I
NCANDESCENT
C
APITAL
40 Fulton St, 20
th
Floor
• New York, NY 100
38
• 64
6-912-8886
•
February 6, 2015
Dear Investor
i
: Our portfolio rose 1.46% in December of 2014
versus the S&P 500‘s
decline of -0.25%, bringing our full year (unaudited) return to 5.31%. This comp
ares to the S&P 500‘s gain of 13
.69%. The table and charts below include other performance figures:
Incandescent S&P 500
Difference
2014 Year to Date
5.31% 13.69%
-8.38%
Since Inception (24 Months)
69.21% 50.42%
18.79%
CAGR
30.08% 22.65%
7.43%
(6.00%)(4.00%)(2.00%)0.00%2.00%4.00%6.00%8.00%10.00%12.00%Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Last 12 Monthly Returns
Incandescent S&P 500 Total Return0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%
J a n - 1 3 F e b - 1 3 M a r - 1 3 A p r - 1 3 M a y - 1 3 J u n - 1 3 J u l - 1 3 A u g - 1 3 S e p - 1 3 O c t - 1 3 N o v - 1 3 D e c - 1 3 J a n - 1 4 F e b - 1 4 M a r - 1 4 A p r - 1 4 M a y - 1 4 J u n - 1 4 J u l - 1 4 A u g - 1 4 S e p - 1 4 O c t - 1 4 N o v - 1 4 D e c - 1 4
Returns Since Inception
Incandescent S&P 500 Total Return
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I
NCANDESCENT
C
APITAL
Although Incandescent Capital was only officially launched in 2013, I have personally managed money for friends and family since 2009. Gross returns (unaudited) from my personal reference account (where I keep 95% of my net worth) since then are thusly:
Return S&P Difference HFRX
1
Difference
2009 50.75% 26.46% 24.29% 13.40% 37.35% 2010 18.78% 15.06% 3.72% 5.19% 13.59% 2011 2.28% 2.05% 0.23% (8.88%) 11.16% 2012 16.38% 16.00% 0.38% 3.51% 12.87% 2013 60.68% 32.31% 28.37% 6.72% 53.96% 2014 5.31% 13.69% (8.38%) (0.58%) 5.89%
CAGR
23.84% 17.20% 6.64% 3.00% 20.84%
And here is how $100,000 would have compounded versus those two benchmarks if it was invested at the end of 2008: All figures above are
gross
of fees (that is, before any fees are deducted). Since each investor in Incandescent Capital has the option to negotiate different fee arrangements, net returns will vary. For 2014, if you elected our standard 20% performance fee (no hurdle, no management fee) arrangement, your
net
return would be around 4.25% compared to your
gross
return of 5.31%. Also, depending on when your account was on-boarded, your results may differ from the main reference account reported above. It takes a bit of time to sync each account to the same exposure as I buy/sell according to the ebb and flow of the market. As always, your patience is asked for as I build your new portfolio up, but rest assured: what you own, I own. I am committed to eating my own cooking
2
.
1
This is the
HFRX Global Hedge Fund Index
, a widely used index to praise or pan hedge funds in the press.
2
The main reference account statement is available upon request from any investor.
$360,643$259,098$119,372
$100,000$150,000$200,000$250,000$300,000$350,000$400,0002008 2009 2010 2011 2012 2013 2014Incandescent S&P HFRX
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I
NCANDESCENT
C
APITAL
Contents
Yellow Media Limited ......................................................................................................... 7 United Insurance Holdings ................................................................................................. 8
................................................................................................................................... 9 Special Situations .............................................................................................................. 10
Cash Proxies ...................................................................................................................... 12 Mistakes ............................................................................................................................. 13 A New Hope, Revealed ...................................................................................................... 15 Outlook .............................................................................................................................. 16