VOLATILITY, OPPORTUNITY AND PORTFOLIO UPGRADES IN Q1 2018

Elevation Capital Value Fund:

Dear Investors,

Volatility has clearly returned to the markets in 2018. While fund returns were negative for March and for first quarter of 2018 (Q1), we were able to realise some attractive long-term gains as detailed in the table below, and capitalise on the market volatility to “enhance” the portfolio while still maintaining a healthy cash balance for future opportunities.

Below are the eight positions the Fund has realised in Q1 2018:

During the quarter we acquired a new position in Richemont as we decided to switch out of Swatch as it had outperformed Richemont over recent times. This “switch” should be viewed as an “upgrade” to our portfolio in terms of brand quality, as Richemont is the second-largest luxury goods company in the world after LVMH, with a luxury brand portfolio (see below) that is almost impossible to duplicate.

Also during the quarter, we were able to establish positions in Kraft Heinz (controlled by 3G Capital and Berkshire Hathaway) and CBS Corporation at attractive prices and re-established positions in Nestle & P&G. 

To conclude, with ~27% in cash (at the time of writing) the Fund is well positioned to opportunistically add to existing holdings or acquire new investments.