“The only thing that overcomes hard luck is hard work.” Harry Golden 

Dear Partners and Friends, 

On 3 September 2025, the Colebrooke Opportunities Fund will mark its first full year. As you may know, one of our core principals is ‘Transparency’, and we intend to adhere to that.  

It’s been a year that, were you inclined to superstition, might persuade you that fortune has a personal vendetta. In almost every instance where the range of outcomes leaned in our favour, reality managed to find the narrow gap that worked against us. We have not been unlucky in our decisions, but we have so far been unlucky in the sequencing of events. It could be worse. The Indian cricket team have lost 15 tosses in a row, a 1/32768 probability, so we are not sat here complaining. 

Instead of diminishing our conviction, this year’s twists and turns have had the opposite effect. They have forced us to sharpen our process, lean into our edge, and continue to refine what is the highest quality, most liquid portfolio we have ever managed. The paradox is that in weathering the turbulence, we have improved the conditions for long-term compounding at attractive rates; precisely the aim we set for ourselves at launch. 

Building resilience through adversity 

This past year has been a stress test, not just for the businesses we own, but for the business we are building together. A newly launched fund is always balancing the dual priorities of portfolio construction and organisational resilience. In the past 12 months, we have made significant progress on both fronts. 

We have begun to deepen our pool of long-term-oriented partners who understand that genuine opportunity often looks most unappealing in the moment. That shared mindset, of seeing falling prices as a chance to improve rather than a reason to retreat, has allowed us to act decisively when conditions offered us high-quality businesses at attractive valuations. 

While our mark-to-market performance so far reflects the challenging backdrop, the businesses we own are, in the main, making good operational progress. We have been able to upgrade the portfolio materially over the past 12 months, purchasing three companies with stronger competitive advantages, higher returns on capital, and deeper liquidity. 

We have also moved away from the type of liquidity traps and event-driven dependencies that can force decisions on unfavourable terms. A lesson from the year is not that catalysts are bad, but that for Colebrooke, liquidity and management alignment are more valuable than a theoretical trigger for value realisation. 

As the famous golfer Gary Player once said, ‘the more you practice, the luckier you get’. Actively fundraising in the last 6 months has not come without challenges, but we remain committed to scaling the fund further throughout the next 5 years and beyond. The chicken and egg dilemma has once again reared its head, the UK sentiment has been hit and miss, and the marketing budget compared to a much larger fund means we must be more selective than we’d like. These were of course not a surprise and rather than sit back after setbacks, we have learned and adapted. This is reflected not only in the portfolio, but in our operational processes and procedures, which improve the offering further for both existing and new partners.  

Our commitment, drive, and optimism are higher than ever. We will continue to work as hard and find out whether Gary’s quote remains true.  

The opportunity set today 

At a time when family and friends are giving each other stock and crypto tips at BBQs, and hot-issue IPOs are popping hundreds of percent, the UK small- and mid-cap market remains structurally under-loved and under-owned. Many companies with durable economics are trading at valuations that imply either permanent impairment or an inability to grow profits in real terms. A significant subset of these companies is not only intact but are taking advantage of their competitors’ retreat to strengthen their position. 

Our task is to identify those few and own them at prices that allow for an attractive skew between potential upside and downside risk. The volatility of the past year has made that easier, not harder. We have been presented with valuations that, in calmer times, would have been unavailable to us. 

This is why we continue to believe we are living through a generational opportunity for our style of investing. The gap between perception and reality is unusually wide, and our long-term orientation allows us to bridge that gap.  

Looking ahead 

We don’t expect the next 12 months to be plain sailing; that would be naive given market sentiment and economic indicators remaining mixed. But none of these changes the fundamental truth that value accrues to owners of good businesses bought well.  

We have the discipline, lean operating structure and relationships to keep doing that. More importantly, we have a group of partners, both investors and management teams, who understand that sustainable returns are the product of years, not months.   

In building the Colebrooke Opportunities Fund, our aim was never to deliver a smooth equity curve. It was to create a business and a portfolio that could withstand and even benefit from the inevitable periods of discomfort. While we would never have chosen it, year one has provided a thorough trial run. The reason we both left employed work was to build something that we can look back on and be proud of, and which has created value for the people we care about who have partnered with us. That commitment hasn’t changed for a moment. 

We remain fully aligned with our partners, fully invested (pun intended), and excited to see what year 2 will bring. 

Thank you for your continued confidence and for sharing our long-term perspective. The opportunity set is as rich as it has ever been, and we look forward to writing to you in future years with the benefits of today’s decisions fully visible in our results. If you know of any potential partners that may be interested in speaking with us, then please us let us know. 

Yours 

Jack and Sam