Q1 2025 Letter to Investors
Please see the Disclaimer at the Bottom of Post
Sorry for the delay in releasing this publicly, last month has been a bit of a whirlwind with the honeymoon and wedding. You can view the PDF of this letter (which I highly recommend), our most recent tear sheet, and our most recent marketing deck by clicking the “Investor Materials” or visiting https://www.rogue-funds.com/invest.
Q1 2025 Letter to Investors
May 1st, 2025
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During the first quarter of 2025, Rogue Funds LLC (the “Fund”) depreciated 12.4% net of fees*. I will continue to reiterate that I expect to see outsized volatility for the foreseeable future. Due to the Fund’s concentration, it will not be unusual to see both large drawbacks and large increases in the overall returns seen throughout the year. At the very end of the quarter our most impactful positions began to see serious catalysts that will most likely continue at a rate of multiple catalysts a month through August/September timeframe.
The Fund released the quarterly letter two weeks later than the norm so that we could report our entire second year returns of 5.1% net of fees*. Going forward our first quarter letter will be released two weeks later than usual to allow us to report these annual returns. Our return since inception is an appreciation of 75% net of fees*.
Seed Fee Structure
Currently, the Fund is offering a seed fee structure utilizing a 10% incentive allocation (compared to a 20% incentive allocation once the seed round ends). We are now only offering the start-up fee structure to individuals investing $500,000+ or $250,000 with a three-year lock period (compared to the usual lock period). All investors who participate in the seed funding are locked into this structure for the entirety of the time that they choose to stay invested in the Fund, including any additional capital. Although we stated we would end the incentive allocation in April, we will continue the incentive allocation indefinitely with the above terms.
Investors in the seed fee structure** returned 10.1% for the entirety of the Funds second year net of seed fees**. Investors in the seed fee structure** have returned 87.3% net of seed fees** since inception.
Performance and Returns
As I stated last quarter, the volatility would continue throughout the year, and it has indeed continued. During April we ended up making up all of our losses in March. To put this in perspective this was a 15% swing in each direction in about two months. So, while we aren’t up an incredible amount for our second year, I am happy with our returns for the number of mistakes I made and where our portfolio currently sits going into our third year.
Compared to last year at this time, I feel much more confident and comfortable in the forward direction of our portfolio, and I expect our third year of the Fund to possibly be our best year thus far. This quarter along with April highlights the fact that our catalyst driven strategy can truly separate our returns from the market in a neutral way despite being a mainly long only Fund.
** Unaudited Net Return Data provided for Rogue Funds, LLC is presented after the deduction of management fees (.25%) at the end of the third month of each quarter and deduction of the annual incentive allocation (20%) at the end of December of each year. Individual investor performance may vary due to factors such as investment timing and specific fee arrangements.
Summary of the Fund Performance
Our performance for the quarter was extremely volatile and it will continue to be. Going forward my confidence in the portfolio has greatly increased and I expect that our positions will begin to increase in value significantly despite the increase in volatility.
We have become even more concentrated since last quarter, making our volatility a little bit more extreme, but this concentration is targeted towards our most confident bets going forward. We have removed two more positions while completely removing any leverage from the portfolio has macro volatility will likely be high for the first nine months of the year.
As management for each position executes (or fails to execute) their strategies I will keep you informed of major updates through both our quarterly letters and the blog which can be found a www.rogue-funds.com/blog.
Sold-Out Positions
Redacted for Rogue Funds Investors Only
Core Holdings Breakdown
ASP Isotopes
ASPI has begun full production for all three of their plants and the stock price has re-rated positively in response. I believe that Silicon-28 will be sold in the coming weeks, and that Ytterbium will be sold at the end of Q2 or beginning of Q3. This will drive real revenue into the company and will also most likely lead to a serious catalyst in the stock price. I expect a TerraPower deal at any moment, and I believe it is highly likely before Q2 ends. The realization of revenue this quarter combined with a TerraPower deal will most likely have extreme upwards pressure on the stock price, which has a short interest of 35%.
I expect Iceland to kick off within the next 3 months and QLE spinoff to happen in late Q3 early Q4. In Q3 I expect the NECSA MOU to finalize and lead to a kickoff of the uranium pilot plant. This is a continuous stream of massive catalyst events occurring all the way through Q4. Their ability to commission Ytterbium (along with their proof via revenue) will show high viability of their ability to enrich HALEU, becoming the only viable option for HALEU for the next half decade. This is easily our biggest position at this point, and I still believe it has a ton of upside despite the strong appreciation in the price already. When revenue begins hitting this quarter, I believe the sky's the limit with this position.
Green Data Centers
This is a private investment we have made, and one that I expect to go public in early Q3. Even with the recent market panic, AI capital expenditures are still set to increase (despite rumors to the contrary), and data centers are contracted to be built. Green Data Centers will be building out the battery and data center infrastructure with numerous hyperscalers they already have contracts with (for two data centers). Their team consists of executives that have worked at hyperscalers such as XAI and Google, specifically on data center infrastructure and contracting. They recently contracted nearly 900 acres in the West Texas area and are working extremely closely with Spaceport America. They have recently raised an investment at a $45mm valuation (50% greater than our valuation) and should finalize this month. This will translate into the mark-to-market upon deal finalization and will be shown in appreciation this month on your returns. The recent strategic investment also has milestones that would lead to an $80mm valuation round before their IPO round.
Achieve Life Sciences, Inc (Stock and Calls)
You can read more about this investment on the Rogue Funds blog here. The company released their first long term trial results in early January and showed zero safety concerns. Despite this being one of the more confident positions for us, it has been an extremely frustrating ride for the Fund and has caused a severe drag in performance that I am not proud of. The current valuation is frankly ludicrous. They delayed NDA filing to June and right after the NDA they will get the July results back, which I expect to be great. They will most likely have to push for a raise to get to PDUFA (likely Q2 of 2026 unless the FDA speeds up approval timelines). In the meantime, after the NDA I still expect a rise in the stock price as they are extremely undervalued to their market potential. After the July study results, if they turn out to be good, it will be very hard to see why they would not be an obvious take-out target. Even with a raise, I still expect the company to have 5x-8x upside from where they are today.
Global Atomic (Uranium)
Global Atomic finally slowed down mine construction and we have had a serious change in the underlying scenario for Niger. Since January, Chinese companies have been kicked out, the US has increased their presence in the country, Starlink was introduced to the country, the DFC reinitiated contact with the company, the US is pushing for integration into Africa with a peace deal with Rwanda and DRC including critical minerals, there is a huge push for bigger DFC influence, and all signs are looking towards GLO being included (and approved) on the next credit committee meeting. This would be an extreme catalyst on the stock that I believe could lead to an increase that is hard to fathom right now. They are still in talks with a JV but I believe that all signs point towards a GLO/DFC partnership with a small raise or royalty deal after CC approval.
New Core Holdings
Biotricity
This isn’t a particularly new holding for the company, but it has been one that we have slowly built a position in since August/September. The company manufactures and sells a three-lead heart monitor and supplies technology that helps in predictability of heart related issues. It can be worn for 30 days and they maintain a 99% retention rate. The device is the best in its class, and they have grown at a solid 25%+ clip to $13mm in revenue that is likely to increase in the near future. In the fall of 2023/early 2024 they began switching their company to focus on providing AI benefits for their device and allowing for a TAAS/SAAS conversion which slowed down sales initially but has led to a large amount of pilot studies taking place. This SAAS conversion has allowed the gross margin to expand significantly, which I expect to continue through the year.
They have a large debt load with a lot of convertibles and preferred stock but seem to have avoided bankruptcy. The pilot studies are key to the thesis and will allow for rapid revenue expansion, leading to highly accretive cash flow since their operating model has become extremely fixed. they are able to target their relatively toxic preferreds. I believe there is a high chance by this time next year the company will be producing $25mm-$30mm in ARR with $6mm+ in FCF. Although there will definitely be dilution, if we assume a safe bet of 80% dilution (which I actually believe is much higher than what’s realistic) we end up with a company trading at $20mm fully diluted ($40mm EV, not including paying off preferreds and debt) growing at 30%+ per year (and most likely even faster once they win these pilot studies) with a highly accretive FCF model, most likely newly refinanced debt, and the ability to pay down their term loans.
The good news is that these pilot studies beginning full ramp are weeks away not months away and they are in an extreme inflection point. The company could begin to experience growth well beyond 30% and this would push the valuation to insane heights as a company like this should be trading at 8x revenue once they show an ability to produce consistent cash flow. We never take on companies this small, but the opportunity is too good to pass up and could lead to a 10x-20x in the next 18-24 months.
Intellego
I decided to try my hand at Sweden again, and this time it went much better than previous endeavors. Intellego at face value looks like a disaster waiting to happen. The company sells dosimeters which measure UV-C for disinfection in hospitals and for industrial casting uses. The company was pushed by short sellers as being fraudulent due to high receivables and this is something that we believe is wrong. They continue to score extremely impressive contracts and are trading for nothing compared to their growth despite the double in valuation we have experienced. I believe the CEO currently owns shares on margin and the company recently hired Deloitte to prove they aren’t committing any sort of fraud (this isn’t a common occurrence). As with many of our stocks, this one is highly shorted (we love a bit of hair on an investment combined with our research and conviction).
Costco Puts
I believe with the tariffs that Costco stock has barely been impacted but they are extremely vulnerable to recessionary scenarios and aren’t as defensive as individuals believe. First, their consumer base is no longer as purely upper middle class as it used to be and will be more exposed to the cyclical nature of retail. Their “sell in-bulk” nature makes this exposure much worse. Unlike Walmart, if I just got laid off, I don’t need to go buy 50 rolls of toilet paper and this makes them much less defensive than Walmart and much more cyclical for low-income consumers (which has slowly made up more and more of their consumer base due to a very slow increase in annual fees). They are currently trading at 55x+ earnings, and I don’t usually like to short cult stocks but with expected growth of 11% (I am highly skeptical of this number as they have only grown in the single digits since 2022) and an economic contraction on the horizon, it seems extremely likely to me that they will not be able to hold this valuation for much longer. If we take into account Canada boycotting American goods (Costco’s second largest footprint outside of the US, having over 100+ stores) and probably ~8%-10% of goods coming from China along with a 10% tariff on 30% of goods, it is unlikely this bodes well for Costco over the next 9 months. Combining that with a lofty valuation (and no Charlie Munger to tout their horn), we could see a serious pull back. This is set up as a hedge for the portfolio and we will be fine if these expire worthless.
Structure, Fees, Expenses, and Performance Allocation
I have stated in each letter that the Fund will continue to experience volatility that most investors are not comfortable with or are not used to. In this quarter alone, we had substantial changes in the valuation of the Fund within any given month. Investors of course view a relatively “smoothed” version of this volatility but similar to what happened in March, we could fall on a severe down month (which luckily in this case was matched by a very strong April, but it might not always be this way).
Because of this, it is in each of your best interests to carry a long-term oriented view of the Fund’s performance. I will continue to reiterate this quarter to quarter and year to year. We are looking for investors who share this long-term ideology and are willing to bear with us through periods of short-term volatility. Many investors throughout history have panicked during moments of heightened volatility and it has cost them greatly to do so. We wish to avoid this for both the Fund’s benefit and each of our investors’ benefit. Each of our investors thus far has held onto their long-term orientation and it has benefited everyone especially in the light of the recent extreme volatility. I appreciate each of you for your endurance as an investor in the Fund and I am extremely proud to have you as a Rogue Funds investor.
Tax Commentary
Our goal is to hold positions for over a year (and even longer for quality compounders) to encourage long-term capital gains benefits but, if I feel that it is in the long-term benefit of investors to sell early, then I will sell early.
Retirement accounts are currently able to invest in the Fund, please contact me if you would like to invest via an IRA as there are certain limitations in the amount you can invest.
Structure and Fees
As many of you are aware, the investors in the Fund bear few costs aside from the management fee and the incentive allocation. The management company covers most expenses, creating an extremely friendly expense ratio for all our investors. The management company is funded by equity from myself and the one percent management fee which is extremely sustainable and investor friendly to try to keep the expense burden off investors.
Summary
I would like to thank each of you for investing in Rogue Funds, LLC. If you have any questions, please email or text me as needed. I will continue to look forward to the future years running this Fund. As always, I would also like to thank my beautiful Fiancée for editing this letter while also being my biggest supporter and the best partner I could ask for. We get married in two weeks and will be on our honeymoon for a couple of weeks thereafter. I will still be available for emails every other day but will likely not be answering calls. I will still be monitoring the portfolio, but we are well set-up going into the vacation.
Respectfully,
Jacob Rowe
Chief Investment Officer
Rogue Funds, LLC
Disclaimer
This document is being provided to you on a confidential basis. Accordingly, this document may not be reproduced in whole or part, and may not be delivered to any person without the consent of Rogue Funds Management, LLC (the “Manager”). Nothing set forth herein shall constitute an offer to sell any securities or constitute a solicitation of an offer to purchase any securities. Any such offer to sell or solicitation of an offer to purchase shall be made only by formal offering documents for Rogue Funds, LLC, managed by the Manager, which include, among others, a confidential offering memorandum, operating agreement and subscription agreement, as applicable. Such formal offering documents contain additional information not set forth herein, including information regarding certain risks of investing in a Fund, which are material to any decision to invest in a Fund.
No information in this document is warranted by the Manager or its affiliates or subsidiaries as to completeness or accuracy, express or implied, and is subject to change without notice. No party has an obligation to update any of the statements, including forward-looking statements, in this document. This document should be considered current only as of the date of publication without regard to the date on which you may receive or access the information.
This document may contain opinions, estimates, and forward-looking statements, including observations about markets, industries, and regulatory trends as of the original date of this document which constitute opinions of the Manager. Forward-looking statements may be identified by, among other things, the use of words such as “expects,” “anticipates,” “believes,” or “estimates,” or the negatives of these terms, and similar expressions. Actual results could differ materially from those in the forward-looking statements due to implementation lag, other timing factors, portfolio management decision-making, economic or market conditions or other unanticipated factors, including those beyond the Manager’s control. Statements made herein that are not attributed to a third-party source reflect the views and opinions of the Manager. Opinions, estimates, and forward-looking statements in this document constitute the Manager’s judgment. The Manager maintains the right to delete or modify information without prior notice. Investors are cautioned not to place undue reliance on such statements.
Certain information contained herein has been obtained from third-party sources. Although the Manager believes the information from such sources to be reliable, the Manager makes no representation as to its accuracy or completeness. Return targets or objectives, if any, are used for measurement or comparison purposes and only as a guideline for prospective investors to evaluate a particular investment program’s investment strategies and accompanying information. Targeted returns reflect subjective determinations by the Manager based on a variety of factors, including, among others, internal modeling, investment strategy, prior performance of similar products (if any), volatility measures, risk tolerance and market conditions. Performance may fluctuate, especially over short periods. Targeted returns should be evaluated over the time period indicated and not over shorter periods. Targeted returns are not intended to be actual performance and should not be relied upon as an indication of actual or future performance.
Unaudited net return data for the Fund is estimated, net of all fees and expenses (From inception on May, 2023 through March 31, 2024). The net return presented is also net of Incentive allocation of 20% unless stated otherwise.
The past performance of the Fund is not indicative of future returns. The performance reflected herein and the performance for any given investor may differ due to various factors including, without limitation, the timing of subscriptions and withdrawals, applicable management fees and incentive allocations, and the investor’s ability to participate in new issues.
There is no guarantee that the Manager will be successful in achieving the Funds’ investment objectives. An investment in a Fund contains risks, including the risk of complete loss.
The investments discussed herein are not meant to be indicative or reflective of the portfolio of the Fund. Rather, such examples are meant to exemplify the Manager’s analysis for the Fund and the execution of the Fund’s investment strategy. While these examples may reflect successful trading, not all trades are successful and profitable. As such, the examples contained herein should not be viewed as representative of all trades made.
Great work Jacob, especially appreciate your work with ASPI :) Been following your work for a year, looking good. But what happened to the belief in ECOR? I would like to have a comment to why (is it?) it is out from your portfolio? I saw the stock go down but have you lost your passion for it? That's totally ok but I would like to know why you most probably changed your mind.
ACHV: Regarding the July study results, why do you think there will be a data release in July? As far as I know, the safety data will be shared in the fall/ at the end of the year.