What • We • Do
Kuleana invests in listed equities in Separately Managed Accounts. Our process leads to a set of investment ideas that typically results in around 10-20 long ideas and 10-25 short ideas. Investors who meet the definition of a qualified client may choose a management fee of zero and only pay an incentive fee if earned. As the vast majority of our liquid net worth is in the same Kuleana strategies, this creates a strong alignment of interest.
Our Investment Process
Our investment process is centered around channel research and behavioral narratives. We try to have a deep understanding of fundamental trends along with the story – who owns the stock, who is betting against it and why.
| IDEA GENERATION | VALUE-ADDED RESEARCH | IDENTIFY CATALYSTS | RISK MANAGEMENT |
Be creativeNetwork of industry contacts (e.g., VCs, operators, consultants) Objective observation of facts in target industries Avoid bias3-5 Rule: analyst must present 3-5 factual data points | Evaluate | “Path to getting paid”Anticipate events that will narrow gap between intrinsic value and the market price Earnings surprises, liquidity events Time horizon arbitrage Product introductions / competition | Scenario analysisWrite pre-mortem memo Develop five probability- Accept / reject decisionReward-to-risk profile Tail risk Ongoing monitoringDynamic probability- Market narrative Sizing ladders |
| IDEA GENERATION |
Be creativeNetwork of industry contacts (e.g., VCs, operators, consultants) Objective observation of facts in target industries Avoid bias3-5 Rule: analyst must present 3-5 factual data points |
| VALUE-ADDED RESEARCH |
Evaluate |
| IDENTIFY CATALYSTS |
“Path to getting paid”Anticipate events that will narrow gap between intrinsic value and the market price Earnings surprises, liquidity events Time horizon arbitrage Product introductions / competition |
| RISK MANAGEMENT |
Scenario analysisWrite pre-mortem memo Develop five probability- Accept / reject decisionReward-to-risk profile Tail risk Ongoing monitoringDynamic probability- Market narrative Sizing ladders |
Investment Characteristics
| Characteristics of Longs | Characteristics of Shorts |
Durable competitive advantage: scale, customer captivity, proprietary asset/capability, regulatory protection Predictable, recurring revenue streams Strong free cash flow generation with high returns on invested capital Growth with attractive reinvestment economics High quality management teams who are aligned with investors Asset value / valuation support | Narrow or no-moat businesses that are over-earning Deterioration of earnings/cash flows driven by competitive or industry forces Underfunded capital requirements, over-leveraged balance sheets Accounting irregularities and/or aggressive financial reporting Unethical or weak management teams Little asset value |
| Characteristics of Longs |
Durable competitive advantage: scale, customer captivity, proprietary asset/capability, regulatory protection Predictable, recurring revenue streams Strong free cash flow generation with high returns on invested capital Growth with attractive reinvestment economics High quality management teams who are aligned with investors Asset value / valuation support |
| Characteristics of Shorts |
Narrow or no-moat businesses that are over-earning Deterioration of earnings/cash flows driven by competitive or industry forces Underfunded capital requirements, over-leveraged balance sheets Accounting irregularities and/or aggressive financial reporting Unethical or weak management teams Little asset value |
