Cable Car Capital invests globally in public companies. The firm screens public companies using an intensive, fundamental research process that seeks to identify mispriced securities using a value-oriented approach with a multi-year time horizon. Cable Car Capital capitalizes opportunistically on shorter-term or special situation (e.g. spinoffs, reorganizations, merger arbitrage) opportunities while maintaining a concentrated core portfolio of contrarian/out-of-favor but high-quality longs and over-hyped or mismanaged single-name shorts.
For non-U.S. public companies, Cable Car utilizes American Depository Receipts which are called ADRs. These are receipts of shares of foreign companies that trade on the U.S. stock market exchanges.
Cable Car Capital looks for investment opportunities in assets priced below intrinsic value, irrespective of whether or not they have a low multiple. The firm treats each long or short stock selection as a discrete investment in its’ hedged long/short portfolio. Cable Car seeks to invest in situations with a favorably skewed risk/reward profile, ideally with a margin of safety and in which it has a differentiated view from other market participants.
Cable Car Capital conducts detailed bottom-up financial analysis of companies and industries through careful reading of public filings, questioning of management, discussion with industry experts, and financial forecasting. Cable Car observes assets over time and seeks attractive entry points at inflection points in the business.
Cable Car’s portfolio is concentrated and typically holds 5-10 long positions and 10-15 short positions. No single holding will represent more than 30% of net assets. Gross and net exposure, cash allocation, and number of holdings are functions of idea flow rather than target weightings. As a result, Cable Car may hold fewer positions. In general, Cable Car Capital maintains a net long bias and smaller individual position sizes on the short side. Position size is based on conviction and valuation.
Cable Car Capital closes positions that have reached its estimate of fair value, where the risk/reward tradeoff is no longer acceptable, or where events have disproven the underlying thesis. The firm also opportunistically takes advantage of unwarranted price changes to adjust position weightings.