Performance – May 2024

SSI tracking portfolio was down -0.8% in May 2024. A detailed performance breakdown is provided below.

Below you will find a more detailed breakdown of tracking portfolio returns by individual names as well as elaborations on names exited during the month.



Disclaimer: These are not actual trading results. Tracking Portfolio is only an information tool to indicate the aggregate performance of special situation investments published on this website. See full disclaimer here.

The chart below depicts the returns of SSI Tracking Portfolio since the start of 2017.

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The graph below details the individual MoM performance of all SSI Portfolio ideas that were active during the month of May 2024.

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Seritage Growth Properties (SRG) -14% in c. 2 years
Seritage Growth Properties owns interests in former Sears and Kmart properties throughout the U.S. SRG had planned to convert these retail locations into more valuable real estate, such as office space or multi-family apartments. However, poor execution and COVID-19 disrupted their plans. As a result, the company decided to start an orderly liquidation process to repay large $1.44bn loan to Berkshire Hathaway and then potentially realize value for the equity holders. Management had initial expected distribution for equity holders to be in range of $18.50- $29/share (vs. position open price of $8.08/share). This was adjusted to $14-$20/share as of Q3 2023. Then in April’24 adjusted again to $11-$17/share. The final drop in the bucket was May’s announcement that the expected property sale prices are materially lower than communicated just a few weeks ago without providing any explanation for the cut. SRG shares fell by 33% upon this announcement. Management has completely lost the trust of the market, and it is hard to have any confidence in their guidance anymore (on new property value numbers NAV is c. $7-$11/share). Given the remaining high leverage, and misaligned incentives (large compensation) the risk/reward is no longer attractive. The position was closed with a 14% loss in approximately two years.

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