Praetorian Capital Q3 2025 Commentary

Praetorian Capital's commentary for the third quarter ended September 30, 2025.

During the third quarter of 2025, the Praetorian Capital Fund LLC (the “Fund”) appreciated by 5.70% net of fees. Given the Fund’s concentrated portfolio structure and focus on asymmetric opportunities, I anticipate that the Fund will be rather volatile from quarter to quarter. During the third quarter, our core portfolio positions appreciated somewhat, while the Event-Driven book produced a negligible gain.

When it comes to investing, there’s an “easy way” of doing things, and there’s a much “harder way.” In retrospect, the “easy way” to make money in the third quarter, and for many of the past dozen quarters, was to be long Ponzi schemes, companies without earnings, concepts without viable paths to profits, and various AI plays, while shorting businesses that traded at low cash flow multiples. Conceptually, I understand why this has worked. Investors crave growth and the desire to invest in the future. If we’re careening toward a global depression, companies with earnings are not the future, as those earnings are likely to decline. Instead, one can make bullish arguments for why many businesses lacking profits can earn arbitrary and inflated profit estimates a decade or more into the future. Some people are gullible, some are reckless, some just like to gamble. I try to be a risk-obsessed pragmatist and we’ve made our money the “hard way” over the course of the year.

We’re long undervalued securities with strong cash flow, while occasionally betting against those crazy ideas that seem to keep levitating. It’s been a frustrating and difficult way to earn returns, but given how wrong the positioning has been for the current environment, I feel like we’ve achieved an acceptable return thus far in 2025, even if we earned it the “hard way.” My view remains that eventually, my way of investing will return to favor, and if we can make a bit when it isn’t working, we can hopefully make a lot when it starts working again.