Gates Capital: Why (Free) Cash (Flow) Is King – ValueWalk Premium

Gates Capital: Why (Free) Cash (Flow) Is King

Gates Capital Management's ECF value fund has earned strong returns for investors since its inception in June 1996. The ECF, or Excess Cash Flow Fund, had returned 12.9% annualized since inception to the end of September 2020. That was compared to 8.9% for the S&P 500 total return index and 7.4% for the HFRI Event-Driven Index.

Q3 2020 hedge fund letters, conferences and more

The firm's marketing materials noted that every $1 million invested with it at inception was worth $19 million at the end of September. A similar investment in the S&P 500 would be worth just $8 million.
Seeking Value In Free Cash Flow
According to an investor presentation, ValueWalk has been able to review, Gates attributed its strong long-term performance to a consistent, systematic, event-driven investment approach.

The marketing materials reported that the strongest performer in the firm's portfolio during 2020 was HVAC business Carrier. This position contributed 4.2% of overall performance.


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