Tourlite Capital Q2 2025 Investor Letter
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To Our Partners:
Tourlite Fund, LP returned 9.7% for the Second Quarter of 2025. Since inception, the Fund has delivered annualized returns of 10.0%, compared to 11.8% for the S&P 500 (SP500), (SPX) and 3.0% for the Russell 2000. 1,2
| Q2 2025 | 2025 YTD | AnnualizedReturn3 | |
|---|---|---|---|
| Tourlite | 9.7% | 4.7% | 10.0% |
| S&P 500 | 10.9% | (1.8%) | 11.8% |
| Russell 2000 | 8.5% | 6.2% | 3.0% |
Gross Contribution & Average Portfolio Exposures
| Gross P&L 2025 YTD | Q2 2025 | |||
|---|---|---|---|---|
| Gross P&L Q2 2025 | Avg. Dollar Exposure | Avg. Beta-Adj. Exposure | ||
| Longs | 12.5% | 12.4% | 82% | 106% |
| Shorts | 4.3% | (1.8%) | (64%) | (70%) |
| Indexes / Hedges4 | 0.7% | 0.7% | (16%) | (15%) |
| Gross Contribution | 6.8% | 11.3% | Gross: 162% | Gross: 191% |
| Net: 2% | Net: 21% |
Market Outlook
As noted in our prior letter, we continue to observe a rally in speculative, lower-quality stocks reminiscent of late 2021. Valuations remain stretched, with companies trading at excessive revenue multiples despite lacking a clear path to profitability. Speculative themes—including crypto, AI, quantum computing, and nuclear energy—are capturing market enthusiasm, and promotional management teams are seizing the moment to capitalize on investor hype. Nearly every week, a new company seems to adopt a bitcoin or crypto-based treasury strategy, fueling sharp gains in their share prices.
We believe this backdrop is setting up an attractive environment for short selling, similar to what we experienced in the latter half of 2021 and throughout 2022. While timing market peaks are inherently challenging, we are positioning ourselves to take advantage of dislocations as they arise.
Despite asset values at all-time highs including speculative assets and a still resilient economy, Jackson Hole commentary makes it increasingly likely the Federal Reserve will begin cutting rates this year. Looking ahead to 2026, the macro environment appears positioned for accelerating economic growth alongside rising inflation, driven by the “Big Beautiful Bill” and evolving trade policies. This should be a benefit for multiple of our industrial long positions, though it may create headwinds for certain shorts.
Portfolio Update & Commentary
During the quarter, our average net beta-adjusted exposure was 21%. Gross exposure ranged between 140% and 175%, with an average of 162%. We maintain our view that a “normal” net exposure range of 20-30% remains optimal for our portfolio construction.
In March, we tactically increased net exposure to 30% as the market selloff, in our view, had reduced the attractiveness of our short book—particularly higher-beta names—while our expected price target spread (the weighted upside of longs relative to shorts) reached its highest level since September 2023. This signaled an opportunity to shift positioning. That call proved premature following the sharp market downturn after Liberation Day. As both longs and shorts declined, the spread between expected price targets widened further, prompting us to again temporally raise our net exposure.
Our portfolio’s sector concentration was as follows: consumer (24%), industrials (42%), technology (12%), other (22%). 5 The majority of our “other” sector exposure (including sector hedges) represents our special situation healthcare investments. As discussed in our prior letters, we remain short consumer and long industrials. Our average dollar exposure for each sector was: consumer (-29%), industrials (+41%), technology (-10%), and others (+7%). The higher net exposure in industrials represents multiple event-driven longs in the portfolio.
During the first quarter, markets came under pressure in the lead-up to Trump’s April 2 tariff announcement. The heightened uncertainty following Liberation Day drove notable declines across many of our event-driven and value positions. We believe part of this underperformance reflected exposure to companies in transition—those with temporarily depressed earnings, elevated leverage, or business-specific uncertainty.
In that environment, a particularly difficult dynamic was beta shifting, where certain stocks sold off sharply but recovered only modestly, if at all. Based on our internal analysis and that of a thirdparty provider, our Q1 performance was negatively impacted by roughly 3% from residual volatility exposure (net long higher-volatility stocks), with an additional 1% drag each from market beta and size factors.
Second Ouarter Gainers & Detractors
| Gainers | Detractors |
|---|---|
| Industrial Short | New Fortress Energy (NFE) |
| FTAI Infrastructure | Consumer Short |
| Sable Offshore (SOC) | Consumer Short |
| Roivant (ROIV) | Technology Short |
| Event Driven Long | Technology Short |
FTAI Aviation (FTAI)
FTAI Aviation fundamentals and market adoption remain strong, positioning the stock as one of the most compelling opportunities in the market today. Despite being in the headlines over the past two years—as a top performer in 2024 and the subject of a short report in January—we believe the company remains underfollowed and under owned. We see potential for the stock to be over the next 12 months, with multiple catalysts extending into the following two years.
At full capacity of 1,800 modules generating $1.5 million of EBITDA per module, FTAI’s aerospace business could deliver ~$2.7 billion of EBITDA. Applying a 15x multiple suggests a valuation of $400 per share for aerospace alone, before considering the additional $500 million of leasing EBITDA.
We believe FTAI is entering another positive inflection point as investors begin to recognize positive free cash flow following second-quarter earnings in July. The combination of free cash flow inflection, accelerating aftermarket adoption, the Strategic Capital Initiative (SCI), and eventual FAA approval of the company’s third—and most valuable—PMA part creates a favorable setup for the second half of the year.
Sable Offshore (SOC)
We continue to see asymmetric upside as Sable approaches the restart of its pipeline. The company now expects first revenue in September, having completed all required repairs outlined in the Consent Decree governing the restart. Final approval from the Office of the State Fire
Marshal (OSFM) could come at any time. Regulatory risk remains an important factor, with the Coastal Commission trial scheduled for October.
Management has increased reported oil in storage to 350k barrels, up from 130k barrels in the first quarter, and expect sales to ramp quickly once approval is granted. The company has also outlined plans to initiate a $4 dividend.
New Long Position
In August, we initiated a new position and continued to build our exposure. We see multiple catalysts over the next two years that should drive accelerating earnings, and we believe the stock has a strong likelihood of doubling over that period. We plan to provide a detailed discussion of this investment in our next quarterly letter.
Short Book
We continue to see a compelling opportunity set for short positions in the second half of the year. For example, we are short a + company, with negative earnings, trading at + revenue, with related party dealings and where revenue and earnings estimates have been reduced multiple times during the year. Despite this, the stock is up nearly year-to-date.
We had two consumer shorts that were large detractors in the quarter. The first, we have been short in the past and it saw strong performance in their core brands which lead management to raise their full year guidance. Our short thesis on this name has not changed. The second was a new short position in a low-quality melting ice cube that soared in the quarter due to high short interest and an extremely optimistic shareholder base. Due to our risk management framework, we have reduced the size of these positions.
Our largest positive contributor was a short position we believed was overvalued, had inferior technology and the need to raise capital in the near term. We were short though a combination of stock and options.
Closing Thoughts
Thank you for your continued trust and partnership. Please do not hesitate to reach out with any questions.
Sincerely,
Jeffrey G. Cherkin
