Opening a New Position in High-End Luxury

Partially locking in a >28% IRR on a core holding that's getting a little expensive

Later today, we’ll be adding a new holding to the portfolio (around 7% of the portfolio value), by partially selling 50% out of one of our core holdings in high-end luxury. This core holding delivered a solid 28% IRR on a sizable portion of our capital.

We aren’t reducing our overall exposure to high-end luxury, though, as our new holding is yet another best-of-breed name for HNWI. Based on our assumptions, this new holding will improve our portfolio’s weighted CAGR, improve diversification. Most importantly, we like the company’s overall capital allocation that’s focused on running with a neutral balance sheet (i.e. not maintaining too much excess cash) by repurchasing shares, and increasing that pace on down days.

Let’s take a closer look.