Investing with conviction to outperform in times of uncertainty and volatility

LRT Capital is a fundamental investment hedge fund based in Austin, TX. The firm was founded by Lukasz R. Tomicki. Lukasz  cofounded and sold LobbyAssist, a technology company that developed software for tracking state campaign finance and legislation. He also worked in the political consulting industry where he worked with lobbyists, campaign managers and outside groups on structural reforms including improving public education, tax reform and economic growth policies. Few fund managers have such experiences to draw on.

Our sole aim in crafting our investment program is to maximize long-term investment returns. LRT employs a repeatable process to identify undervalued securities. We invest only in companies with durable competitive advantages, i.e. “moats”, the ability to grow and reinvest capital, and led by management teams with a demonstrated history of intelligent capital allocation. At LRT Capital we invest as though it were our own money – because it is.

We focus on moats, management and long growth runways – all three are sources of perpetual inefficiency and mispricing. Our flagship strategy is 40-60% beta-adjusted net long and comprised of a portfolio of 30-40 long names which are hedged with 4-6 market index short positions. Since inception our strategy has outperformed the S&P 500, the Russell 2000 and all relevant hedge fund indexes by a wide margin. Winner of “Best Emerging Manager” Award.

WHY MOATS?

  • Qualitative processes are hard to replicate and arbitrage. There is no Bloomberg screen for switching costs or network effects.
  • Understanding a moat requires deep knowledge of a business – hard to achieve in a portfolio of 50+ stocks.
  • The presence of a moat makes the valuation of a business less uncertain and improves risk management.
  • Moats force you to take a long-term view – an advantage when other market participants are obsessed with quarterly results.

OUR RESEARCH PROCESS

To find investment candidates we perform fundamental research and detailed analysis of the nature of competition in the industries the investment candidates operate in. We invest exclusively in companies with strong and growing competitive advantages. Sources of competitive advantage include:

  • Patents, brands, licenses and other types of government approvals.
  • Process or scale based cost advantages
  • Switching cost
  • Network effects