Upslope Capital's Q4 2022 Investor Letter

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  • Upslope Capital Management is simply a Colorado registered finance adviser. Upslope's halfway finance attack is simply a concentrated, long/short equity strategy, focused connected mid-cap businesses.
  • 2022 was a bully twelvemonth for Upslope, pinch beardown superior preservation during nan astir convulsive months for nan marketplace and coagulated capacity during alleviation periods.
  • I judge Upslope’s low-volatility attack tin proceed to outperform complete nan long-run.
  • Looking ahead, superior preservation remains beforehand and center.
business financial accounting


Dear Fellow Investor,

Upslope’s nonsubjective is to present attractive, equity-like returns pinch importantly reduced marketplace consequence and debased relationship versus accepted equity strategies. 2022 was a bully twelvemonth for Upslope, pinch beardown superior preservation during nan astir convulsive months for nan marketplace and coagulated capacity during alleviation periods.

Upslope Exposure & Returns[1]

Benchmark Returns

Average Net Long

Net Return

S&P Midcap 400


HFRX Equity

Hedge Index

Q4 2022





FY 2022





Since Inception*





Note: clients should ever cheque individual statements for returns, which whitethorn alteration owed to timing and different factors. *Since Inception returns are annualized (from August 2016).


Investors person been not-so-patiently waiting for an all-clear signal. Markets person go progressively jumpy connected immoderate “news” arsenic a result. It doesn’t matter overmuch if nan news is bully aliases bad. Something conscionable needs to hap truthful investors tin feel good astir buying stocks.

I’m not judge really nan large issues of nan time (inflation, rates, housing, geopolitics) resolve, but nan result that would frustrate nan largest number of investors seems to beryllium for markets to stay stuck…waiting for different 6, 12 aliases 18 months. The existent carnivore marketplace has dragged connected for astir a year. This compares to nan “average” carnivore of 20 months. A sizable number ran to 30+ months.2 Extended malaise isn’t retired of nan question, moreover if it would consciousness unprecedented to astir progressive investors today. This isn’t scientific.

In theory, navigating this situation shouldn’t beryllium that analyzable (not to beryllium confused pinch “easy”). But it’s a different playbook than those that were astir successful for nan past decade. It involves leaning connected accepted worth stocks (as opposed to high-class compounders aliases fallen maturation stocks), being other disciplined pinch valuation, and staying nimble. Trimming (or adding to) stocks purely on…gasp…valuation grounds is astir apt wise. There will travel a clip erstwhile letting longs tally further valuation-wise makes sense. But that’s beyond The Waiting Place. Morgan Stanley’s Mike Wilson echoed this sentiment successful a caller note,

“...a Fed region will apt not lead to higher P/Es if maturation is really rolling over.”

Upslope’s portfolio and caller actions bespeak nan above. Tactical Longs (aka accepted value) comprise nan bulk of our longs and caller adds. This group is much divers than successful nan past, reflecting a position that astir accepted worth stocks are almost by meaning higher risk. It besides reflects ongoing testing of “starter” positions noted past 4th (so far, truthful good). An overview of caller purchases, including nan starters antecedently alluded to, is provided below.

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At quarter-end, gross and beta-adjusted nett exposures were 148% and 28%, respectively. Positioning reflects a heightened number of perceived opportunities, peculiarly connected nan agelong broadside of nan portfolio (offset pinch elevated hedges).

Exhibit 1: Upslope Portfolio Snapshot

 Upslope Portfolio Snapshot

Exhibit 1: Upslope Portfolio Snapshot (Source: Upslope. )

Note: arsenic of 12/31/22 and whitethorn alteration without notice.

Exhibit 2: Gross Exposure by Market Cap & Geography

 Gross Exposure by Market Cap & Geography

Exhibit 2: Gross Exposure by Market Cap & Geography (Source: Upslope, Interactive Brokers, Sentieo. )

Note: arsenic of 12/31/22. Market headdress ranges: Micro (<$400mm), Small ($400mm - $3bn), Mid ($3bn - $13.5bn), Large (>$13.5bn).


The largest contributors to and detractors from quarterly capacity are noted below. Gross publication to wide portfolio return is noted successful parentheses.

Exhibit 3: Top Contributors to Quarterly Performance (Gross)

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Top Contributors

Top Detractors

Long: Kongsberg (+295 bps)

Short: Hedges, nett (-220 bps)

Long: Silgan (SLGN, +210 bps)

Short: Undisclosed (-75 bps)

Long: Diploma (OTCPK:DPMAY, +205 bps)

Short: Undisclosed (-60 bps)

Longs – Total Contribution

Shorts – Total Contribution

+1,535 bps

-295 bps

Source: Upslope, LICCAR, Interactive Brokers

Note: Amounts whitethorn not necktie pinch aggregate capacity figures owed to rounding.

Casey’s (CASY) – Exited Long

Focused exclusively connected nan Midwest/South, Casey’s is nan 3rd largest independent convenience shop usability successful nan U.S. The institution has executed good and shares person outperformed a challenging marketplace nicely since nan position was initiated a twelvemonth ago. It whitethorn look unusual to waste a position pinch this backdrop, but I did truthful for 2 reasons. First, it was purchased successful nan first spot arsenic a reasonably priced protect during an orgy of speculation. In this context, CASY served its purpose. Second, fixed nan developments of nan past twelvemonth and Upslope’s wide still-defensive portfolio, I deliberation location are amended uses of superior coming – specifically cheaper, less-defensive longs. Some of these are highlighted successful Exhibit 4 below.

TCV Acquisition Corp. (TCVA) – Exited Long

TCVA is simply a pre-transaction SPAC, sponsored by nan task superior patient Technology Crossover Ventures. While I added it successful 2021 arsenic a “free” telephone action (and a loose hedge for SPAC+ shorts), I exited this 4th owed to: (a) losing realistic dream for completion of a successful acquisition, and (b) nan position becoming a (mild) distraction.

New Longs

Given heightened activity successful caller quarters (mostly Q3), a summary array laying retired nan basics of Upslope’s newest longs is provided below. The array includes nan 3 “starter” positions discussed successful nan past letter, arsenic good arsenic 1 caller summation (BOK Financial). For nan astir part, these are still sized somewhat modestly.


2022 was a bully twelvemonth for Upslope’s strategy, which has outperformed its benchmarks (with acold little volatility) connected a 1-, 3-, and 5-year basis, arsenic good arsenic since inception. A thoughtful and well-aligned customer guidelines that “gets” what Upslope’s protect attack is and is not expected to do was a cardinal enabler of this result.

I judge Upslope’s low-volatility attack tin proceed to outperform complete nan long-run. While embracing volatility successful speech for theoretically higher semipermanent returns has go trendy successful caller years, nan style has ne'er appealed to me. The basal decay mathematics that $1.00 invested successful a return watercourse of {+20%, -20%, +20%, -20%} will yet beryllium worthy $0.92 is under-appreciated, successful my view. Volatility does matter – not conscionable successful helping clients enactment nan course, but besides successful delivering semipermanent outperformance.

Looking ahead, superior preservation remains beforehand and center. Nevertheless, I americium trying difficult to beryllium arsenic openminded arsenic imaginable for amended times ahead.

Thank you again for nan spot you’ve placed successful maine to negociate a information of your hard-earned money. If you person immoderate questions astatine all, would for illustration to adhd to your account, aliases cognize personification who whitethorn beryllium a bully fresh for Upslope’s atypical approach, please telephone aliases email anytime.


George K. Livadas

Appendix A

Appendix B

Appendix C: Portfolio Company ((Long)) Descriptions

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AptarGroup (ATR): Specialty packaging business focused connected pumps and sprayers, pinch a highly profitable, defensive, and increasing Pharma unit. Misclassified and undervalued owed to legacy/traditional packaging businesses (Food + Beverage, Beauty + Home), which lend 60% of income but conscionable 15% of EBIT.

ATS Corp. (OTCPK:ATSAF): Canada-based mill automation solutions supplier chiefly serving protect extremity markets (healthcare, food, etc.) successful N. America and Europe. Active acquisition strategy + perchance accelerating reshoring tailwinds should prolong maturation ahead.

BOK Financial (BOKF): Regional slope based successful and chiefly focused connected OK, arsenic good arsenic TX, NM, and CO. Conservative civilization + unsocial power expertise + humble valuation support BOKF shares connected a standalone basis. Also position position arsenic a portfolio hedge successful nan arena of sustained, elevated rates and/or power prices.

Bolsa Mexicana de Valores (OTCPK:BOMXF): Dominant financial speech usability successful Mexico. Despite known headwinds successful its equities business, nan institution is diversified, highly rate generative, conservatively managed, and shares look a inexpensive telephone action connected world macro reacceleration and/or Mexico resurgence.

CACI International (CACI): Specialized exertion and consulting services provider, chiefly to U.S. defense and intelligence agencies. Anticipate institution will use from geopolitical tailwinds, beardown position successful cyber defense, and continued consolidation opportunities.

Chemring (OTCPK:CMGMF): Niche defense contractor focused connected Countermeasures & Energetics (defensive flares, specialty explosives) and Sensors & Info (cyber warfare, explosive/chem/bio detection). End markets should outgrow defense marketplace for years; besides has elevated “conflict-driven” request exposure.

Diploma (OTCPK:DPMAY): U.K.-based specialty supplier focused connected basal consumable products crossed life sciences, seals (machinery), and controls (aerospace wiring/harnesses). Unique exemplary and blimpish M&A strategy person historically enabled charismatic free rate travel maturation done nan cycle.

FTI Consulting (FCN): Boutique consulting and advisory firm, pinch starring expertise successful restructuring, conflict advisory, and different practices. Should yet use from elevated woody travel successful aftermath of longer-term pandemic effects (e.g. rising rates and SPAC boom/bust) and restructuring cycle.

Glatfelter (GLT): Specialty materials institution pinch astir of its footprint successful W. Europe. Commodity products mostly service protect extremity markets (e.g. tea, hygiene). Significant vulnerability to E. Europe + ill-timed M&A put institution successful distress. Anticipate easing ostentation to “bail out” nan company, sloppy of different macro considerations.

Kongsberg Gruppen (OTCPK:NSKFF): 200+ twelvemonth aged defense (missile/defense, distant weapons systems) and maritime (offshore, commercial) business, mostly owned by Norwegian government. Dominant positions successful niche products pinch cyclically charismatic extremity markets, beardown guidance squad and coagulated equilibrium sheet.

Man Group (OTCPK:MNGPF): UK-based alt. head pinch $138bn of AUM (70% alts, 30% long-only). Differentiated, strategies focused connected public, liquid markets person withstood assemblage headwinds good complete years and could spot resurgence, fixed dramatically changed macro environment. Position besides provides portfolio pinch “cheap beta.”

Silgan Holdings (SLGN): Food can, dispensing system, and integrative packaging shaper managed pinch a backstage equity mindset. Defensive extremity markets, charismatic valuation and disciplined exemplary make for charismatic baseline finance pinch equilibrium expanse optionality (M&A aliases superior return).

Tecan Group (OTCPK:TCHBF): Switzerland-based laboratory automation and consumables business, pinch starring marketplace position successful automated liquid handling. Attractive and defensible guidelines business greatly enhanced by exceptional execution during nan pandemic.

TMX Group (OTCPK:TMXXF): Largest speech usability successful Canada pinch vulnerability to equities, fixed income, and derivatives, arsenic good arsenic European power/energy trading/data. Anticipate steady, protect maturation pinch outperformance during periods of elevated ostentation and/or volatility.

Upslope Capital Management, LLC (“Upslope”) is simply a Colorado registered finance adviser. Information presented is for chat and acquisition purposes only and does not intend to make an connection aliases inducement for nan waste aliases acquisition of immoderate circumstantial securities, investments, aliases finance strategies. Investments impact consequence and, unless different stated, are not guaranteed. Be judge to first consult pinch a qualified financial advisor and/or taxation master earlier implementing immoderate strategy discussed herein.

While Upslope believes each accusation herein is from reliable sources, nary practice aliases warranty tin beryllium made pinch respect to its completeness. Any projections, marketplace outlooks, aliases estimates successful these materials are forward-looking statements and are based upon soul study and definite assumptions, which bespeak nan views of Upslope and should not beryllium construed to beryllium suggestive of existent events that will occur. As such, nan accusation whitethorn alteration successful nan early should immoderate of nan economical aliases marketplace conditions Upslope utilized to guidelines its assumptions change.

The explanation of finance strategies successful these materials is intended to beryllium a summary and should not beryllium considered an exhaustive and complete explanation of nan imaginable finance strategies utilized by Upslope discussed herein. Varied finance strategies whitethorn beryllium added aliases subtracted from Upslope successful accordance pinch related Investment Advisory Contracts by Upslope successful its sole and absolute discretion.

Any circumstantial information aliases finance examples successful these materials are meant to service arsenic examples of Upslope’s finance process only. There is nary assurance that Upslope Capital will make immoderate investments pinch nan aforesaid aliases akin characteristics arsenic immoderate investments presented. The investments are presented for chat purposes only and are not a reliable parameter of nan capacity aliases finance floor plan of immoderate composite aliases customer account. The scholar should not presume that immoderate investments identified were aliases will beryllium profitable aliases that immoderate finance recommendations aliases finance decisions we make successful nan early will beryllium profitable. Any scale aliases benchmark comparisons herein are provided for informational purposes only and should not beryllium utilized arsenic nan ground for making an finance decision. There are important differences betwixt Upslope’s strategy and nan benchmarks referenced, including, but not constricted to, consequence profile, liquidity, volatility, and plus composition. You should not trust connected these materials arsenic nan ground upon which to make an finance decision.

There tin beryllium nary assurance that finance objectives will beryllium achieved. Clients must beryllium prepared to carnivore nan consequence of a nonaccomplishment of their investment.

Any capacity shown for applicable clip periods is based upon a composite of existent trading successful accounts managed by Upslope nether a akin strategy. Except wherever different noted, capacity is shown nett of guidance and inducement fees (where applicable), and each trading costs charged by nan custodian. Composite capacity calculations person been independently verified by LICCAR, LLC. Performance of customer portfolios whitethorn disagree materially owed to differences successful interest structures, nan timing related to further customer deposits aliases withdrawals and nan existent deployment and finance of a customer portfolio, nan magnitude of clip various positions are held, nan client’s objectives and restrictions, and fees and expenses incurred by immoderate circumstantial individual portfolio.

Benchmarks: Upslope’s capacity results shown are compared to nan capacity of nan HFRX Equity Hedge Index, arsenic good arsenic nan exchange-traded money that tracks nan S&P Midcap 400 (ticker: MDY). The HFRX Equity Hedge Index is typically not disposable for nonstop investment. Benchmark results do not bespeak trading fees and expenses.

The HFRX Equity Hedge Index (source: Hedge Fund Research, Inc., © 2023 Hedge Fund Research, Inc. All authorities reserved) was chosen for comparison arsenic it is mostly good recognized arsenic an parameter aliases practice of nan capacity of equity-focused hedge money products. Any different benchmarks noted and utilized by Upslope person not been selected to correspond an due benchmark to comparison an investor’s performance, but alternatively are disclosed to let for comparison of nan investor’s capacity to that of definite well-known and wide recognized, investable indexes.


These materials whitethorn not beryllium disseminated without nan anterior written consent of Upslope Capital Management, LLC.


[1] Unless different noted, returns shown for a composite of each accounts invested according to Upslope’s halfway long/short strategy.

Please spot important performance-related specifications and disclosures successful Appendix A. 2 Source: J.P. Morgan Asset Management, 1Q 2023 Guide to nan Markets.

Original Post

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

Editor's Note: This article discusses 1 aliases much securities that do not waste and acquisition connected a awesome U.S. exchange. Please beryllium alert of nan risks associated pinch these stocks.

This article was written by

Upslope Capital Management floor plan picture

Concentrated, long/short, midcap, world developed markets. CO registered finance adviser. DISCLAIMER: Upslope Capital Management (“Upslope”) is simply a Colorado registered finance adviser. Upslope whitethorn only transact business successful those states successful which it is registered, aliases qualifies for an exemption aliases removal from registration requirements. Nothing published by Upslope connected this aliases different websites should beryllium construed by immoderate user and/or prospective customer arsenic Upslope’s inducement to effect, aliases effort to effect transactions successful securities, aliases nan rendering of personalized finance proposal for compensation, complete nan Internet. Any subsequent, nonstop connection by Upslope pinch a prospective customer shall beryllium conducted by a typical that is either registered aliases qualifies for an exemption aliases removal from registration successful nan authorities wherever nan prospective customer resides. For accusation pertaining to nan registration position of Upslope, please interaction nan authorities securities regulators for those states successful which Upslope maintains a registration filing. A transcript of Upslope’s existent written disclosure connection discussing Upslope’s business operations, services, and fees is disposable astatine nan SEC’s finance advisor nationalist accusation website ( aliases from Upslope upon written request. Upslope does not make immoderate representations aliases warranties arsenic to nan accuracy, timeliness, suitability, completeness, aliases relevance of immoderate accusation prepared by immoderate unaffiliated 3rd party, whether linked to connected this aliases Upslope’s website aliases incorporated herein, and takes nary work therefor. All specified accusation is provided solely for convenience purposes only and each users thereof should beryllium guided accordingly.  From clip to time, Upslope whitethorn people investigation reports pinch nan purpose of receiving feedback from nan broader finance community. Such materials are not intended to beryllium finance proposal and should nether nary condition beryllium considered a proposal to return action pinch respect to immoderate security. Upslope, its Managing Member, and its clients whitethorn clasp positions, agelong aliases short, successful specified securities, and Upslope whitethorn waste and acquisition without informing aliases updating readers.   Investments impact consequence and unless different stated, are not guaranteed. Be judge to first consult pinch a qualified financial advisor and/or taxation master earlier implementing immoderate strategy. Information published by Upslope connected this website is not intended to supply investment, tax, aliases ineligible advice.

Additional disclosure: Copyright © Upslope Capital Management, LLC

Editor: Naga

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