As we close out another year, we are pleased to report another strong performance in 2024. While the broader market experienced significant momentum, our disciplined, quality-focused investment strategy continued to deliver steady gains. This consistency underscores our commitment to long-term value creation and our ability to navigate both opportunities and challenges.
Over the past decade, Talguard has consistently outperformed major indices. This track record is a testament to the resilience of our approach, which prioritizes quality investments, downside protection, and long-term growth.
2024 Performance Highlights
Despite a complex and evolving macroeconomic landscape, our investment approach yielded strong results in key sectors:
- Technology: The rapid evolution of artificial intelligence fueled growth across our tech holdings, particularly in software and next-generation hardware. One of our standout performers was Netflix, an investment we made near its bottom 2.5 years ago. The company’s dominant content development strategy, crackdown on password sharing, and rollout of an ad-supported subscription tier led to tremendous revenue growth. Netflix’s sophisticated recommendation algorithms continue to enhance engagement, reinforcing its competitive moat.
- Healthcare: The sector faced regulatory pressures and market volatility, particularly in December. While our healthcare holdings encountered short-term headwinds, we remain optimistic about select pharmaceutical and biotech stocks with strong long-term potential.
- Consumer Discretionary: The economic environment put pressure on lower-income households, while higher-income consumers maintained their spending. This divergence highlighted the importance of selectively investing in companies with strong pricing power and resilient demand.
Outlook for 2025
As we enter 2025, we remain cautiously optimistic. While opportunities abound, we are maintaining a prudent approach given current market conditions. Key factors shaping our strategy include:
Opportunities from Pullbacks: Valuation resets across various sectors have created attractive long-term entry points.
Inflation and Interest Rates: The U.S. economy performed better than expected in 2024, leading the Federal Reserve to pause or slow rate cuts. Inflation remains a key watchpoint as the Fed remains vigilant against overheating.
AI and Technology: The continued advancement of AI presents significant opportunities, though we remain mindful of the cyclical nature of hardware investments.
Healthcare Resilience: We expect select pharmaceutical and biotech stocks to recover, while keeping a cautious eye on structural challenges in the industry.
Navigating Broader Changes
The incoming administration brings potential shifts in economic policy that could impact markets:
Tariffs and Inflation: New tariff policies may drive up production costs, potentially increasing inflationary pressures. However, this could create opportunities for domestic manufacturers and supply chain realignments.
Defense Spending: Increased allocations to defense under a Republican-led government could benefit key sectors.
Labor Market Dynamics: Proposed policies on immigration and labor could influence wages and inflation. Meanwhile, AI and automation continue to drive efficiency gains that may counteract some of these inflationary trends.
Commitment to Long-Term Growth
At Talguard, we remain steadfast in our focus: investing in high-quality companies that generate strong cash flows, reward shareholders through buybacks and dividends, and offer long-term capital appreciation. While short-term volatility is inevitable, our commitment to compounding value over time remains unwavering.
Final Thoughts
We deeply appreciate your trust and partnership. Talguard’s decade-long track record of outperformance reflects the strength of our disciplined approach and our shared commitment to long-term success. As we begin 2025, we look forward to navigating the markets with the same focus and determination that have driven our success.
Here’s to another year of growth and opportunity.
CEO
Talguard Investments LLC
531 Main Street, Suite 1165
El Segundo, CA 90245
Tel: (310) 923-2138
Email: dan@talguard.com
This document does not constitute an offer to sell or a solicitation to buy membership interests in the Talguard Value Fund LP. Past performance is not necessarily indicative of future results. All information provided herein is for informational purposes only.
Investment in the Fund will involve significant risks due to, among other things, the nature of the Fund’s Investments (as defined herein). Investment in the Fund is suitable only for sophisticated investors and requires the financial ability and willingness to accept the high risks in an investment in the Fund. No assurance can be given that the Fund’s investment objectives will be achieved or that investors will receive a return of their capital.
In making an investment decision, prospective investors must rely on their own examination of the Fund and the terms of this offering, including the merits and risks involved. Prospective investors should not construe the contents of this letter as legal, tax, investment or accounting advice. Prospective investors are urged to consult with their own advisors with respect to legal, tax, regulatory, financial and accounting consequences of their investment in the Fund.