For this edition we welcome Orlando Muyshondt, Founder and Portfolio Manager of Elena Partners.
Elena Partners aims to deliver attractive returns over an investment cycle by investing in undervalued equities globally.
The approach is fundamental, bottom-up, contrarian, and long-term oriented.
(Disclaimer: This interview is for informational and educational purposes only, and should not be seen as investment advice. Please do your own research before investing in any company mentioned).
Thanks so much for taking the time to do this interview Orlando.
Can you please tell readers about your background, and how you got involved in investing?
I have been investing professionally for more than 30 years, primarily in publicly traded equities and mostly internationally.
I was born in El Salvador, which gave me an early appreciation for macro and political risk. In 1980, there was a “coup,” and the new government implemented a major wealth-redistribution program that brought major industries under state control.
My family was involved in several agro-industrial businesses, and most of its assets were expropriated. We emigrated to the United States as a ten-year civil war erupted.
After university, my first job was at KPMG Consulting, where I worked on internal audits for large multinationals, mostly of their Latin American operations.
Seeing how the “sausages are made” has proven very useful over the years.
When I analyze a company, I want to understand not only whether the accounting reflects the underlying economics of the business, but also whether the corporate culture at all levels and the leadership are conducive to value creation and success. Businesses are living organisms.
After graduating from Columbia Business School, I joined Merrill Lynch Investment Managers, now part of BlackRock, where I researched publicly traded companies across Latin America, Africa, and Southeast Asia and later managed the Merrill Lynch Latin America Equity Fund.
It was a remarkable time to begin investing in public markets. I joined in 1994, just as the Fed was tightening monetary policy and a series of severe financial crises began: Mexico in 1994, Thailand, Malaysia, Indonesia, Philippines, South Korea in 1997–98, Brazil in 1999, and Argentina in 2001.
These episodes included banking and balance-of-payments crises, sovereign defaults, major devaluations, and deep economic contractions. Equity markets suffered peak-to-trough declines of 50–95% in U.S. dollar terms.
One of the most important lessons from that period was the power of capital flows. As George Soros describes through his “theory of reflexivity,” flows can affect not only valuations but also fundamentals.
Strong returns attract capital, which can push both valuations and the fundamentals upon which those valuations are based above trend. Eventually, the process works in reverse.
I also learned the importance of combining deep local knowledge with emotional distance. You need good contacts to assess the capability, integrity, and motivations of the people who run and control businesses. But being too close can also be a disadvantage.
I have rarely found local investors particularly bullish in the middle of a crisis or bearish in the middle of a bubble. When you live through the headlines every day, it can be difficult to remain objective.
It happened to me a couple of years ago in El Salvador. I remain connected to the country and sit on the board of a local conglomerate.
Yet when a Venezuelan friend asked me a few years ago whether he should buy Salvadoran sovereign bonds trading at roughly forty cents on the dollar, I told him to stay away.
The bonds subsequently traded at par. In retrospect, my views were influenced more by the difficult dialogue between the IMF and the government than by the underlying fundamentals.
El Salvador faced a maturity wall and an uncertain refinancing path, but even in a default scenario, the country’s debt burden and tax revenues suggested a recovery value well above forty cents.
That experience reinforced my view that it is best to invest in places where you are well informed but not overwhelmed by the local narrative.
In 2002, I joined an event-driven multi-strategy fund where I worked for eight years, ultimately becoming a partner and head of equity research.
I was the only person in the organization investing internationally at a time when many of the markets I had covered in my prior job, as well as Europe, were emerging from prolonged bear markets.
The firm’s founder, Dan Nir, had been one of the original partners at Gotham Capital alongside Joel Greenblatt, and the firm’s DNA was strongly oriented toward special situations. I was predisposed to this style of investing, but by then I was fully committed to it.
In 2009, I co-founded Tyrian Investments, which Julian Robertson of Tiger Management seeded.
The BRIC boom was beginning to crack, and we launched with a substantial short book. We ran net short on a beta-adjusted basis, which was an enormously valuable experience.
Spending years looking for deteriorating businesses, accounting problems, poor industry structures, and value traps made me a better long investor.
We had four very strong years, followed by three difficult ones. Many of our original shorts had played out, while the next generation - including several Chinese property developers that eventually went bankrupt - took years to work.
We produced three years of negative low-to-mid-single-digit returns during a strong bull market.
Because four institutions represented a large portion of our capital, redemptions eventually became self-reinforcing, and we were forced to return capital and close the business as we also began to lose our employees.
If you manage money long enough, markets eventually expose your weaknesses. I took two major lessons from that experience.
First, running a structurally net-short equity strategy is extremely difficult for a single manager; it suits a multi-manager framework with leverage and strict risk controls.
Second, a concentrated investor base and an excessive cost structure can quickly undermine an asset management business during a period of underperformance.
That matters because even very successful long-term active investors experience extended periods of underperformance when their style is out of favor. The investment process, and the business around it, must be built to survive those periods.
Can you provide readers with an overview of the Elena Partners Fund?
Elena Partners is a global, special situations, value-oriented long/short equity fund.
I began managing the strategy that became Elena Partners in 2020 through a separately managed account and launched the Fund in January 2024.
In many ways, Elena is the culmination of what I have learned over my career.
We are a team of three investment professionals, an investor relations manager, an operations manager, and a CFO.
Our philosophy is rooted in value and fundamentals. We believe opportunities migrate over time across markets, sectors, and geographies. A flexible mandate, combined with patience, allows us to pursue opportunities wherever they are.
We seek to profit from misperception and dislocation. Although our mandate is global, the types of situations we pursue are specific.
They include orphaned securities such as spin-offs and broken IPOs; overreactions to earnings disappointments or temporary execution problems; cyclical businesses near a trough; turnarounds under new management; misunderstood restructurings; and occasionally very good businesses or industries that have simply fallen out of favor.
In addition to a very attractive valuation, other non-negotiables for all investments are capable and honest management, controlling shareholders whose interests are aligned with ours, and a credible path to value realization.
We manage the Fund with a 50% net long exposure and 150% gross exposure on average.
The long portfolio is concentrated, typically around 20 positions, and it is complemented by a diversified portfolio of individual shorts and indices.
We plan to launch a Fund that captures the long-only version of the strategy in the first quarter of 2027.
We are fortunate to have a stable capital base and a meaningful amount of our own money invested alongside our investors.
That lets us tolerate volatility when we believe the underlying thesis remains intact - and take advantage of opportunities others can’t.
Where are you finding compelling ideas and opportunities at the moment - is there any particular country, region, or industry, that stands out?
Today, more than 80% of our long book is invested internationally, primarily in Europe, Latin America, and Southeast Asia. But geography itself is not the thesis.
We are looking for the same phenomenon across geographies: good assets where expectations are low, capital has left, valuations are depressed, and we see an attractive risk-reward profile and a path to value realization.
Today, in these geographies, we are finding businesses with long operating histories, strong balance sheets, good management, and good governance, trading at significant discounts to comparable U.S. listed companies.
Oddly, a couple of our European-listed holdings generate most of their profits in the United States yet trade at substantial discounts to U.S.-listed peers.
This illustrates an important market inefficiency. In theory, comparable assets should trade at comparable valuations, on a risk-adjusted basis, regardless of listing location.
In practice, capital is allocated to a specific geography, sector, or benchmark, and once committed, it cannot migrate beyond its mandate, even if the valuation argument is incredibly compelling.
I think that segmentation has become more pronounced over my 30-year career - and, for us, more interesting.