DG Capital is a mid-sized value asset manager focused on distressed and special events investments. In their March letters, and April stat sheets obtained by Hedge Fund Alpha, the fund shares that it is positive YTD despite the tariff volatility.
DG Value Funds generated a 1.41% gain in the first quarter, while the majority of gains (76%) came from equity investments. The remaining contribution (24%) was generated by credit investments.
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In the same period, DG Concentrated Strategy delivered 3.5% gains. Equities played a primary role, bringing in 84% of the gains, while the remainder (16%) came from credit positions. The strategy was a 1.23% loss in April, bringing YTD gain to 2.24%.
On the other hand, Legacy Class delivered -0.13%, bringing YTD gains to 1.06%.
Macro Developments in 2025
Two factors that caused significant disruption in the investment market were a highly valued equity market and a shift in economic policies that triggered uncertainty. The markets were negative, with small caps being hit hardest. Tariffs surprised investors, which caused a major sellout of equities that reached even debt markets.
In April, investors continued to sell due to tariff worries, with the S&P 500 going down by -0.68%, with a total YTD gain plummeting to -4.92%. The Russell 2000 index for smaller caps has performed even worse with -2.31% in April and -11.57% YTD.
Despite these factors, DG Capital managed to stay on top due to their disciplined value investing approach. Key elements that brought gains were M&A deals, restructurings, and refinancing of debt.
Dov Gertzulin and his team are well aware of predictions that this crisis is the real deal and that it will bring groundbreaking changes. However, they heard the same talks several times in the last couple of decades, with every crisis passing by.
What they learned through these crisis periods is that it creates a lot of undervalued equity and debt situations. Those can later, through special situations, be unlocked into real generators of capital.
Equity holdings that brought positive gains were Anterix, Burford Capital, Cengage, Genesis Energy, GEO Group, Inspired Entertainment, Mercury General, Petersen (claims), Rusoro Mining, Talen Energy, and Tenet Healthcare.
Positive contributions to the credit book were
