crescatcapital
Crescat Capital commentary for the month ended April 30, 2023, titled, “Whistling Past The Graveyard.” US policymakers continue to act as if they have the stability of the financial system, the economy, and consumer prices under control. Instead, their ongoing deficit spending and debt monetization since the 2008 crisis have created a trifecta of macro imbalances: 1. Historic overvaluation of long-duration financial assets;2. Systemic solvency problems posed by excessive leverage; and3. Embedded structural inflation. This unholy trinity foreshadows both secular stagflation and a near-term hard...
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The Crescat Global Macro Fund was up 2.9% net in August and 38.8% net year to date. Mega Cap Growth shorts were the best performing theme overall generating a 2.3% absolute return to the fund while the S&P 500 was down 4.1%. The Long/Short and Precious Metals Funds were also up in August. All Crescat strategies have outperformed their benchmarks in August, year to date, and since inception net of fees as shown in the table below. Q2 2022 hedge fund letters, conferences and more Crescat has a long-term firmwide track record across multiple business cycles and investment strategies. Our persiste...
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Crescat Capital commentary for the month of February 2022, titled, “A Trifecta Of Macro Imbalances.” Q4 2021 hedge fund letters, conferences and more For the first time in history, the US is experiencing a confluence of three macro extremes all at once: 1. High government debt to GDP like the post-war 1940s2. Excessive stock market valuation on par with 1929 & 2000 bubbles3. A resource-driven inflationary crisis environment comparable to the 1970s Any one of these three economic states endangers the health of markets and the economy. Together they are a highly explosive mix. The disparities ha...
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Crescat Capital’s commentary for the month ended December 2021, the year of the great rotation. Q3 2021 hedge fund letters, conferences and more The Year Of The Great RotationWelcome to 2022. More than ever, we believe it is time to get out with the old and in with the new. At Crescat, we believe investors today face a twofold problem: 1. The imperative to not get sucked into a financial asset bubble destined to implode.2. The need to outpace structurally rising inflation. Starting from historically stretched valuations, inflation is the catalyst that can and should both crush price-to-earning...
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Crescat Capital’s commentary for the month ended December 2021, titled, “Pipe Dreams and Ponzi Schemes.” Q3 2021 hedge fund letters, conferences and more Pipe Dreams And Ponzi SchemesNormally, as part of the creative destruction process in economic downturns, the financial system gets purged of excesses. In the subsequent recovery, the health of the economy is restored in a natural way as new leadership arises from sectors and industries that are inherently different from those of the prior expansion. In the wake of some of the biggest profligacies, the disorderly unwinding of pipe dreams and ...
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Crescat Capital’s commentary for the month of December 2021, discussing that software is the tell. Q3 2021 hedge fund letters, conferences and more Equity Market WarningThe recent weakness in the broad US equity market is being masked by the outperformance of mega-market cap companies that remain near record valuations. With that in mind, it is remarkable to us how the NASDAQ Composite is just 2.6% from all-time highs while only 35% of its members are above the 200-day moving average. Such a disconnect is corrosive. This backdrop of deteriorating market breadth is present at a time when signif...
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Crescat Capital’s commentary for the month of November 2021, discussing the catalyst for the great rotation. Q3 2021 hedge fund letters, conferences and more The Catalyst for The Great RotationBased on the firm’s current equity and macro models, and our investment team’s analysis, we believe we are in the explosive first wave of an inflationary cycle in the US and globally that will elevate consumer prices at a much higher annualized rate and for significantly longer than priced into financial markets today. The factors driving our view include structural shortages in primary resource industri...
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Crescat Capital’s commentary for the month ended October 2021, titled, “The Macro Case For Precious Metals.” Q3 2021 hedge fund letters, conferences and more The Macro Case For Precious MetalsWhere are we in the precious metals cycle? There is no shortage of questions on why gold has significantly underperformed during such an ideal macro setting. Let’s start by looking at the usual fundamental trends of this industry as part of prior historical cycles. Gold and silver stocks have never peaked at historically undervalued levels. Miners are now trading at the cheapest fundamental multiples we h...
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Crescat Capital’s commentary for the month ended September 2021, titled, “The Psychology Of Inflation.” Q3 2021 hedge fund letters, conferences and more The Psychology Of InflationToday’s macro environment is indeed very different than any other period we have experienced in the last four decades. Inflation is infiltrating the mindset of US households in a way not seen since the wage-price spirals of the 1970s. Prices for the goods and services that individuals require to meet basic needs have been increasing at an accelerated pace. These necessities include shelter, food, energy, and transpor...
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Crescat Capital’s commentary for the month of September 2021, discussing the three themes coalescing. Q2 2021 hedge fund letters, conferences and more Dear Investors: Three Themes CoalescingWith unsustainable imbalances in the global economy and financial markets today, we see unprecedented opportunities to grow and protect capital in both the near and long term. Crescat is focused on investment strategies that offer uncommon value and appreciation potential. We believe that all of Crescat’s strategies offer an incredible entry point today based on the firm’s three core macro themes: 1. China ...
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