Birkoa Newsletter 52 (end of year 2025)
Birkoa Performance Snapshot (at a glance)
Levered Fund (Main Strategy)
Inception-to-date (May 2022–present): 111%+ net
Net annualized return: ~23%
2025 performance: 40% net / 52%+ gross
Delevered Fund
Inception-to-date (May 2024–present): 48.5%+ net
2025 performance: 23%+ net
Introduction
This is the first letter I’ve written since July 2025. In the interim, the main fund completed the year, and as all investors have seen in their year-end reports, we finished 2025 up 40% net and over 52% gross.
The reason I have written less since July is largely the same reason I cited previously: the degree of political volatility coming out of the White House. As a global macro fund, short-term political shocks can materially impact markets, even if they are irrelevant over the long term. It becomes difficult to write something thoughtful when one day later it can be invalidated by a new, unexpected announcement—whether it was last week’s Greenland tariff threats, which were quickly walked back, or this morning’s tariff threats against Canada for engaging in a trade agreement with China, something they are fully entitled to do.
With that context in mind, I’ll walk through how we ended 2025, how we’ve started 2026, and what we’re focused on going forward.
2026 Outlook
By October 2025, the main fund was up approximately 65% net. Extreme volatility in November and December reduced that to a 40% net finish. The drawdown was concentrated in AI and crypto-related positions and was driven primarily by narrative forces—aggressive short-seller campaigns, AI-related PR missteps, and broad risk-off sentiment—rather than any fundamental deterioration. Looking ahead, we see this as an opportunity. These same positions—Palantir, NVIDIA, Coinbase, and others—still have a long runway. The dip was narrative-driven, not structural. So for 2026, with no fundamental cracks, we’ll let these themes reassert themselves in 2026.
SoftBank is a good example. It had been up nearly 200%, before pulling back to roughly 120%. Similar volatility occurred across AI and crypto exposures. While painful, nothing fundamental changed. This was a narrative-driven reset.
I had considered exiting some U.S. positions going into 2026. Given what transpired, and given the lack of fundamental cracks, I’ve changed that view. These themes still have substantial runway. We intend to remain patient and allow fundamentals to reassert themselves through 2026.
This past week, I’ve acted on something I was admittedly late on. While I rarely miss big calls, I was wrong on software as a sector. Even AI-touched SaaS names like Salesforce or Atlassian have been crushed—some down nearly 50%. With AI tools like Anthropic’s, OpenAI’s, and Gemini’s advances, many SaaS models won’t recover. Though late, I’ve started exiting these weaker software positions and redeploying into those unjustly dipped by recent volatility. I’m adding to Palantir—benefiting from defense support—SoftBank, and other robust names. Though I was late, better late than never. This should strengthen our 2026 outlook, as strong players keep absorbing weaker ones.
Now that we’ve laid out the broader themes for 2026, let’s look under the hood at our key portfolio components. Each major position carries its own macro or geopolitical angles, and I want to share how we’re thinking about each of them as we move forward. Let’s break it down component by component.
Portfolio Breakdown
Commodities
Commodities were a very quiet part of the portfolio for over three and a half years, and at times a losing one. We held them because other components of the portfolio were performing strongly—allowing us to take a longer-term view and remain undeterred by short-term weakness. That diversification is core to our strategy.
Recently, that patience has paid off. Metals have shown strong performance—particularly copper miners, lithium miners, and related exporters. Positions tied to Brazil and Argentina have performed well. Names like Albemarle and Freeport-McMoran, along with our copper and copper-miners ETFs, have done extremely well.
Oil prices themselves have not surged and were down significantly last year. However, oil infrastructure, explorers, and U.S. energy providershave performed strongly, driven by geopolitical developments—particularly the effective transfer of Venezuelan oil influence toward U.S. energy majors under the current administration.
In hindsight, we should have held gold and silver longer. We didn’t. That capital was redeployed into crypto, which has outperformed precious metals in the recent cycle. You win some, you lose some—but overall, commodities are now contributing meaningfully.
Given the administration’s resource-centric, almost imperial approach to geopolitics, we are comfortable being on the receiving end of the resulting tailwinds.
China
China was another long-time laggard that turned decisively in early 2025. Hong Kong was the best-performing equity market in the world last year, and we benefitted meaningfully. That strength has continued into 2026.
China has made it clear that AI is a national priority. With the recent allowance of NVIDIA H200 chips into China, major technology firms such as Alibaba, Baidu, and JD have continued to rally. Baidu, in particular, has been on a strong run.
China is also the global leader in EVs. Companies such as BYD, XPeng, and Li Auto have benefited from trade realignments, striking deals with Europe and other regions as U.S. trade uncertainty pushes partners elsewhere. We expect this momentum to continue.
The Chinese government is not short-term oriented. It is surgical, deliberate, and quietly building relationships with countries that feel marginalized by U.S. trade policy. Monetary policy has shifted to a more accommodative stance, which should support growth.
While consumer stocks have lagged—Pinduoduo being a notable example—recent GDP data suggests overall strength, and the government has shown willingness to support the consumer economy. We expect even underperforming names to improve.
China is becoming such a strong contributor that we are actively monitoring concentration risk.
Japan
Japan has two components for us: the broader market and SoftBank.
On the macro side, Japan has definitively exited its post-1989 stagnation. Our entry in 2023 proved well-timed, and Japan has now delivered two strong years. Companies like Panasonic remain solid, and the weak yen provides an additional tailwind—when we eventually exit, we expect roughly 25–30% gains purely from currency conversion.
SoftBank is different. I entered SoftBank in 2023 as a way to gain venture-style exposure to AI. Despite recent volatility, we continue to add. SoftBank sits at the center of global AI—striking deals with OpenAI, sovereign governments, and major infrastructure players. It is uniquely positioned geopolitically and technologically, and we expect it to continue outperforming.
Crypto & Blockchain
Since July, I’ve added exposure to crypto indirectly, not by buying Bitcoin or Ethereum outright.
We added:
An Ethereum-linked derivative (BitMiner Immersion Technologies )
A VanEck Bitcoin ETF
Additional MicroStrategy
These were accumulated during the November–December drawdowns. So far, these positions are roughly flat—neither large gains nor losses—which is acceptable given their volatility.
Crypto was actually net negative for us in 2025, yet the fund still finished up 40% net. That alone is a strong testament to our diversification and strategy.
We believe long-awaited crypto market structure legislation—which investors expected after the Trump administration took office—will materialize before the midterms. This should directly benefit Coinbase, which experienced close to a 50% drawdown since July, as well as Bitcoin and Ethereum exposures, which are still down 30–40% from October highs.
We bought MicroStrategy at roughly 40% below its all-time high. We believe these entries were prescient.
Coinbase is particularly important. If Coinbase performs, the fund can have an independently strong year on that alone. Even now, we’re up roughly 5% net YTD, while Coinbase remains down—illustrating the asymmetric upside ahead.
U.S. AI & Technology
We are staying the course in U.S. AI. No exits. We’ve added on dips.
Semiconductors—NVIDIA, AMD, ARM—continue to see overwhelming demand. Short-term noise does not change that. Palantir remains a core holding at the intersection of AI and defense.
Big tech remains intact. Google has performed exceptionally well, particularly with Gemini gaining traction. Amazon has lagged, but we are comfortable holding. Oracle and infrastructure names remain important.
We are especially excited about robotics AI. We added UiPath after a roughly 33% drawdown. Robotics may be the next major AI wave—UiPath could become the next Palantir.
Tesla, in our view, is now fundamentally an AI and robotics company. Between full self-driving and Optimus, Tesla has the potential to become one of the most valuable companies in the world—trillions in value. We accumulate patiently.
U.S. Defense
We have meaningful exposure to U.S. defense.
Palantir sits squarely at the intersection of AI and defense.
We hold Boeing, which we began accumulating in early 2024 when its commercial aviation issues drove the stock down. That was an arbitrage: the market punished Boeing for commercial problems while ignoring its defense strength. That thesis has played out very well.
We also added Lockheed Martin in April of last year. While we missed opportunities in Northrop Grumman, Raytheon, and General Dynamics, our existing exposure is sufficient.
The administration’s aggressive geopolitical posture—nation-building, resource control, and strategic realignment—has been extremely supportive of defense stocks. We have not added new positions recently, but we continue to hold and expect these names to perform well under this administration and potentially beyond.
Monetary Policy
On monetary policy, inflation hasn’t fallen as fast as expected. The Fed has been cutting, but likely with more caution now. If we see surprise downside in inflation, it’ll help the rate outlook, boosting equities. If they don’t cut rates much, we’re not worried. The market expects just one cut, and we see no hawkish risk.
Our equity positions—especially AI—aren’t truly rate-dependent long-term. AI demand is through the roof. Over time, the Fed’s moves fade in importance. We expect dovishness, especially once Trump appoints a new Fed chair—likely Rick Reider—plus three new dovish governors. This limits any monetary policy risk.
China’s easing cycle is already helping. Japan may slowly normalize, but the Bank of Japan has been signaling stability.
In short, over time, monetary policy fades in importance. Our portfolio is built to perform through cycles, and as months pass, fundamentals dominate.
Sincerely,
Pranjit K. Kalita
Chief Investment Officer