Putting Up Impressive Q2 Results, GrizzlyRock Value Is Bullish on This Government Contractor

GrizzlyRock Value Partners returned a blistering 14.3% net for the second quarter, outperforming the Russell 2000’s 8.5% gain. Year to date, the fund is up 8.3% net, versus the Russell’s 1.8% decline.

During Q2, GrizzlyRock’s long return was 15.2%, while the short book subtracted 0.9% net from the return. Versus the Russell 2000, the fund’s long portfolio generated 7.2% net alpha in the second quarter. Its short book generated 0.7% net alpha for Q2. Year to date, GrizzlyRock’s long return is 5.6% net, while its short return is 2.7% net through the end of June.

Portfolio shifts

In his second-quarter letter to investors, which was obtained by Hedge Fund Alpha, Kyle Mowery of GrizzlyRock Value Partners said they tapped into the April sell-off to cover many of their shorts - turning a hefty profit on multiple names. That continued their strong short performance from the first quarter as the fund continued to improve its process in reflection of the current market structure.

Mowery said they’ve patiently readded some shorts since then, avoiding the sharp market recovery that bounced off the lows in mid-April. He added that their short pipeline is robust, especially in the “perceived quality” bucket.” The GrizzlyRock team is focused on catalysts as they continue to normalize their short exposure.