Strategic Insights and Opportunities

Solimar Fund returned -7.30% net of fees for the month of April compared to the S&P 500’s return of -3.95%. The YTD return remains at a very solid 10.48% net of fees compared to S&P 500’s YTD return of 5.81%.

As we noted in the March Fund Update, we expect ~70% of months to be positive. Our monthly win rate was 83% at the time. As a result of our April performance our monthly win rate is down to 71%, which is perfectly in line with our very impressive long-term average.

The Opportunity in Drawdowns

It's essential to view temporary downturns through the lens of strategic investment opportunity. It’s prime time to add capital. Then again, it always is!

Based on a meticulous analysis of 40 years' worth of backtested data, our system’s recovery trajectory averages only 26 trading days to reach new highs after a drawdown. Ninety five percent (95%) of the time a new max is achieved within 61 trading days.

The swift rebound witnessed in November following October's downturn along with extensive backtesting reaffirms that downturns often lead to significant rebounds.

Why it is Always Time to Invest

The depth and duration of drawdowns are critical metrics to analyze when considering new systematic injections of capital. Our system’s typical max drawdown is substantially less severe than that of the broader market across various medium and long-term timescales. It’s approximately half that of the S&P 500 max drawdown.

This resilience underscores the strength of our trading strategy and its capability to withstand market volatilities while maintaining very robust growth trajectories. 

The system focuses on maximizing annual returns with a willingness to take on significant short term market risk in order to do so. Returns may fluctuate over months and quarters. Using a systematic approach and integrated real-time risk management processes lead us to believe that the long-term results will balance out any shorter-term volatility.

Five year backtests yield excellent returns and efficient risk/reward ratios with a Sharpe ratio above 2.

The algorithm was designed with market data going back to 1985. We didn’t stop at the typical 5 years. We used nearly 40 years to introduce significant market events, macro trend shifts, bear markets, and ensure long-term performance. We are happy to share backtested performance during any of these events. Email us and ask if you are curious!

To date live trading has been similar to model performance through many market conditions yielding a 65% signal win rate and a 2 to 1 win/loss ratio. These metrics give us the confidence to aim to return an average of 20% to 30% net of fees a year over 3 to 5 years. 

It’s always a good time to consider adding funds to Solimar as part of your alternative investment strategy. We would love to help you reach your financial goals!

Tyler added 20% of his equities portfolio on May 1 after freeing it up from a different approach. We now both have the bulk of our portfolios in the system.

We continue to add personal capital whenever possible because we haven’t found a better opportunity for risk adjusted growth.

Looking Ahead

We remain steadfast in our commitment to leveraging advanced analytics and historical insights to build confidence and interest in our trading strategies. We actually look forward to these seasons of market volatility and trend changes! They are often the seedbed for systematic outperformance and wealth creation.

While it can seem counterintuitive and undesirable on the surface, volatility is necessary to achieve superior returns with alpha beyond index funds.

Thank you for your continued trust in Solimar Fund. We are dedicated to navigating these periods with precision, resilience, and care.

Join Us

For those considering increasing their investment or joining our fund, now is a strategically advantageous time to act. We welcome conversations about how Solimar Fund might play a pivotal role in your overall investment strategy and invite you to reach out for more detailed insights into our approach and future outlook.

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.}