2Q22 FV Quarterly Letter

Fundamental Value dramatically outperformed the market in Q2, returning -1.4% net of fees versus -16.1% for the S&P 500. This outperformance was due primarily to the gains provided on our short positions, which declined on average -38.4% during the quarter and made a +16.9% contribution to the portfolio.¹

Market commentary

We expect bringing underlying inflation down to the Fed's 2% target will be much harder than currently anticipated – occurring more slowly, requiring much tighter financial conditions, and causing more damage to the economy. Thus, the famous “Fed put” is no more. Since the late 1980s, the Fed has loosened policy in response to every bear market, providing a jolt of energy when most needed. No more. Instead of alleviating investors’ pain, the Fed will be exacerbating it. Despite a terrible first half to the year, we believe further pain is likely for investors in stocks, bonds, cryptocurrencies, and more.

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