradual work of compounding earnings, simplifying the business, and letting the facts eventually force a revision in expectations.
In so many words, the business is moving upward. The facts on the ground are improving faster than the story attached to them. But what many investors learned, “luxury e-commerce doesn’t work,” has yet to be unlearned. That space between facts and narrative is where our opportunity exists.
The table below shows the composition of our portfolio at the end of the quarter.
Portfolio Holdings
Thank you for your partnership. I welcome your thoughts and questions, and I am available to speak with you or anyone you know who might be interested in joining us.
Sincerely,
Godfrey M. Bakuli
Founder & Managing Partner