OUR BUSINESS

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Saffron Sky Capital aims to maximize returns for its partners over the life of the partnership on an absolute, relative & risk-adjusted basis.  Our economic goals are- 

• Capital preservation: Never lose money.
• Deliver satisfactory absolute returns & outperform the S&P over rolling five-year periods. 

We operate on timeless value-oriented principles adapted carefully to endure the disruptive digital age we currently live in.  Our operating framework is summarized below. 

• We are long term focused but careful not to ignore key signals in the short term.
• We operate with zero to minimal leverage.
• We don’t engage in naked shorting.
• We are market agnostic and aim to outswim the tide over time.

We expect most years to be routine, with occasional bursts of panic or euphoria but their order of occurrence is not of particular significance to us. Our job is to build up an economic advantage year by year, through prosperity & scarcity and hopefully deliver sizable outperformance over decades.

We invest across a variety of strategies but at the core of our operation lies a value-based approach, favoring franchises with durable earning power, decent management, purchased at attractive prices

• Our favored investments are forever companies - dominant franchises with barriers to entry & long runways to reinvest capital at attractive rates, run by honest & capable management.
• We seek out mispricing’s in underappreciated or undiscovered securities with asymmetric payoffs before they gain widespread recognition. Although far from comprehensive, below are few illustrative examples of such situations -

                          -  Business with unrecognized but improving economic prospects (hidden catalyst).

                          -  Business with improving capital allocation or distribution policies.

                          -  Structural shifts in value capture due to changing tech, macro, or sector dynamics.

                          -  Beneficiaries of cyclical or secular tailwinds yet to be recognized by the market.

• Event driven situations- spin offs, liquidations, merger securities, arbitrage situations, net nets etc. when available at the right terms.
• We invest across asset classes - equities, bonds, preferred securities, warrants or convertibles optimizing for most favorable risk adjusted returns across the capital structure.

We operate with no management fees, aligning our interests with those of our partners. We achieve profitability alongside you, not from you. The general partner receives 25% of profits exceeding a 5% hurdle rate, with no carryforwards, claw backs, or guarantees against losses. However, no fees are due from the limited partner until a high watermark on assets is reached.  

• Long-term focus is only possible with clients that allow assets to remain invested for the long term therefore we partner selectively & exclusively with like-minded investors.
• We communicate with our partners like we communicate with family members invested in the partnership- with full transparency and accountability.

Our promise to partners is my entire liquid net worth is invested alongside the partnership. Additionally, the partnership is managed as though the entirety of your savings are invested with us, even if not so, as several of our partners have entrusted us with that responsibility.  A strong and risk-averse approach, prioritizing capital preservation over high-risk endeavors with always remain the cornerstone of our partnership.

• No management fees
• A quarter of profit above a 5% hurdle, subject to a high watermark
• Minimum investment of $0.5M

Contributions & Redemptions:   Please invest funds that can remain invested for a long enough timeframe (approximately five years) for the business results to overshadow interim market sentiment. Subsequent investments can only be made on the first of each month, preferably with advance notice (a few months). We encourage adding capital during market panic (when discomfort peaks).  Redemptions during such market dislocations would be capitulation and are therefore restricted to calendar year ends. 

• Prime broker:  Interactive Brokers
• Custodian: Interactive Brokers & East West Bank
• Legal: Investment law group
• Audit: Summit LLC
• Administrator: Yulish & Associates