Dear Partner,
In the first quarter of 2021, Woodbridge Capital Partners (the “Partnership”) returned 43.99% while the S&P 500 returned 5.77%. Since its inception on September 1st, 2018, the Partnership has returned 136.31% compared to the S&P 500’s 36.94%.
Our performance since inception reaffirms our core investment principle: price (what you pay) converges to value (what you get) over the long term. This distinction between price and value is what afforded us equanimity in the midst of pandemic-induced market panic. When our portfolio dropped 52% during Q1 2020, we were comforted by the inflated disparity between price and value. In the past quarter, our portfolio has moved 44% closer to intrinsic value, and we are searching for ways to bolster the disparity once again.
We believe that indifference to short-term price fluctuations is essential to the long-term investment success of our partners. To further reinforce a focus on the long term, we have maintained a policy of not discussing the Partnership’s individual positions.
Joel Greenblatt, Managing Partner of Gotham Funds, discusses the detriment of excessive transparency in The Big Secret for the Little Investor:
“The best-performing stock mutual fund of the last decade [2000 to 2009] earned more than 18 percent annually…Yet the average investor in this same fund managed to lose 11 percent per year over those ten years.”
That is, exposure to the fund’s volatility resulted in, on average, investors losing money. We hoped that our policy of not discussing positions would help to insulate partners from volatility.
However well-intentioned we may have been, this policy, seen as a lack of transparency, has been an obstacle when meeting with prospective investors. So, after considerable thought, we’ve amended this policy such that we will disclose our positions to individual partners upon request. Nonetheless, we prefer to avoid unnecessary disclosures for the reasons stated above.
As always, we appreciate the trust that you have placed in us to manage your money. It is a responsibility that we take very seriously. We reiterate our objective of outperforming a low-cost S&P 500 index fund over the long term, and we believe that we are well positioned to do so.
Thank you,
Kyosuke Mitsuishi & Jesse Flowers