Birkoa Newsletter 40 (end of November '23 updates)
Dear Birkoa LPs, Prospective LPs, and Friends,
I am writing a brief update newsletter at the close of an excellent November, in which we finished up over 25%. Our year-to-date performance comfortably surpasses most, if not all, major global indices, suggesting this may only be the beginning. Those of you already invested with us should receive your end-of-month statements by Monday.
This newsletter primarily aims to manage expectations for the upcoming weeks and months, without intending to celebrate prematurely. I will explain why I believe we are in the early stages of a bull period for our specific strategy, and how the macroeconomic environment seems favorable for our continued success. I will also discuss why new capital might benefit significantly in the near future.
Firstly, let me assure you that we are taking steps to protect our recent gains, particularly in light of the volatility we experienced in previous months. Volatility can sometimes be an integral part of our strategy, and I firmly believe that our willingness to endure it has been crucial to our recent success. While I cannot guarantee perfect results every time, I am committed to minimizing risks. Currently, I am exploring a potential hedge that could protect our gains with limited downside.
Please note that a hugely successful month does not guarantee future performance. Dealing with markets requires patience and fidelity to one's strategy, along with continuous, rigorous self-evaluation. Unless market movements defy our strategic logic, we avoid rash decisions. Over time, our patience and tolerance for volatility often prove beneficial. However, there may be instances where this approach does not yield the desired results.
Looking ahead, I am cautiously optimistic. We anticipate a bullish trend for our strategy, potentially involving a broad participation across our asset classes. We have identified potential strategies to safeguard our gains while avoiding near-term setbacks. Such opportunities are rare, and we intend to capitalize on them. This is a secondary reason why new capital could benefit tremendously, considering our advantageous positioning from both individual positions and risk management perspectives.
Under closer inspection, our recent success is primarily due to just two of our eight asset categories. These two assets are structurally positioned for near-term success, while the others, currently underperforming, could join the rally at any moment.
Particularly, Chinese assets, which have been dormant for over 1.5 years, are poised for a rebound. With expectations of an economic recovery and governmental stimulus in China, we are well-positioned for this potential rally. Likewise, commodities could turn in our favor, influenced by geopolitical and supply chain tensions, along with a weakening dollar. Our ability to maintain these underperforming assets due to our fund's overall success represents a significant opportunity for new capital deployment.
U.S. AI and broader U.S. tech have been our top performers. With the Federal Reserve signaling the end of its tightening cycle, we anticipate further growth in these sectors, especially considering the rapid advancements in AI technology.
Our cryptocurrency and blockchain holdings, including Coinbase, are poised for growth in a potentially bullish market currently underway within crypto, driven by a weakening dollar, anticipated Federal Reserve rate cuts, and the likely approval of multiple Bitcoin ETFs.
I hope you find this update informative. I plan to send around mid-to-late December a more detailed newsletter as further developments occur in relation to our macro strategies and positions. Wishing everyone a happy holiday season!
Sincerely,
Pranjit K. Kalita
Chief Investment Officer, Birkoa Capital Management, LLC