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Black Bear Value Partners LP commentary for the fourth quarter ended December 31, 2022.
“Don't play everything; let some things go by.... What you don't play can be more important than what you do.”
– Thelonious Monk
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Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for read more
Dear Partners and Friends,
Black Bear Value Fund returned +1.8%, net, in december and +12.5% for 2022. The HFRI Value Index returned -0.9% in December and -8.1% for 2022. The S&P 500 returned -5.8% in December and is -18.1% for 2022.
From the start of our Partnership, it was clear that investment knowledge alone would not be enough for a sustainable business with a competitive advantage. If we could create a long business runway we could invest for the long-term (not the next quarter or year).
As a result, I underwrote the business to failure...I presumed to raise 0 dollars meaning Lauren and I would have to fund the business entirely ourselves for 5-10 years. We would invest in high quality service providers but otherwise keep the operating costs lean.
This mentality, while unusual, gave me the freedom to look for ideas and quality long-term investors. Having a durable business structure leads to quality partners which leads to the ability to have a quality long-term and concentrated portfolio...they're all interconnected.
Thankfully we have attracted amazing LP's that range from high-net-worth individuals to family offices. Although our headcount has grown from a team of 1 to a team of 2 (CFO David Proskin), we will forever maintain a lean and bootstrapped culture. It helps explain our returns, our patience, and our extremely high-quality LP base.
Topics covered in our letter include:
2022 in review Could something other than rates be unprecedented? Degree of difficulty when investing Inflation thoughts and short ideas Discussion of our top 5 investments General fund updates and medium term growth plans
Please note returns could vary depending on your time of investment.
2022 Year-End Letter:
link to letter
Thank you for your trust and support,
Black Bear Value Partners, LP
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