The Hardest Part of a 5,000% Return Happens Before Anyone Believes You

The pitch always looks easier in the morning

Dear Partners

When I was growing up in Vasai, north of Mumbai, there was a cricket ground a short walk from where we lived. It was not a proper ground. No pavilion. No grass worth mentioning. Just a strip of rolled earth that passed for a pitch and an outfield that swallowed the ball if it didn’t quite reach the middle of the bat.

In the early hours, before anyone had played, the pitch looked forgiving. The surface was flat. The ball came on nicely. Shot-making felt easy. By mid-afternoon, after hours of play under the sun, the same pitch slowed dramatically. The ball stopped carrying. Mistimed shots died in the dust. Batsmen who went after it early often found themselves walking back sooner than expected.

Nothing sudden had happened. The ground had not changed its nature. What changed was whether the player had the patience to let conditions reveal themselves.

Markets work the same way. Most investments look easy at the beginning. Prices cooperate. Narratives make sense. Confidence comes cheaply. It is only later, when conditions deteriorate and the score stops moving, that judgment is tested.

Gautam Baid, in The Joys of Compounding, describes long-term success not as a function of repeated brilliance, but as the result of minimizing error and interference over time. Compounding, in that sense, is not something you chase. It is what remains when you stop getting in your own way.

That idea has shaped how I think about capital allocation more than any forecast. It moves the focus away from prediction and toward endurance. Away from excitement and toward survivability.

This letter is about what that looks like in practice.

This looked straightforward, until it wasn’t

We began building our position in Iris Energy (IREN) in 2022 at approximately $7 per share. The thesis was simple. The company owned power and data infrastructure that could not be easily replicated. It carried no debt. And the market was valuing those assets as if they were permanently impaired.

There was nothing clever about the setup. It was arithmetic and structure.

Then the game changed.

The stock did not drift lower politely. It fell sharply. As sentiment around bitcoin mining deteriorated, Iris Energy became a stand-in for everything investors wanted to avoid. Price declines fed narratives. Narratives accelerated selling. Each reinforced the other.

At around $4 per share, we continued to add. Not because the price had fallen, but because nothing important had broken. The balance sheet remained unlevered. The assets remained intact. The company still had time.

Then the stock fell again.

When the scoreboard stops moving

At its lowest point, Iris Energy (IREN) traded below one dollar. At approximately 98 cents, we acquired an additional 100,000 shares at one point we had approximately 2.8m shares of IREN.

By then, the challenge had stopped being analytical. It was psychological.

When a stock trades at that level, price starts to feel like information. You begin to wonder whether the market knows something you don’t. Whether your original assumptions were flawed. Whether discipline has quietly turned into stubbornness.

This is where capital allocation stops being about intelligence and becomes about judgment.

We forced ourselves to return to the same questions we had asked at $7 and at $4, even though doing so offered no emotional comfort.

What assets exist today?
What liabilities exist today?
What conditions would permanently impair those assets?
What conditions would force dilution or liquidation?
What has changed, structurally, since our last review?

The answers were not reassuring, but they were consistent. Price had collapsed. Structure had not.

There was no certainty of recovery. Survival was probable, not guaranteed. But at those prices, the market was assuming near-total failure. The only question that mattered was whether the business could stay standing long enough for perception to change.

Just don’t get out

Buying at 98 cents was not an act of confidence in the usual sense. It was an act of restraint.

On that Vasai cricket ground, the players who lasted were not the ones trying to force boundaries once the pitch slowed. They were the ones who focused on staying in. Defending well. Letting time work.

That is what this moment required. Not aggression. Not optimism. Just refusing to throw the wicket away when conditions were at their worst.

This is the part of compounding that rarely appears in investor letters. The long stretch where nothing validates you. No headlines. No momentum. No sense that patience will be rewarded. Only the discipline to keep returning to first principles.

Same ground, different conditions

When Iris Energy later re-rated, it did not feel like vindication. It felt like recognition finally catching up to what had already been true.

The infrastructure did not suddenly improve. The balance sheet did not suddenly strengthen. The optionality did not appear overnight.

What changed was perception.

From that lowest point, with Iris Energy later touching an intraday high near $50, the position appreciated by over 5,000 percent from the 98-cent level. That number is not important because it is large. It is important because it captures the distance between a price that assumed near-total failure and one that began to acknowledge survivability.

Moves like that are not created by timing. They come from enduring periods where ownership feels unjustified and isolated, and where interference is most tempting.

By the time outcomes look obvious, the work that mattered has long since been done.

Nobody wants to bat here

Core Scientific tested the same discipline in a different way.

Where Iris Energy challenged patience through price collapse, Core Scientific challenged judgment through association. Bankruptcy is a word that shuts down analysis. Many investors treat it as a permanent stain rather than a restructuring of liabilities.

This is often a mistake.

Bankruptcy reorganizes the balance sheet. It does not erase physical reality. The relevant question is not what failed, but what remains.

After restructuring, Core Scientific retained substantial infrastructure, power access, operational capability, and scale. What changed was the capital structure. Debt was reduced. Equity was reset. The business emerged lighter.

The market remained anchored to the past. Narrative dominated economics. Few were willing to step onto that part of the ground.

Once again, the opportunity was not in flair. It was in defense. In being willing to bat where others refused to stand.

Most of the game happens between the highlights

One of the most persistent misconceptions in investing is that progress requires constant action. Markets reward responsiveness and punish stillness, even when stillness is the rational choice.

In reality, most of the value in a portfolio is created during periods when very little appears to be happening. Long stretches where the score barely moves. Short bursts where recognition finally arrives.

The danger is not missing the highlights. It is getting out in the quiet overs because patience wears thin.

You don’t win by swinging at everything

Compounding only works if the base survives. Anything that turns temporary adversity into permanent loss breaks the chain.

This is why we avoid fragile structures. Why we are cautious with leverage. Why we are skeptical of strategies that require perfect timing.

Even strong businesses can be destroyed by being early if they cannot endure disappointment. Time only rewards what can stay in the game.

Leave the ground with wickets in hand

Managing capital is not about stimulation. It is about stewardship.

Our responsibility is not to maximize short-term results. It is to protect capital and allow it to compound across cycles.

That requires accepting boredom. Enduring misunderstanding. Resisting the urge to act simply to feel involved.

On that cricket ground in Vasai, the players who walked off at the end of the day were rarely the most spectacular. They were the ones who understood conditions, respected risk, and preserved optionality.

Investing works the same way.

Thank you for trusting me with your capital. I will continue to manage it with discipline, humility, and respect for the long game.

With steady conviction,
Neel