Caledonia’s ice age
The hedge fund is in the trenches. As always, it maintains a sunny disposition.
Caledonia's Will Vicars and Mike Messara have become the boys who cried recovery. In the 12 months to June 2026, their Global Fund bled 32.7 per cent net, according to Caledonia's monthly performance estimate. That same month, an investor letter said the hedge fund was in its seventh major drawdown of the last 34 years (though didn’t mention that four of these have come in the last eight years).
But investors apparently need not get their knickers in a knot because they expect it will "resolve," and be followed by "a period of significant outperformance," according to a March valuation handbook. History, it said, suggests the portfolio is "near or at an inflection point." What's more, past drawdowns have been followed by an average recovery of 149.1 per cent.
Investors were duly reminded that "every prior period of significant stress in our portfolio has been followed by a recovery that rewarded those who stayed the course – and, emphatically, those who added capital." The message was largely the same in June: "Now is the time to be greedy, not fearful," Vicars and Messara said, reaching, as downtrodden fundies often do, into the Warren Buffet hymnbook.
But have Caledonia clients who stayed the course really been rewarded? As of September 2025 – before the latest downturn – the fund had compounded at 10.2 per cent a year (after fees) since the inception of its long/short strategy in 2012, according to a monthly performance summary. Its MSCI World Index benchmark, meanwhile, recorded a 13.2 per cent annual return over that period. Sliced another way, the fund cumulatively trailed the index by a painful 173 percentage points.
