After Aarion Capital closed its equity positions, the firm’s options hedges earned back its modest October loss and put it ahead in the first few trading days of November, according to preliminary internal figures.
When Aarion Capital sold its remaining equity positions in late October, founder and Chief Investment Officer Aarush Garg still had a decision to make. The firm had used options to protect its portfolio against a market decline. With the stocks sold, it could close the hedges too. Garg kept them open.
“October ended with a modest loss,” Garg wrote to investors on November 6. By then, according to Aarion’s preliminary figures, the same options strategy had earned more in the first few trading days of November than the firm had lost in all of October. Aarion had recovered the decline and moved into positive territory for the two periods combined, while remaining out of equities.
What made the decision consequential was how much the portfolio had changed around those contracts. While Aarion owned stocks, gains on its hedges could cushion losses on the shares. Once the equity positions were closed, the options still gave Aarion a way to benefit from further market weakness. A sharp rebound could also have cut into their value. Selling the stocks answered one question about risk. Deciding how long to hold the hedges required a judgment of its own.
A company worth following can still be too expensive to own
Garg’s November 6 letter is especially revealing on artificial intelligence. He questioned how quickly the money pouring into AI would translate into sustainable earnings, particularly for smaller companies that may need another round of financing before their businesses can support themselves.
“We have therefore exited our existing AI-related equity positions and are waiting for more attractive entry valuations,” he wrote. “In the meantime, we are using interest-bearing cash products to preserve flexibility and earn income.”
A few paragraphs later, Garg named Palantir as a company he still follows. Its government technology business gives Aarion a reason to study its contracts and financial performance alongside those of Lockheed Martin. Its valuation gives Garg a reason to wait. That combination makes Palantir one of the more telling names in the letter. Investors can see both why the company interests him and why, as of November 6, Aarion was willing to own none of its shares.
Where the next investment could come from
The same willingness to exit showed up in markets where Aarion says it had already made money. Positions in Chile, Brazil, and selected Central American markets contributed positively earlier in 2026, according to the letter. Garg wrote that the firm closed those positions as its assessment of regional political and financial conditions changed. The core portfolio he intends to build for 2027 will focus on the United States.
Aarion’s search for ideas remains wider. Gold, silver, and copper are all under review, but Garg wants to know how each actually behaves under stress before assigning it a role alongside the options strategy. His team is also studying freshwater infrastructure and selected carbon-credit markets. In those areas, the letter raises practical questions. What can the firm own? How readily could it sell? Which policy changes would materially alter the economics?
Garg has set February 2027 as the target for completing the planned development of VAL, Aarion’s proprietary research system, alongside new backtests and investment models. The expanded team includes head quantitative researcher and analyst Sameer Saifan, who brings 24 years of institutional investment management experience, according to the letter.
February gives investors a date to judge Aarion’s progress on research. Garg offered no such deadline for buying stocks again. As of November 6, the firm was earning interest on cash, its market hedges were still open, and gains on those hedges had covered October’s loss.
Garg said Aarion Capital LP is in an extremely strong position heading into 2027. He said both current and prospective investors who have reviewed the firm’s year-to-date financial results and its projections for the year ahead have been extremely pleased with what they’ve seen.
