Curreen Capital Partners, LP’s Q2 2019 Investor Letter

Brooklyn-based investment management firm Curreen Capital Partners, LP released its Q2 2019 Investor Letter – a copy of which can be downloaded below. Launched in 2013, the firm works with both high-net-worth institutions and everyday accredited investors. Christian Ryther is the founder and portfolio manager of Curreen Capital. He holds a bachelor’s degree from Boston College and an MBA from Columbia Business School. Ryther began his career as a Research Analyst at LECG. Before starting Curreen, he worked with several companies such as ISS, Riva Ridge Capital Management, Principled Capital Management, and NeuStrada Capital.

In its Quarterly Letter, Curreen Capital reported a 6.11% return during the second quarter. Ryther also announced that the firm bought shares of Kontoor and explained the reason behind it.

“Dear Partner,

Our fund was up 6.1% in the second quarter. We bought shares of Kontoor, which you may remember from our Q1 letter – where I described the business as an airplane falling out of the sky

So… why did we buy it?

Because it fits our investment strategy: it is a good business, managed well and on behalf of shareholders, where our purchase price offered an attractive upside-to-downside ratio.

Kontoor sells Wrangler and Lee jeans, and that is a good business – generating 20%+ returns on capital. It is not a growth business – their revenues and earnings are about the same as they were in the mid-2000s, and the late-1990s for that matter. Throughout these years, Kontoor’s jeans business has been treated as a cash cow, funding growth and acquisitions at its parent, VF Corp. Kontoor is likely to continue to be a cash cow, and now its earnings will flow to debt repayment and shareholder dividends.

I like Kontoor’s management – CEO Scott Baxter previously ran the business—well—and was promoted to run sexier parts of VF (including the cooler and faster-growing Vans and North Face brands). He then chose to return to the jeans business, and have all of his VF stock options convert into Kontoor stock options. I like this a lot – he knows the business, has successfully run it before, and has chosen to return to it and tie his own wealth to its success. This is also his shot to show what he can do as a CEO. I am a fan of this combination of demonstrated ability and personal and financial incentives to drive success.

I am also a fan of the board of directors – the Chairman was VF’s CFO from 2005 to 2015, a period in which VF successfully grew, through acquisitions and internal investments, without diluting shareholders. I believe that part of that limited dilution is due to the share ownership of the founding Barbey family, which is represented on the board by Juliana Chugg. A large founding family shareholder is often evidence of both an excellent business and that the family have been good capital allocators – only a durable business and a capable family can prevent a large shareholding from fading with time. As the family representative, Ms. Chugg’s presence on the board gives me confidence that Kontoor will be friendly to shareholders – avoiding excessive share dilution and other actions that benefit management at the expense of shareholders.”

You can download a copy of Curreen Capital’s Q2 2019 Investor Letter here:

Curreen Capital Partners, LP’s Q2 2019 Investor Letter