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(Bloomberg) — Waratah Capital Advisors’ largest hedge fund dropped 1.5% last month, wiping out most of its gains this year.

The Waratah Performance fund advanced just 0.4% through August, according to an investor letter seen by Bloomberg, trailing the 12.8% return for a benchmark that includes the S&P 500 and Canada’s TSX Composite Index.  

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“A raging bull market, narrowly led by a few names, isn’t usually my time to shine,” Waratah Chief Investment Officer Brad Dunkley said in a separate note to investors. “I consider myself to be a rational and patient investor with a preference for unexciting but attractively valued businesses.” 

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The largest long exposures in the C$908 million ($672.1 million) Waratah Performance fund were Sun Communities Inc., which rose 0.9% in August, and Microsoft Corp., which tumbled 28%. 

This month, US stocks have lost some of their 2023 gains as hotter-than-expected inflation data has investors betting the Federal Reserve may raise interest rates again. 

Waratah’s long-biased fund, with C$649 million of assets under management, fell 0.3% in August, trimming its year-to-gain to 1.7%. It’s largest long exposures include Dream Unlimited Corp. and Canadian Natural Resources Ltd. 

Two flagship funds, Waratah One and Waratah One X, both rose 0.5% last month, trimming their declines so far this year to 1.9% and 3.5%, respectively. 

The Toronto-based firm, founded by Dunkley and Blair Levinsky, manages C$4.7 billion for wealthy individuals, family offices, foundations and pension funds across its hedge funds and private equity strategies, according to its website. 

—With assistance from Geoffrey Morgan.

(Updates with CIO comments in third paragraph.)

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