In early 2008 Krim and Zovinar venture out and start Orange Capital Partners. Krim is trading derivatives at Merrill Lynch and Zovinar is a portoflio manager at a long/short equity hedge fund.
The first few months are tough. Equities are starting to unravel and the financial crisis soon to come is already making its mark. Fundamental analysis doesn't work anymore. Stocks are trading all over the place and volatiliy is increasing. After a negative first quarter Orange decides to change course.
Anticipating a shake up in US and international stocks we short banks, oil, commodities and emerging market currencies. By the end of 2008 the fund is up 28% net of fees.
2009
In late 2008 we go on a business trip to Chile. We see copper mines and other amazing operations in the Atacama desert. One take away from Chile is that demand for copper is actually pretty good despite the financial crisis.
We decide to reverse our short positions and go long commodity stocks, oil and Chilean equities. The fund ends up 14% in 2009.
2010
Spain has always been on our radar. By mid 2010 the time to invest in Spain finally comes. The stock market collapses after the outbreak of the European souvereign debt crisis. Spanish banks sell off like most other European equities. We see this as a buying opportunity since Spanish banks derieve most of their profits from abroad. The fund ends up 32% in 2010.
2011
The spring of 2011 is harsh on financial markets. In hindsight we know that this was when investors realized that the Feds around the world will jeopardize free market principles to save levered governments and banks. In short, 2011 is the year when the whole world turns into Japan. Record low interest rates and money printing become normal things. As a consequence our portfolio suffers and the fund is down 10% for the year.
2012
When realizing that the Fed is directly influencing the inner workings of financial markets, we decide to change our strategy. Macro investing and special situations don't work in an environment where the Fed takes a central planning role. We focus on technology and innovation. Those are things the Fed can not directly influence. We start the groundwork to identify promising situations. The fund ends the year flat.
2013
We decide to research the field of electric cars and Lithium. After a meeting with Seifi Ghasemi, then CEO of Rockwood, we realized the bright future for Lithium-Ion batteries and electric cars. We started building positions in Tesla and Rockwood. The opportunity with Tesla is beyond electric cars. We see particular upside in software and artificial intelligence. The fund ends the year up 28%.
2014
This is the year we finally make the move from New York to San Francisco. We decide to allocate more time and resources to the analysis of new technologies and their impact on the markets. Our particular focus is on the emergence of AI. This area really kicked in high gear around 2013 and we felt the need to move West to better participate. We make money with Apple and Tesla. Our losses came from investments in startups such as Westport Innovations and Silver Spring Networks. We close both positions. The fund ends the year down 1.8%
2015-2016
Our focus is on artificial intelligence and its applications to real business problems. We invest in Twitter, thinking that this is a good business to apply AI to. Unfortunately, Twitter management doesn’t see it that way in 2015. They miss out on applying AI to fix trolling, improve search and generate more valuable experiences. We attribute the lack of focus on AI to the downfall of Twitter. Similarly, we invest in Gopro, thinking that AI is the key to unlock user generated content and turn the company into a powerful provider of unique video footage. As with Twitter, Gopro management misses out on the AI opportunity. Both businesses turn into commodities with no meaningful profitability and little growth prospects. We close our positions with large losses. We make money with currencies, particularly shorting the Brazilian Real. We also make money buying Microsoft. The company takes leadership in cloud computing. We end 2015 down 17% and 2016 down 16%.
2017
Companies with engagements in AI start getting traction in the market. Our investments pay off. We reposition our portfolio with Tesla, Nvidia, Intel and Qualcomm to take full advantage of the race to build the most powerful self driving car. These investments perform very well. We also make money with Microsoft and Apple. We end the year up 50%.
2018
We continue to make money with our investments in intelligent electric vehicles. In particular Intel, Nvidia and Qualcomm do well in the first quarter. Our investment in robotics through Fanuc also continues to perform. Then President Trump disrupts the planned Qualcomm-Broadcom merger in late spring and changes the course of politics in Washington. Arbitrary decision making and the US-China trade dispute take center stage and contribute to a slowdown in China. By year end economic deterioration in China is felt globally and sparks a selloff in financial markets. The government shutdown in Washington further increases uncertainty. The fund ends the year down 18%.
2019
This is the year Tesla finally breaks through as a true disruptor. After a slow start in Q1 the company continuously outperforms consensus and shows real traction with customers. By the end of the year TSLA is not just recognized by the market as a true competitor but as the only viable transportation company going forward. The rest now has to catch up. We take advantage of a selloff early in the year and increase our position. TSLA is now by far our largest holding. Other money makers are MSFT and INTC. We liquidate our loss making Fanuc position but keep our exposure to industrial automation and robotics through an investment in ABB. We start working on the theme of gene editing with special focus on Crispr and Base Editing technologies. The fund ends the year up 35% net of fees.
2020
In 2020 Tesla transitions from startup to industry shaper. Costumers embrace the car. Tesla proves that they can build factories at scale with successful execution in Shanghai. We increase our investment in Tesla. Our work on Crispr culminates in us taking positions in several Crispr stocks. Crispr is like the invention of the transistor. Life sciences are therefore moving from bespoke solutions to digitally driven systematized engineering disciplines. We see potential in medicine, pharmaceutics, agriculture and materials engineering. The fund is up 335% for the year net of fees and commissions.
.jpeg)
2021
Two major events shape 2021 for us. First, Intellia delivers break through science by successfully engineering in vivo gene editing. Second, Tesla shows record gross margins and proves that the business is resilient due to a superior cost structure. Both companies reiterate our approach to investing which is that wealth creators iterate fast, deliver more value at lower cost and fundamentally improve the life of fellow humans. We end the year up 25 % net of fees and commissions.