Fundamental Value 4Q19 Quarterly Letter

Fundamental Value returned 8.3% for the fourth quarter, slightly trailing the market’s return of 9.0%. For the year, FV was up 29.7% vs the S&P 500’s 31.2% return. Since inception in 2016, FV has beaten the market by 4.4% annualized after fees, returning 19.2% annualized.¹

FV’s outperformance has come in spite of two material drags. First, FV tilts toward value stocks, which have had weak relative returns (as we have discussed in depth). FV has outperformed the S&P 500 Value Index by 6.7% annualized. Second, FV has carried net cash, averaging a net long position of only 89% and a monthly beta of only 0.83. Despite a much more concentrated portfolio, FV has had 20% lower downside volatility than the S&P 500.

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Bireme Capital LLC is an SEC Registered Investment Advisor. Registration does not constitute an endorsement of the firm nor does it indicate that the advisor has attained a particular level of skill or ability. This piece is for informational purposes only. If not specified, quarter end values are used to calculate returns. While Bireme believes the sources of its information to be reliable, it makes no assurances to that effect. Bireme is also under no obligation to update this post should circumstances change. Nothing in this post should be construed as investment advice, and it is not an offer to sell or buy any security. Bireme clients may (and usually do) have positions in the securities mentioned.

The performance described above is the performance on a dollar weighted average of the securities in all Bireme accounts invested in the FV portfolio. Net performance is shown as net of a 1.75% advisory fee. Some clients may receive services at a lower advisory fee with a performance fee based on the gains in the account. Advisory fees and other important disclosures are described in Part 2 of Bireme’s Form ADV. Changes in investment strategies, contributions or withdrawals may cause the performance of your portfolio to differ materially from the performance displayed. Different types of investments involve varying degrees of risk and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio. Past performance is not indicative of future results. SPY ETF performance includes expenses as well as reinvested dividends. For current performance information, please contact us at (813) 603-2615.