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The following segment was excerpted from this fund letter.
We were more active than usual in the quarter, buying shares in Solventum (SOLV), and adding to Dye and Durham (OTCPK:DYNDF), Enhabit (EHAB), and VF Corp (VFC). These businesses were all available at very attractive prices, and this drove our activity.
Solventum: We put about 2.5% of the fund into Solventum in the quarter, paying $54.01 per share. Solventum used to be 3M’s (MMM) highly regarded healthcare business, and was spun out in April of this year. Solventum was loaded up with debt, and 3M retained 19.9% of the company – all to provide financial value to 3M as it works through its financial, legal, and environmental liabilities. This means that Solventum will spend years paying down its debt and setting up the company – typical spinoff tasks plus a not-so-standard need to start producing the products that it sells (3M kept that know-how). All in, we have an ugly duckling – a high return on capital, cash cow spinoff, working through difficult but resolvable issues, selling at an attractive price. I love buying businesses like this, and if it drops to my next buy price, we will add to it.
Dye and Durham: We added about half a percent of the fund to Dye and Durham at C$13.87. After seeming to spend much of 2023 acting in the hope that Canadian real estate transaction volumes would improve, the company has spent the past few months addressing its debt problems. I appreciated this change of tack and some signs of improving demand, and so we added a little.
Enhabit: We added about 4% of the fund to Enhabit at $8.69. The company has dealt with many issues since its spinoff two years ago-some of which were self-inflicted-and is now going through a proxy contest. This has led to an attractive stock price, and I believe that the company is addressing its own problems and has gotten some relief from the industry issues (such as weak CMS pricing and a shortage of nurses) that have hamstrung it over the past few years. Regardless of whether the proxy contest goes the way I would like, I think that the company’s financials will look better in a year, and the price we paid to add will look extremely attractive.
VF Corp: We added about 3.5% of the fund to VF Corp at $12.29. VF Corp is going through a turnaround, with a new CEO working to fix its brands and balance sheet. I think that this is an excellent business and that management is fixing the company’s problems. Given the situation, I thought the price was too low, and we added to our position.
Our purchases in the quarter – and through most of 2024 – show where I am finding the most value: good businesses that are dealing with temporary problems. I have found decent opportunities among growth businesses too, but these ugly ducklings are trading as if they are irredeemable basket cases. I think ours are working through manageable issues, and are very attractively priced. We are still cautious when we buy them, starting our purchases at excessively low prices, and then adding more if they drop further.
DISCLAIMER
The information contained herein regarding Curreen Capital Partners, LP (the “Fund”) is confidential and proprietary and is intended only for use by the recipient. The information and opinions expressed herein are as of the date appearing in this material only, are not complete, are subject to change without prior notice, and do not contain material information regarding the Fund, including specific information relating to an investment in the Fund and related important risk disclosures. This document is not intended to be, nor should it be construed or used as an offer to sell, or a solicitation of any offer to buy any interests in the Fund. If any offer is made, it shall be pursuant to a definitive Private Placement Memorandum prepared by or on behalf of the Fund which contains detailed information concerning the investment terms and the risks, fees and expenses associated with an investment in the Fund.
An investment in the Fund is speculative and may involve substantial investment and other risks. Such risks may include, without limitation, risk of adverse or unanticipated market developments, risk of counterparty or issuer default, and risk of illiquidity. The performance results of the Fund can be volatile. No representation is made that the General Partner’s or the Fund’s risk management process or investment objectives will or are likely to be achieved or successful or that the Fund or any investment will make any profit or will not sustain losses.
Unless otherwise stated, the performance information contained herein is for the Fund and is net of a 1.50% annual asset-based management fee and a 20% annual profit-based performance allocation. As with any hedge fund, the past performance of the Fund is no indication of future results. Actual returns for each investor in the Fund may differ due to the timing of investments. 2013 – 2023 returns were prepared based on audited financial statements, and 2024 performance information contained herein has not yet been independently audited or verified. While the data contained herein has been prepared from information that Curreen Capital GP, LLC, the general partner of the Fund (the “General Partner”), believes to be reliable, the General Partner does not warrant the accuracy or completeness of such information.
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