Investor Letter: April 2025
April 2025
Dear Investor,
“The United States innovates; China replicates and Europe regulates.”
– old saying
After an excellent return of +30.8% in 2024, our Fund experienced a broad market correction during the first quarter of 2025. Your investment in CM Legacy Partners LLC declined -5.9% through March 31. This performance was about in line with the S&P 500 -4.6% and the Nasdaq -10.4%. The Fund has a five-year annualized return of +13.9%.
Three of our largest, longest held and most profitable investments were severely sold off during the quarter (Amazon -13.3%, Blackstone -18.9 % and Microsoft – 11.1%). We will not be selling any of these great businesses, unless something dramatic changes. We did sell our holding in MicroStrategy, the leveraged acquirer of Bitcoin, for a substantial profit and we made a nice profit by shorting Apple stock during the Magnificent 7 sell-off.
By far our most successful investments during the first quarter were our gold and gold mining stocks. We own (Agnico-Eagle +38.6%, Alamos Gold +44.9% and Wheaton Precious Metals +38.0%). The primary driver of the gold breakout over $3,000/oz. has been global Central Banks accumulating gold instead of U.S. dollars. The dollar is considered by many countries as a liability backed by an unreliable and deeply indebted government and can too easily be sanctioned and confiscated.
Bitcoin is often referred to as digital gold. It has been the best performing asset over the last three years +103.1% and five years +735.0%. However, year-to-date it is -12.0% and has far underperformed traditional physical gold. Ironically, the environment has never been better for Bitcoin with the new Republican administration promoting crypto friendly regulations and adding Bitcoin to the U.S. strategic reserves; greatly enhancing its credibility. It has been a case of “buy the rumor and sell the news!” Bitcoin has already proven to be a store of value, albeit with lots of volatility. In addition, it’s blockchain technology removes friction costs and improves transparency, efficiency and productivity in both internet and financial service applications. Our portfolio currently has a 5% position in Bitcoin (GBTC) and we have 15% invested in gold and gold stocks. The balance of the portfolio is concentrated in fifteen high quality businesses with superior growth and profitability characteristics.
The U.S. equity markets are currently quite chaotic. The new administration is trying to “reset” the economy with a mix of deregulation, lower taxes, reduced government spending and tariffs on trade. Hopefully, this mosaic of economic policies will lay the groundwork to avert a debt crisis, balance the budget and provide sustained economic prosperity. We shall see in the coming months and years!
If you have any questions, do not hesitate to contact me at 917-225-6002 or cam@kcorba.com.
Kenneth W. Corba
Portfolio Manager
