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| Oct | Nov | Dec | Q4 2024 | YTD | Since Inception | Annualized | |
| Curreen Capital Partners LP | 3.15% | 5.55% | -2.91% | 5.71% | 7.72% | 206.7% | 10.2% |
| S&P 500 | -0.91% | 5.87% | -2.38% | 2.41% | 25.05% | 346.9% | 13.8% |
| MSCI World (US Gross) | -1.97% | 4.62% | -2.58% | -0.09% | 19.02% | 220.8% | 10.6% |
Dear Partner,
During the fourth quarter we sold one stock and bought six, using most of our cash. We have been cautiously buying since September 2022, and are once again fully invested. We will review our performance below, first let us go through our actions in the fourth quarter.
Our Actions in Q4
We sold Kambi (KAMBI) in the quarter, reinvesting the proceeds into Credit Acceptance (CACC). I grew uncomfortable with Kambi’s business – which has an element of many small steps forward, then one big step back. Kambi provides an outsourced sportsbook to gaming company customers, and as those customers grow, they tend to bring this task in-house. While the company has succeeded in growing over time, it continues to lose its most successful clients as they grow and develop their own sportsbooks. Kambi is a great solution for small companies entering new markets, but if economies of scale in the gaming industry drive consolidation over time, Kambi would face difficulties. When I compared this to Credit Acceptance, another company that grows over time, I preferred that we own Credit Acceptance. Both are attractively priced, but I am more confident in Credit Acceptance’s runway for growth. We received SEK 110.8 for our Kambi shares, and paid $449.61/share for Credit Acceptance.
We also bought Advance Auto Parts (AAP, 1% of the fund at $37.68/share), Enhabit (EHAB, 2% at $7.68/share), GetBusy (OTCPK:GETBF, 1% at £0.56/share), TriNet (TNET, 2% at $76.57/share) and Truecaller (TRUBF, 1% at SEK 47.2/share). We added to Advance Auto, Enhabit and GetBusy because they were especially cheap, and to Truecaller because it reported improving results. We bought our position in TriNet because it is an excellent business with a long runway for growth, and we paid an attractive price after it reported weak results.
Longer Term Lookback
Normally in these year-end letters we review our performance for the prior year. This year I want to go further back and analyze our performance since September 2022. That was when I became especially cautious (because of the inverted yield curve), and I believe that our underperformance in 2024 was driven by the same issues that have driven our performance since late 2022. We have paid great prices and bought excellent businesses, but the stock market has taken longer than I would expect to recognize our undervalued ugly ducklings.
In late 2022 we had a large position in Jackson Financial (JXN). Jackson’s operating performance is driven in large part by the performance of the S&P 500 (SP500, SPX) – when the overall market rises, they sell more variable annuities and their AUM grows with higher stock prices. When the market falls, all of that reverses. In retrospect, we owned too much Jackson for me to be comfortable with this relationship. In estimating the value of Jackson, I tried to predict the performance of the S&P 500, and I got my head handed to me. I estimated that there was a higher than usual risk of a downturn, which would have hurt the value of our large position in Jackson, and I sold.
Since then, the S&P has gone up strongly, while the ugly ducklings that we bought have largely remained out of favor, for longer than I would have expected. We continue to implement our investment strategy, paying attractive prices for good businesses that are increasing their value. This should be rewarded in the stock market over time, but lately that process has been particularly slow and uneven.
For example, GetBusy continues to grow its revenues without diluting shareholders, which makes its shares more valuable over time. Since 2018, the company has doubled revenues, while the share count is up less than 5%. This is a barely-profitable, U.K.-listed microcap. It pays no dividend and its growth rate is not high enough to excite interest. It is an ugly duckling, and ended 2024 selling for 1.5x revenues. I think that it is significantly undervalued—which is why we added to our position—but I do not know when the company will trade for a more reasonable multiple. I believe it is worth our wait because GetBusy continues to grow, and I think we will earn good returns on our investment – first from revenue growth and second from a higher multiple.
As another example, I would have expected both VF Corp (VFC) and Advance Auto to have performed well last year, as the company’s situations are similar, and both made good progress on their turnarounds. But VF Corp dropped, before rebounding strongly and ending the year up, while Advance Auto dropped for most of the year. Similarly, I would not have predicted that Frontdoor’s (FTDR) stock would do well, while Credit Acceptance dropped. Nor that Truecaller would rise while Enhabit fell. In each case, the fundamentals are solid or improving, and I would have thought that they all would rise.
That the stock market has been slow to recognize the values of our portfolio has had two effects. First: our performance looks weak compared to the S&P 500 (which unlike our portfolio, has been in favor), and second: we have been able to buy lovely businesses at very attractive prices. This is our silver lining. I strive for us to buy good businesses at an attractive upside-to-downside ratio, and over the past few years we have exceeded that – and bought many stocks at prices well below my downside valuation estimate.
Owning a portfolio of good businesses that are increasing their value, bought at a discount to my conservative estimate of their value, makes all the sense in the world to me. But it has not worked well lately, and I know that your patience has not been rewarded. That said, we have a great investment portfolio and I remain confident that it will perform well over time.
Thank you. I appreciate your patience and trust. If you want to reach out – I would love to talk. Sincerely,
Christian Ryther
Note the new number: 202-518-3747 cryther@curreencapital.com
Appendix
Curreen Capital Investments
Lists all positions larger than 5% of the fund
Advance Auto Parts (AAP)
Advance Auto Parts is a store-based retailer of aftermarket automotive parts and supplies. This includes batteries, windshield wipers and fluid, air filters, motor oil, etc. The company has historically earned decent (approaching 20%) returns on tangible capital. The company is attempting a turnaround, and has fixed its balance sheet and is improving operations. Advance Auto currently trades at an attractive upside-to-downside ratio.
Credit Acceptance (CACC)
Credit Acceptance is a subprime auto lender, enabling subprime borrowers to buy vehicles from used car dealerships. The business has profitably gained share in a large and difficult market for more than two decades. Management allocates free cash flow to growing the business and repurchasing shares at attractive prices. Credit Acceptance currently trades at an attractive upside-to-downside ratio.
Enhabit (EHAB)
Enhabit provides healthcare and hospice services in patients’ homes. The company serves patients covered by Medicare, Medicare Advantage, private Insurance and Medicaid – with reimbursement rates declining in that order, from the higher levels paid by Medicare to the lower levels paid by Medicaid. Enhabit was spun out of Encompass Health in July 2022. Historically, the business earned high returns on capital and grew both organically and through acquisitions. The company has struggled since the spinoff, with declining revenues and higher costs, which drove it to repeatedly seek covenant relief from its lenders. Enhabit currently trades at an attractive upside-to-downside ratio.
Frontdoor (FTDR)
Frontdoor sells home service plans to homeowners. The company contracts with HVAC and other contractors and dispatches them when customers have problems with one of their major home appliances and systems (furnace, air conditioning, refrigerator, electrical system, etc). Frontdoor spun out of ServiceMaster in October 2018. Frontdoor serves about 2% of U.S. homes, and uses its free cash flow to grow organically, pay down debt, repurchase shares, and acquire complementary businesses.
GetBusy (GETB:GB)
GetBusy provides online document exchange systems—primarily for accountants. GetBusy spun out of Reckon in August 2017, and has continued to grow since then. GetBusy does not earn money, investing through higher expenses to grow its existing businesses and attempting to launch new products. The underlying businesses are profitable and sustainable in the U.K. and U.S.
Nilörn Group (NILB:SS)
Nilorn designs and delivers tags and labels for European clothing brands. The company combines just-in-time delivery with quality design that can elevate the customer’s products in the eyes of the end consumer. Management uses free cash flow to grow the business and pay a dividend. The company has historically earned good returns on capital. Nilorn currently trades at an attractive upside-to-downside ratio.
Siemens Energy (ENR:GR)
Siemens Energy combines a world-class electrical power generation business, a world-class electricity transmission business, and an onshore and offshore wind turbine business that is attempting a turnaround. The company spun out of Siemens in September 2020. After many years of weak electricity demand in OECD countries, Siemens Energy is benefiting from a cyclical boom in demand.
VF Corp (VFC)
VF Corp manages apparel brands, including Dickies, The North Face, Timberland, and Vans. Under its prior CEO, the company’s poor capital allocation (including overpaying for Supreme and maintaining a too-high dividend after spinning out Kontoor) forced it to pause its model of using excess free cash flow to acquire good brands and manage them well. The company has now cut its dividend (twice) to a reasonable level and brought on a new CEO who has a track record of successfully turning around businesses. I believe that the company has good brands, the skills to manage them well, and a management team that is righting the ship. VF Corp currently trades at an attractive upside-to-downside ratio.
Performance Net of Fees, vs Alternatives
| S&P 500 | MSCI World | MSCI SC+mC | ||
| 2013* | 34.29% | 14.8% | 14.1% | 16.4% |
| 2014 | 16.26% | 13.7% | 5.3% | 1.6% |
| 2015 | 5.05% | 1.4% | -0.5% | -0.2% |
| 2016 | 15.11% | 12.0% | 7.9% | 12.7% |
| 2017 | 18.21% | 21.8% | 22.8% | 23.2% |
| 2018 | -22.32% | -4.4% | -8.4% | -14.3% |
| 2019 | 22.07% | 31.5% | 28.1% | 25.7% |
| 2020 | 23.55% | 18.4% | 16.3% | 16.5% |
| 2021 | 50.74% | 28.7% | 22.2% | 15.8% |
| 2022 | -37.47% | -18.1% | -17.9% | -19.1% |
| 2023 | 15.54% | 26.3% | 24.2% | 15.1% |
| 2024 | 7.72% | 25.0% | 19.0% | 8.0% |
| Cumulative | 206.7% | 346.9% | 220.8% | 141.3% |
| Annualized | 10.2% | 13.8% | 10.6% | 7.9% |
| * Fund inception on June 1, 2013 through year-end |
| DISCLAIMER The information contained herein regarding Curreen Capital Partners, LP (the “Fund”) is confidential and proprietary and is intended only for use by the recipient. The information and opinions expressed herein are as of the date appearing in this material only, are not complete, are subject to change without prior notice, and do not contain material information regarding the Fund, including specific information relating to an investment in the Fund and related important risk disclosures. This document is not intended to be, nor should it be construed or used as an offer to sell, or a solicitation of any offer to buy any interests in the Fund. If any offer is made, it shall be pursuant to a definitive Private Placement Memorandum prepared by or on behalf of the Fund which contains detailed information concerning the investment terms and the risks, fees and expenses associated with an investment in the Fund. An investment in the Fund is speculative and may involve substantial investment and other risks. Such risks may include, without limitation, risk of adverse or unanticipated market developments, risk of counterparty or issuer default, and risk of illiquidity. The performance results of the Fund can be volatile. No representation is made that the General Partner’s or the Fund’s risk management process or investment objectives will or are likely to be achieved or successful or that the Fund or any investment will make any profit or will not sustain losses. Unless otherwise stated, the performance information contained herein is for the Fund and is net of a 1.50% annual asset-based management fee and a 20% annual profit-based performance allocation. As with any hedge fund, the past performance of the Fund is no indication of future results. Actual returns for each investor in the Fund may differ due to the timing of investments. 2013 – 2023 returns were prepared based on audited financial statements, and 2024 performance information contained herein has not yet been independently audited or verified. While the data contained herein has been prepared from information that Curreen Capital GP, LLC, the general partner of the Fund (the “General Partner”), believes to be reliable, the General Partner does not warrant the accuracy or completeness of such information. |
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