Black Bear Value Partners 4Q22 Commentary

Black Bear Value Partners LP commentary for the fourth quarter ended December 31, 2022.

“Don’t play everything; let some things go by…. What you don’t play can be more important than what you do.” – Thelonious Monk

Q4 2022 hedge fund letters, conferences and more

Dear Partners and Friends,

Black Bear Value Fund returned +1.8%, net, in December and +12.5% for 2022.
The HFRI Value Index returned -0.9% in December and -8.1% for 2022.
The S&P 500 returned -5.8% in December and is -18.1% for 2022.

From the start of our Partnership, it was clear that investment knowledge alone would not be enough for a sustainable business with a competitive advantage. If we could create a long business runway we could invest for the long-term (not the next quarter or year).

As a result, I underwrote the business to failure…I presumed to raise 0 dollars meaning Lauren and I would have to fund the business entirely ourselves for 5-10 years. We would invest in high quality service providers but otherwise keep the operating costs lean.

This mentality, while unusual, gave me the freedom to look for ideas and quality long-term investors. Having a durable business structure leads to quality partners which leads to the ability to have a quality long-term and concentrated portfolio…they’re all interconnected.

Thankfully we have attracted amazing LP’s that range from high-net-worth individuals to family offices. Although our headcount has grown from a team of 1 to a team of 2 (CFO David Proskin), we will forever maintain a lean and bootstrapped culture. It helps explain our returns, our patience, and our extremely high-quality LP base.

Topics covered in our letter include: