I
NCANDESCENT
C
APITAL
222 Broadway, 19th Floor
• New York, NY 10038 • 64
6-912-8886
•
www.incandescentcapital.com
February 9, 2017
Dear Investor
i
: Our portfolio rose 4% in Q4 of 2016
versus the S&P 500‘s
rise of 3.83%, bringing our full year (unaudited) return to 2.31%. This comp
ares to the S&P 500‘s total return of
11.98%. The table and charts below include other performance figures:
Incandescent S&P 500
Difference
2016 Year
2.31% 11.98%
-9.67%
Since Inception (48 Months)
79.51% 70.82%
8.69%
CAGR
15.74% 14.31%
1.43%
0.00%10.00%20.00%30.00%40.00%50.00%60.00%70.00%80.00%90.00%
J a n - 1 3 M a r - 1 3 M a y - 1 3 J u l - 1 3 S e p - 1 3 N o v - 1 3 J a n - 1 4 M a r - 1 4 M a y - 1 4 J u l - 1 4 S e p - 1 4 N o v - 1 4 J a n - 1 5 M a r - 1 5 M a y - 1 5 J u l - 1 5 S e p - 1 5 N o v - 1 5 J a n - 1 6 M a r - 1 6 M a y - 1 6 J u l - 1 6 S e p - 1 6 N o v - 1 6
Returns Since Inception
Incandescent S&P 500 Total Return(10.00%)(5.00%)0.00%5.00%10.00%15.00%J F M A M J J A S O N D
Last 12 Monthly Returns
Incandescent S&P 500 Total Return
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2
I
NCANDESCENT
C
APITAL
Although Incandescent Capital was officially founded 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:
Incandescent 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%
2015 3.69% 1.38%
2.31%
(3.64%)
7.33%
2016 2.52%
2
11.98%
(9.46%)
2.50%
0.02%
CAGR
18.29% 14.44%
3.85%
2.08%
16.21%
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 2016, if you elected our standard 20% performance fee (no hurdle, no management fee) arrangement, your
net
return would be around 1.85% compared to your
gross
return of 2.31%.
1
This is the
HFRX Global Hedge Fund Index
, a widely used index to praise or pan hedge funds in the press.
2
Slightly different from the official time-weighted return of 2.31% due to me adding more personal funds in the reference account in Q2.
$383,374 $294,141 $117,903
$100,000$150,000$200,000$250,000$300,000$350,000$400,0002008 2009 2010 2011 2012 2013 2014 2015 2016Incandescent S&P HFRX
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3
I
NCANDESCENT
C
APITAL
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
3
.
Portfolio Review
Here are how our positions look as a percentage of total portfolio and its geographic split:
And here‘s a snapshot of where our investments fall into various types and sectors:
3
The main reference account statement is available upon request from any investor.
16.5% 11.0% 9.6% 8.6% 7.0% 15.3%
Position Size by %
Cash
10.2% 89.8%
Geographic Split
Canada USA
Mispriced 48.0% Compounder 41.5% Special Situations 10.5%
Investment "Type"
Tech, 24.8% Financials, 36.8% Energy, 11.9% Consumer Cyclicals, 12.7% Other, 13.9%
Sectors