26 Value Partners LP

2nd Partners Meeting- 4/27/2025

https://26valuepartners.com

Disclaimer

These materials shall not constitute an offer to sell or the solicitation of an offer to buy any interests in account managed by 26 Value Partners LP, (“26VP”) or any of its affiliates. Such an offer to sell or solicitation of an offer to buy will only be made pursuant to definitive subscription documents between 26VP and an investor.

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No assurance can be given that the investment objective will be achieved or that an investor will receive a return of all or part of his or her investment. Investment results may vary substantially over any given time period.

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Reference and comparisons are made to the performance of other indices (together the “Comparative Indexes”) for informational purposes only. 26VP focuses on an absolute returns investment strategy. The investment returns may not mirror any of the Comparative Indexes and the volatility of investment strategy may be materially different than that of the Comparative Indexes. The securities or other instruments included in the Comparative Indexes are not necessarily included in 26VP’s investment program and criteria for inclusion in the Comparative Indexes are different than those for investment by 26VP. The performance of the Comparative Indexes was obtained from published sources believed to be reliable, but which are not warranted as to accuracy or completeness. Unless noted otherwise, the returns of the Comparative Indexes presented do not reflect fees or transaction costs, but those returns do reflect net dividends, if any.

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Historical performance results for investment indices and/or categories have been provided for general comparison purposes only, and generally do not reflect the deduction of transaction and/or custodial charges, the deduction of an investment performance fee, nor the impact of taxes, the incurrence of which would have the effect of decreasing historical performance results. It should not be assumed that your account holdings correspond directly to any comparative indices.

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Performance for 26VP are for time periods of investments in 26VP during the time period Jan 9th 2023 through Mar 31st 2025. Past performance may not be indicative of future results of investments through 26VP.

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Agenda

• Goals and Philosophy
• Portfolio Performance and Allocations
• Q1 2025 Partnership Activity
• Elephant in the Room – Tariffs
• Mag-7
• Where are we in the Market Cycle
• Taking Stock
• Plans for the Year

Reminder-Our goals

Investment Objective

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Investment Strategy

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*Contrarian value focused investment in **quality companies with long-term mindset to maximize the benefits of exponential tail of compounding.

Our focus will be on superior absolute returns (albeit with higher volatility) as compared to market-volatile average returns.

*Contrarian Value: The art of seeking to buy quality businesses when under distress with the conviction to hold on for the long haul!

**Quality Companies: Companies run by owner-oriented management, and employing capital allocation strategies consistent with long term shareholder wealth creation

Long term sustainable wealth compounding through long-only investments in publicly traded, marketable securities of U.S. and non-U.S. ADRs without use of leverage with the goal of producing at least 16X returns in 20 years

Reminder-Our Investment Philosophy

Loath Originality- �FundSmith Investment Philosophy

Don’t overpay

Do Nothing

Only Invest in Good Companies

Follow the cash

Keep it Simple

Be Cheap Within Reason

Disavow Macro Forecasting

Stay the Course

Disavow Market Timing

Announcement

Mr Varun Khurana, L.P., has agreed to take on additional duties for Partnership, In addition to being an LP (with 9.62 % ownership of units outstanding), Mr Varun will assist, G.P. Sachin Talathi, in the following capacity:

• Take a leading role in fundraising efforts to secure capital from new and existing Limited Partners (LPs)
• Engage with and provide support for research and analysis of portfolio companies when requested
• Utilize and expand industry networks to help uncover investment opportunities and partnerships
• Provide insights on market trends and shifts in core sectors to inform investment strategy
• Contribute to strategic initiatives that advance the Partnership's mission and market presence

Net Asset Value

144.53^*

As of March 30th 2025

*Before Taxes and Performance Fees

Cumulative Returns

~43.9 %

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SP500

~42.6 %

103.42

108.5

107.58

118.99

125.58

123.62

141.5

150.83

144.53

100

Inception

Q1 23

Q2 23

Q3 23

Q4 23

Q1 24

Q2 24

Q3 24

Q4 24

Q1 25

MSCI World

~ 9.6 %

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Equal Wt. SP500

~ 23.8 %

Monthly Returns

16 of 27 months beat SP500 monthly returns

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Concentrated Holdings in diverse Industries

Asset Allocation

BABA, TCEHY

BTI

LVMUY, CHDRY, EVVTY, PROSY

BAM,BN

Asset Diversification

Q1 2025 Portfolio Activity

• Purchases:
• NVR, CHDRY
• Exit:
• PRNDY
• Add on:
• GOOGL, NKE
• Trim:
• LVMUY

NVR Purchase

We initiate purchase on Mar 3rd for price of $7251/share

Thesis

• Unique structure for a home builder– Do not own land outright instead acquires land through options contracts.
• NVR Mortgage subsidiary offers significant untapped earnings potential as interest rates normalize
• Strong history of share-repurchase and the firm maintains extraordinarily strong balance sheet

Variant Perspective:

NVR is viewed as a home builder in a cyclical downturn. However the core markets of NVR (mid-atlantic and Northeast) are primed for demand growth spurred by reshoring of manufacturing

Quantitative Metrics

• Stock dropped 27% from peak value of $9964 reached in late Sept 2024
• Stock tracking at cheap valuation,EV/EBIT <10
• Strong record of profitability with ROE~39 %

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Elephant in the room – Trump Tariffs

Howard Marks offered a concise summary of possible reasons for Trump to impose tariffs¹

• support U.S. manufacturing
• encourage exports
• discourage imports
• shrink or eliminate our trade deficit
• make supply chains more secure through onshoring
• deter unfair trade practices aimed at the U.S.
• force other countries to the negotiating table
• generate revenue for the U.S. Treasury

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1. https://www.oaktreecapital.com/insights/memo/nobody-knows-yet-again

Elephant in the room – Trump Tariffs

Not much historical precedence to objectively evaluate whether tariffs can achieve these goals. The two biggest tariff events in the last 100 years of American History are:

• Smoot Hawley Tariffs Act of 1930s
• Trump-1.0 Tariffs

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Elephant in the room – Trump Tariffs

• Consensus view is that tariffs increase inflation – Data (though limited) does not support this claim
• In the immediate aftermath of Smoot-Hawley; Prices in the US fell sharply
• Trump's initial tariffs on steel, aluminum, and Chinese goods showed "no correlation with inflation"
• Impact on Trade Balance
• Economic activity slowed down
• Immaterial impact on trade balance

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How has the Tariff (News) Impacted our Holdings

Percent Change from April 2nd through April 17th

(Average Drawdown of -7.5 %)

Correlation for 1 year Stock Price

Not all stocks have same exposure to Tariffs

HIGH IMPACT

Not all stocks have same exposure to Tariffs

MEDIUM IMPACT

Not all stocks have same exposure to Tariffs

LOW IMPACT

Some historical perspective on market downturns

Are we finally seeing mean-reversion to Mag-7?

Where are we in the interest rate cycle?

Yield Curve- 10 Year Treasury - 3 Month Treasury

What to look for in the coming year?

One word, Volatility!

Volatility breeds high uncertainty and a drop in price correlations, as stock move less in tandem. It is a breeding ground for astute active investors and a bane for passive investments. We remain vigilant to be in a position to exploit this environment to the maximum extent.

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A call of action to partners

If your capital is parked in passive funds or sitting idle, it’s time to act. Volatility won’t last forever-the window for bargains is narrowing.

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How do we plan to exploit Volatility?

• Seek out investment capital to build cash reserve ready to deploy
• Explore tactical rebalancing strategies– Sell appreciated stock in an uptrend and buy undervalued assets in a down trend.
• Explore Hedging– Including covered option strategies and exposure to safe-haven assets like gold
• Increase exposure to defensive stocks, that are less susceptible to market whim

Our Most Important Asset: Partners

• A close knit family of partners as I believe them to be the most important asset in assuring the success of 26 Value.

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• Essential trait of great partners: provide long-term permanent capital in times of opportunity and patience in time of scarcity.

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• Long-term oriented partners who are equally interested in sustainable wealth creation and preservation as opposed to getting rich quick

Spread the word!

We are always looking for Partners (who fit above criteria) to join our journey of sustained wealth building!

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Contact

Sachin S. Talathi

General Partner,

Email: 26valuepartners@gmail.com

Website: https://www.26valuepartners.com

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Office: 522 W Riverside Ave, Ste N

Spokane, WA 99201

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