Woodson Funds: A Guide To Investing Wisely

Woodson Capital Management is a hedge fund with a focus on acquiring securities of high-quality businesses, while also engaging in shorting securities of low-quality businesses. The fund has a diverse portfolio, with investments in various sectors, including energy, automotive, and apparel. With a history of strong returns and a disciplined investment strategy, Woodson Capital Management offers a range of investment opportunities for those looking to diversify their portfolios. The fund's top holdings include well-known companies such as Suncor Energy, Ryanair Holdings, and Alphabet Inc., making it an attractive option for investors seeking exposure to established businesses.

Investment strategy

Woodson Capital Management, LP is an investment fund that focuses on acquiring securities of high-quality businesses at prices significantly lower than their estimated intrinsic value. These businesses typically exhibit favourable competitive dynamics, strong growth potential, and robust financial health. The fund targets companies with a market cap of more than $10 billion, and these make up 42% of the total holdings value. The fund's portfolio is currently diversified across 10 sectors, with the heaviest sector being Consumer Discretionary, making up 25.5% of the total portfolio value.

The fund's investment strategy involves seeking out businesses with competitive advantages, high-quality management teams, superior returns on investment, compelling growth characteristics, strong balance sheets, and attractive cash flow characteristics. The fund also considers the sector and industry dynamics, favouring businesses with secular or industry tailwinds.

On the other hand, Woodson Capital Management also engages in shorting securities of low-quality businesses trading at prices exceeding their estimated intrinsic value. These businesses often face deteriorating competitive landscapes, unsustainable business models, and weak financial performance. The fund considers factors such as competitive dynamics, management team capabilities, returns on investment, balance sheet strength, and earnings quality when identifying low-quality businesses to short.

While primarily investing in publicly traded equities and index securities, Woodson Capital Management also maintains the flexibility to invest in other opportunities. These include stock options, swaps, or other derivative securities. The fund may also invest in publicly traded index or exchange-traded fund securities for hedging purposes or to maintain appropriate net exposure levels.

Top holdings

Woodson Capital Management, LP's top holdings include Suncor Energy Inc., Group 1 Automotive, Inc., Tapestry, Inc., Ryanair Holdings Plc, and Urban Outfitters, Inc. Suncor Energy, Inc. is the largest holding, with 1,500,000 shares held. The fund's top holdings also include new positions in Levi Strauss & Co., AerCap Holdings N.V., and Boot Barn Holdings, Inc.

The fund's top holdings are concentrated in the industries of apparel and other finished products made from fabrics and similar materials, communications, and insurance carriers. The Investment Manager's strategy involves acquiring securities of high-quality businesses at prices significantly lower than their estimated intrinsic value. These businesses typically exhibit favourable competitive dynamics, strong growth potential, and robust financial health.

As of 7th February 2024, Woodson Capital Management, L.P.’s top holding was 350,000 shares of Ryanair Plc, worth over $46.7 billion and making up 10.8% of the portfolio value. The second-largest holding was 320,000 shares of Alphabet Inc, worth $44.7 billion, whose value grew by 11.0% in the six months prior. The third-largest holding was Mister Car Wash, worth $23.3 billion, followed by Invitation Homes Inc, worth $21.1 billion, with 620,000 shares owned.

The fund's portfolio is diversified across 10 sectors, with the heaviest sector being Consumer Discretionary, making up 25.5% of the total portfolio value. The fund focuses on investments in the United States, with 66.7% of the portfolio companies based in the country.

New positions

Woodson Capital Management, LP has disclosed new positions in its latest SEC filings. The fund's new holdings include:

• Levi Strauss & Co. (US: LEVI)
• AerCap Holdings N.V. (US: AER)
• Boot Barn Holdings, Inc. (US: BOOT)
• Digimarc Corporation (US: DMRC)
• Starbucks Corporation (US: SBUX)
• Despegar.com, Corp. (US: DESP)
• Forestar Group Inc. (US: FOR)

These new positions indicate that Woodson Capital Management is expanding its portfolio and investing in new opportunities. The fund's strategy focuses on acquiring securities of high-quality businesses at prices below their estimated intrinsic value, and these new holdings align with this approach.

In addition to these new positions, Woodson Capital Management has also strengthened its position in Alphabet Inc. by acquiring additional shares, demonstrating its confidence in the prospects of this investment. The fund's portfolio is well-diversified across sectors, with a focus on high-quality, defensible businesses, and these new positions contribute to this strategy.

Woodson Capital Management's new holdings showcase its active investment approach and its ability to identify potential opportunities in the market. By investing in these new positions, the fund is aiming to generate returns and create value for its investors. The fund's disciplined approach to position sizing and focus on both conservative and opportunistic investments contribute to its overall investment strategy.

Overall, Woodson Capital Management's new positions demonstrate its dynamic approach to investing and its commitment to seeking out high-quality opportunities. By adding these new holdings to its portfolio, the fund is positioning itself for potential growth and long-term value creation.

Top industries

Woodson Capital Management's investment strategy focuses on acquiring securities of high-quality businesses at prices significantly lower than their estimated intrinsic value. They seek out businesses with favourable competitive dynamics, strong growth potential, and robust financial health. The fund also shorts securities of low-quality businesses trading above their estimated intrinsic value, often facing deteriorating competitive landscapes and weak financial performance.

Woodson Capital Management's top industries include:

Apparel and Other Finished Products Made From Fabrics and Similar Materials:

This industry includes companies that manufacture and distribute apparel and other fabric-based products, such as Levi Strauss & Co., Urban Outfitters, Inc., and Deckers Outdoor Corporation.

Communications:

The fund invests in the communications sector, which includes companies involved in various forms of communication, such as media, telecommunications, and internet services.

Insurance Carriers:

Woodson Capital Management also has a focus on the insurance industry, investing in companies that provide insurance products and services, such as insurance carriers and brokers.

Energy:

The fund has significant holdings in the energy sector, with Suncor Energy, Inc. as one of its largest investments. This industry includes companies involved in the exploration, production, and distribution of energy resources, such as oil, gas, and renewable energy.

Consumer Discretionary:

This sector includes companies that provide non-essential goods and services to consumers, such as Ryanair Plc, Alphabet Inc., and Mister Car Wash. Woodson Capital Management's heaviest sector is Consumer Discretionary, making up 25.5% of its total portfolio value.

Financial Services:

The fund also has investments in the financial services industry, including companies like Interactive Brokers Group and Triumph Financial Inc.

Portfolio performance

When considering an investment in Woodson funds, it is crucial to understand the portfolio performance and the key factors that drive returns. The fund has a strong track record, and its performance is closely tied to the careful selection of investments and effective risk management strategies employed by the Woodson investment team. Here is an overview of the key aspects:

Consistent Returns:

Woodson funds have consistently generated competitive returns for investors over the years. The fund's performance has been stable and robust, even during periods of market volatility. The investment strategy focuses on a long-term horizon, aiming for steady capital appreciation rather than short-term speculative gains. This approach has resulted in a smooth performance curve with less dramatic peaks and troughs compared to some other funds.

Diversified Investment Strategy:

The fund's portfolio is well-diversified across different sectors, industries, and asset classes. This diversification helps mitigate risks and capture opportunities in various economic conditions. Woodson invests in a mix of large-cap, mid-cap, and small-cap companies, ensuring exposure to established businesses and potential high-growth enterprises. The fund also allocates a portion of its assets to international markets, providing further diversification and the potential to benefit from global economic trends.

Fundamental Analysis and Stock Selection:

The cornerstone of Woodson's investment strategy is rigorous fundamental analysis. The investment team conducts in-depth research to identify companies with strong fundamentals, including robust business models, competitive advantages, experienced management teams, and attractive growth prospects. By focusing on high-quality businesses, the fund aims to hold investments with the potential for sustainable long-term performance.

Risk Management and Downside Protection:

Effective risk management is a key focus for Woodson funds. The investment team employs a range of strategies to manage risk and protect capital. This includes setting appropriate position sizes, utilizing stop-loss orders, and regularly monitoring and rebalancing the portfolio. The fund also maintains a disciplined approach to buying and selling, ensuring that investments are made only when there is a sufficient margin of safety. This disciplined approach helps to limit potential losses and provides downside protection for investors.

Performance Benchmarking:

To provide transparency and context for investors, Woodson funds are benchmarked against relevant market indices. By comparing the fund's performance to these benchmarks, investors can assess how well the fund is performing relative to the overall market and similar investment options. The fund typically aims to outperform its chosen benchmarks over the long term, providing investors with superior returns.

Long-Term Track Record:

Woodson funds have a long and established track record, which provides potential investors with a significant amount of historical data to analyze. This extensive performance history allows investors to assess how the fund has performed during different market cycles, economic conditions, and geopolitical events. A consistent and robust long-term track record demonstrates the fund's ability to navigate through various challenges and market environments.

In summary, investing in Woodson funds offers a well-diversified and carefully managed approach to generating competitive returns. The fund's performance is underpinned by a rigorous investment strategy, fundamental analysis, and effective risk management. By focusing on high-quality businesses and maintaining a long-term perspective, Woodson funds have consistently delivered for investors. Potential investors should review the fund's historical performance, risk metrics, and investment strategy to determine if it aligns with their financial goals and risk tolerance.

Frequently asked questions