Fundamental Value had a solid quarter, essentially flat against a loss of -4.6% for the S&P 500. Our short positions made the difference. Our average short name was down -17% and the short book contributed 5.5% to the quarter’s return. FV has compounded at 24.7% net of fees since inception in 2016, outperforming the S&P 500 by 8.6% annually.1
Market commentary
As we did in January in our 4Q21 letter, let’s check on our predictions from Part III: Apex of a Bubble. In Part III, published last September, we said that the US capital markets were mired in an “everything bubble,” presaging real returns that investors would find severely disappointing – and likely negative – for many years to come. And we predicted an imminent top and a proximate cause: