Ashva Capital: The Last Active Manager

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HFA Staff
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Ashva Capital’s commentary for the month ended February 29, 2024, titled, “The Last Active Manager.”

The story of the 300 Spartans at the Battle of Thermopylae holds profound significance in the annals of history. Facing an overwhelming Persian force numbering in the millions, these brave warriors, led by King Leonidas, stood fearlessly to defend their homeland and the principles they held dear. Their sacrifice symbolizes the epitome of courage, unity, and selflessness.

Much like the Spartans, our community of active investors faces its own battles in the modern world of finance. Over the course of my investing career, one trend that has continued unabated is the continual increase in the use of automation and technology at the expense of human labor.

The growing demand for passive indexing, algorithmic trading and advancement in AI will increasingly pressure our faith in active management and attempts to outperform the market.

Do you believe it’s possible to consistently outperform the market? I doubt you would be reading this email unless you were seriously interested in finding an equity manager who was capable of outperforming his benchmark over time.

Fundamentally, we believe that equities should be the main asset class that you own for the long run. I won’t get into the details, but Jeremy Siegel’s classic book Stocks for the Long Run definitively proves that stocks are the only asset class that have provided significant real returns over the past 100 years. Please refer to the single most important chart in finance below. The chart is taken from the 6th edition of Siegel’s book. It shows that over two centuries equities have dominated all other asset classes. The key lesson to take from the chart is that even after significant bear markets and recessions, the upward trend continues unabated throughout history.

Additionally, we believe that owning high-quality companies produces higher returns with less risk. We also know through academic research that value stocks outperform over time but not at all times. Thus, our equity investing framework is based on two main factors: Quality and Value.

Utilizing this framework, the Ashva Capital LP fund delivered a net return of 16.18%, accounting for fees, while the gross return, prior to fees, stood at 18.53% in 2023. Although I was pleased with the performance, I acknowledge that a more aggressive approach could have potentially yielded higher results. I made the correct call that a recession wouldn’t materialize and our bet on the housing sector paid off handsomely.

You can read the 2023 investor letter using the following link.

I have no doubt that active managers will continue to face challenges that test our resolve and demand unwavering dedication to our craft. Yet, just as the 300 Spartans refused to yield in the face of adversity, so too do we, drawing inspiration from their indomitable spirit march forward confident that we will achieve success in our investment endeavors.


Ankur Shah

Ashva Capital Management LLC

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The post above is drafted by the collaboration of the Hedge Fund Alpha Team.