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Name: Popular Delusions by Calderwood Capital
Audience: Professional investors & HNW individuals
Author(s): Dylan Grice & Tim Bergin
Topics: Macro and deep dives into specialist managers, sectors, themes and individual securities in equities and fixed income
Overview: As Investment Advisors to the Altana-Calderwood Specialist Alpha Fund (ACSAF), Calderwood Capital sits at a unique informational vantage point, being active in some of the hardest-to-reach corners of international capital markets.
In their research to ACSAF investors they triangulate that information, working hard to understand both traditional financial markets (equities, credit, government bonds and commodities) and less traditional ones (cryptocurrencies, catastrophe risk, synthetic credit and private credit).
Each report has three sections:
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Highlight #1: The Death of Duration (November 2019)
This piece states the past four decades have been the Golden Age for duration assets, with the bull market in government bonds helping spur returns in corporate bonds, public equities, private equity, venture capital and real estate. It assesses why it happened and why they believe another decade of the duration trade is unlikely.“today’s conventional investment wisdom will be tomorrow’s folly: liquid will be the new illiquid; rapid turnover the new patience; niche strategies the new index trackers.”
Highlight #2: The Height of The Pandemic (March 2020)
“Which areas are the most attractive? We don’t think it really matters at the moment. More than any time in the past, most investment ideas today ultimately boil down to the same investment decision: “risk on” vs “risk-off”.”
Highlight #3: The Cockroach Portfolio (October 2020)
Highlight #4: Crash Risk and Japanese Regional Banks (January 2022)
1. Elevated Crash Risk: This part covers inflation, which at the time was 7.5%, and why they believed the markets were underwriting the risk of a policy error too cheaply.
“The speed of the acceleration, the co-movement of its constituents and the absence of the dispersion we’d expect to see were the situation characterized by isolated supply side, issues all point towards a more fundamental problem we think the Fed are on the wrong side of.“
The Idea Farm Team