CERES TACTICAL SYSTEMATIC L.P.

CERES TACTICAL SYSTEMATIC L.P. Annual Report: How They Performed This Year

Hey there! Thinking about investing in CERES TACTICAL SYSTEMATIC L.P.? This guide helps you understand their performance, especially last year. We'll simplify their annual report. It's like a chat over coffee. No fancy finance talk here. Just what you need to know to decide if it's right for your money.

We'll review their annual report for the year ending December 31, 2025.

1. What They Do and How They Performed

   • First, let's understand what CERES TACTICAL SYSTEMATIC L.P. does. They are a Limited Partnership (L.P.). They manage money using a "systematic" (rules-based) approach. This means they trade in various financial markets. As an L.P., they pass profits and losses to investors for tax purposes. Investors (limited partners) have limited liability. This protects their personal assets beyond their investment. Their "systematic" approach uses computer models and algorithms. This removes human emotions from trading decisions. They invest using a set strategy in things like:
     • Futures and Forward Contracts: These are agreements to buy or sell something later at a set price. They are 'derivatives,' meaning their value comes from another asset.
     • Diverse Markets: This includes U.S. and international interest rates, stock market indexes, and agricultural goods. They also trade metals, energy, and foreign currencies. This broad mix helps them find trends across different assets and regions.
   • Ceres Managed Futures LLC manages them. This company acts as the General Partner (GP). The GP handles daily management and trading. L.P. investors provide the money.
   • They measure performance by the change in net asset value (NAV) per unit. This shows how much each investor's ownership unit changed in value. NAV is the total value of their assets minus their debts, divided by units outstanding.
   • This Year's Report: We are looking at their Form 10-K. It covers the year ending December 31, 2025. This report details their activities and performance. It includes gains, losses, and NAV changes for 2025.

2. Money Matters: Sales, Profit, and Growth

   • Let's look at their money. For a trading firm like CERES, "sales" mainly come from net trading gains. These include both finalized and unfinalized gains on their investments. "Profit" is their income after expenses and management fees. The full 10-K report details these in its Statement of Operations.
   • As of their last second fiscal quarter, regular investors held $44,861,433 in Redeemable Units. These are like shares for an L.P. This shows the total money they manage for outside investors. It gives us an idea of their scale.
   • Their trading includes "Net Unrealized Appreciation/Depreciation." These are gains or losses on trades not yet finalized. These unfinalized gains and losses greatly affect their reported performance and NAV.

3. Big Wins and Tough Challenges This Year

   • Every company faces good times and bad. CERES is a systematic trading firm. Big wins in 2025 would come from their models. They would successfully spot and profit from trends. These trends could be in interest rates, commodity prices, or currency movements. For instance, if models predicted rising energy prices. Or a specific stock index direction. This would lead to strong performance.
   • Challenges could come from unexpected market shifts. Or from low volatility, making trends hard to find. "Black swan" events, unforeseen by models, also pose risks. Big losses in certain markets would be key challenges. For example, a sharp drop in farm goods. Or a sudden change in central bank interest rate policy. The full 10-K includes a Management's Discussion and Analysis (MD&A). This section details market conditions. It explains their impact on trading results.

4. Financial Health: Cash, Debt, and Easy Access to Money

   • How strong is their financial position? The full 10-K includes a balance sheet and cash flow statement. These are key to judging financial health. Trading firms need lots of cash. This helps them meet margin requirements for contracts.
   • They hold "Derivative Financial Instruments Assets" (what they own). They also have "Derivative Financial Instruments Liabilities" (what they owe). These represent positive and negative market values from contracts. They value these daily at current market prices. This means their values change with the market.
   • They use "Fair Value Inputs Levels" (1, 2, and 3) to value assets. Accounting rules require this system. It shows how reliable and observable the valuation inputs are.
     • Level 1 assets use quoted prices from active markets. These are for identical assets, like actively traded futures contracts. They are usually easy to sell and have reliable values.
     • Level 2 assets use observable inputs, but not active market prices. Examples include prices for similar assets, interest rates, or yield curves. They are less easy to sell than Level 1. But they still have market data.
     • Level 3 assets use inputs that are not observable. These often rely on the firm's own assumptions and models. They are harder to value and less easy to sell. This can mean higher risk or complexity. It's harder to sell these quickly without losing money.
   • Level 3 assets suggest they hold positions harder to price or sell fast. This could be a risk in volatile markets.

5. Key Risks That Could Affect Your Investment

   • What challenges might they face? CERES trades in many markets. These include interest rates, commodities, currencies, and indexes. So, they face global economic ups and downs. They also face risks in specific market sectors. Diversification can lessen some risks. But it also exposes them to more potential problems.
   • They use "futures" and "forward contracts." This means they do derivative trading. This can be complex and risky. Leverage can cause rapid, big losses. Even small price changes can cause large losses. This is compared to the money first invested. Counterparty risk also exists. But exchanges usually reduce this for futures trades.
   • Level 3 assets suggest they hold positions harder to price or sell fast. This "illiquidity risk" means they might not sell these assets easily. In tough markets, they might not get their full value. This could lead to big losses and hurt NAV.
   • Systematic Strategy Risk: Their rules-based approach relies on effective models. If markets change unexpectedly, models might fail. Or if models have flaws, the strategy could underperform. This could lead to big losses.
   • Operational Risk: They are a tech-driven trading firm. So, they face risks like system failures or data issues. Cybersecurity breaches and human errors also pose risks. These can happen in model use or trade execution.

6. How They Stack Up Against Competitors

   • How do they compare to others? CERES operates in a very competitive financial area. They compete with other Commodity Trading Advisors (CTAs). They also compete with hedge funds and large money managers. These all use quantitative or systematic strategies. Key factors are investment performance, fees, and reputation. Also important is attracting and keeping investor money. Their "systematic" approach sets them apart. But success depends on their models' consistent profits. This is compared to what competitors achieve.

7. Market Trends and Rule Changes

   • What larger forces affect them? They trade in global markets. So, big economic trends affect them. These include inflation, recession worries, and global growth. Central bank interest rate changes greatly affect them. They impact bond futures and currency values. This directly changes their trading positions. Global events, like conflicts or trade disputes, can cause rapid shifts. These affect commodity prices (energy, farm goods, metals). They also impact foreign exchange rates. These are central to their trading.
   • They report to the SEC. This means they must file regular reports, like the 10-K. This gives investors clear information. They consistently file all required reports and electronic data. They are a "non-accelerated filer." This means their public float is between $75 million and $700 million. (Public float is the market value of shares not held by insiders). They get slightly longer deadlines for reports than larger companies. They are not a "shell company." This means they are an active business. They have ongoing operations. They are not just a company formed for a future deal.