This year’s top-performing hedge fund posted another huge gain in October.
Sosin Partners added 50 percentage points to its performance and is now up more than 122 percent for the year, according to a hedge fund database. This is better than double any other hedge fund’s known performance this year. The surge enabled Sosin to come close to its high-water mark after the volatile fund lost 77 percent in 2022.
The fund began its turnaround in 2023 with a nearly 80 percent gain, per the database. As Institutional Investor has chronicled for more than a year, one stock continued to drive the fund’s highly concentrated portfolio: online used-car company Carvana.
In October alone, Carvana’s shares surged 42 percent. Early last month, the company raised its 2024 guidance after beating this quarter’s estimates, saying adjusted earnings before interest, taxes, depreciation, and amortization would be “significantly above the high end” of its earlier target. The stock has swelled roughly five times this year alone — double Nvidia’s performance. Since early January 2023, it has increased more than 55 times. However, it is down slightly so far this month.
Cliff Sosin founded Sosin Partners and CAS Investment Partners, which manages the fund, in 2012. The hedge fund holds just five stocks. Carvana accounted for roughly three-quarters of capital as of the end of the third quarter, up from two-thirds the previous quarter even after Sosin slightly trimmed its stake. Most of the increased concentration around the stock was the result of price appreciation.
In the third quarter, Sosin cut one of its other positions — a small stake to begin with. The firm slashed its investment by nearly two-thirds in World Acceptance Corp., a small-loan consumer finance company and its smallest position, now accounting for less than 1 percent of assets.
Otherwise, Sosin stood pat with its main positions.
For example, Hilton Grand Vacations — Sosin’s second-largest long — makes up a little more than 15 percent of assets. The hedge fund trimmed this position by a small amount in the third quarter. The stock was up about 1.5 percent in October but was down by just over 8 percent for the year through October.
In contrast, in the third quarter Sosin boosted its stake in Capital One Financial by more than 18 percent. The financial services company is now responsible for a bit more than 8 percent of assets. The stock was up nearly 9 percent last month and about 37 percent for the year through October.
Rounding out the portfolio is Cardlytics, which now accounts for a little more than 1 percent of assets. The company, which partners with financial institutions to help marketers identify potential customers, has seen its stock drop about 60 percent this year.
