Surfing the Market’s Waves with Confidence

Solimar Fund delivered a net of fees return of 1.6% in August, making a full recovery from the early August market turmoil. The S&P 500 (SPY) followed a similar path and returned 2.3%. Our Fund’s net Year-to-Date (YTD) return stands at an impressive 38.3%, compared to the SPY’s YTD return of 18.6%.

The conclusion of August means the Fund is one month away from a full year of live trading. Solimar Fund is up 45.1% in our first eleven months.

We are proud of the returns we’ve generated for our investors thus far and believe our risk-optimized strategy ought to be considered by every accredited investor, even (maybe especially!) if you already have exposure to equities.

FOWO: Fear Of Wipe Outs

As surfers and investors, we’ve learned that success in both fields often comes down to managing fear and understanding risk. Whether you're dropping into a large wave or considering a new investment, fear-aversion tends to be the primary deciding factor. It's a natural human instinct to hesitate when faced with the unknown. But in surfing and investing alike, it's not about avoiding fear—it's about learning to navigate it.

So what is a wipeout? While it’s easy to get caught up in the daily fluctuations of the market, at Solimar Fund, we prefer to zoom out from the daily and monthly noise to focus on the bigger picture—annual performance. For us, a wipeout isn’t just a bad day or a tough month; it’s having a down year. 

As a firm, we have a lofty goal of never having a down year. Why? And is that even doable? We understand that protecting your capital is of greater value than growing it, so we aim to do both. We’ve built our strategy to keep us upright and moving forward, no matter how turbulent the market becomes. And while we can’t guarantee no down years, our edge is strong and we are hyper-focused on risk management, drawdown control, and capital preservation.

Data-Driven Confidence

We know we will have plenty of down days, but our hypothetical backtest since 2007 says that 57% of days and 74% of months should be up. That said, we’ve only had one down month in 2024 so we wouldn’t be surprised if we have some red months between now and the new year.

BUT, they could also all be green! There’s a 74% chance each month. 🙂 

Fear and Decision-Making

In the ocean, a surfer must decide whether to drop into a wave or let it pass. The decision is often made in a split second, guided by experience, intuition, and an assessment of risk. The same principles apply in investing. Deciding to take on a new investment—or avoid one—often comes down to a moment of judgment, weighing the potential rewards against the risks.

Thankfully, as opposed to the quick decision to drop into a wave, we give you much more time and data to consider your investment, we think you’ll decide to join the ride! There are only 95 spots left but if you are reading this, you’ve got a shot to be an early adopter and secure your spot. Once fully subscribed, we have no plans currently to open new spots. We want to stay edgy and nimble to maximize returns for our investors.

Our Approach to Managing Risk

At Solimar Fund, we've built a system that aims to reduce the length and severity of wipeouts. It’s not just the depth of the drawdown that gets you, it’s also how long you are held under. Just as a skilled surfer reads the ocean to avoid dangerous conditions, our quantitative strategy is designed to respond and manage market risks. We understand that no one can completely eliminate risk, and in fact one must take risk to grow. But our goal is to encapsulate and minimize it, to provide our investors with a smoother and more predictable experience. It’s more fun too!

We spent about 3 years crafting and refining our algorithm prior to launching Solimar Fund. The fund aspires to achieve double the market (SPY) returns with only half the risk over a 5-year time horizon. We don't just chase returns; we prioritize protecting our capital and our investors' peace of mind. By carefully selecting the waves we ride—both in the ocean and in the market—we aim to navigate turbulent waters with confidence and enjoyment.

Performance Comparison: Solimar Fund vs. SPY

• Solimar Fund Net Performance (10/1/23- 8/31/24): 45.1%

• SPY Performance (10/1/23- 8/31/24): 31.9%

Solimar Fund has had a great 11 months of trading since October 1, 2023. As you can see, so has the market. They say a rising tide lifts all boats, and while that’s mostly true, our algorithm also keeps an eye out for the dropping tide. It’s anybody’s guess when the next low tide might come our way, but we trust our edge. We’d love to tell you more about it.

For those of you who want to geek out on some dashboards and metrics, here is a look at the hypothetical backtest of our strategy.

Looking Ahead

As we move forward, we remain committed to refining our strategies and staying true to our principles. Just as surfers constantly study the ocean to improve their skills, we continually analyze the markets to adapt and strengthen our approach. We believe that by focusing on reducing risk and managing fear, we can achieve not only strong returns but also long-term success for our investors.

Thank you for your continued trust in Solimar Fund. We're excited to keep riding the waves of the market together, with skill, confidence, and a clear vision of the horizon.

Drop into the next wave with us!

Warm regards,

Geoffrey & Tyler

_{2by2 Capital LLC | [email protected] | www.2by2Capital.com}

_Disclaimer

_{Solimar Fund is a private fund operating under Rule 506(c) of Regulation D, which allows us to engage in general solicitation and advertising to raise an unlimited amount of capital from accredited investors, provided we take reasonable steps to verify their accredited investor status. This fund is exclusively available for investment by accredited investors, as defined by applicable securities laws}

_{This material does not constitute an offer or the solicitation of an offer to purchase an interest in Solimar Fund, LP (the “Fund”), which such offer will only be made via a confidential private placement memorandum. An investment in the Fund is speculative and is subject to a risk of loss, including a risk of loss of principal. There is no secondary market for interests in the Fund and none is expected to develop. No assurance can be given that the Fund will achieve its objective or that an investor will receive a return of all or part of its investment. All statements herein are qualified in their entirety by reference to the Memorandum, and to the extent that this document contradicts the Memorandum, the Memorandum shall govern in all respects.}

_{The hypothetical backtest results presented herein are for illustrative purposes only and do not represent actual trading or future performance. Past performance, whether actual or simulated, is not indicative of future results. The backtest is based on historical data and assumptions that may not be accurate or complete. Investors should not rely solely on this information when making investment decisions and should consult with financial advisors to understand all risks associated with investing in our hedge fund.}

_{Past and simulated performance is not necessarily indicative of future performance. Any performance data prior 10/2023 does not represent the performance of the Solimar Fund. 2023 performance data prior to launching the Fund is taken from actual returns net of fees from a live trading account managed by 2by2 Capital. Data prior to 2023 represent the simulated performance of 2by2 Capital’s long-short algorithm.}

_{Information provided reflects 2by2 Capital’s views as of the date of this document. Such views are subject to change at any point without notice. The information contained herein is for informational purposes only and should not be considered a recommendation to buy or sell any securities. Nothing presented herein is or is intended to constitute investment advice, and no investment decision should be made based on any information provided herein. There is a risk of loss from an investment in securities, including the risk of loss of principal. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will be profitable or suitable for a particular investor’s financial situation or risk tolerance. Asset allocation and portfolio diversification cannot assure or guarantee better performance and cannot eliminate the risk of investment losses. Past performance is not necessarily indicative of future performance. There can be no assurance that the performance achieved above will be achieved at any time in the future. All investments involve risk, including the loss of the entire investment.}