For a fund like this, more volatility = more opportunities to make money. Doing 25% when the benchmark does 15% is less impressive than when it does 10, 5, or is down over the same period.
This statement is correct, but doesn't address the problem with the OP's calculation.
This fund is up basically entirely on the strength of TSLA being up 700%. OP is basically considering two possibilities:
1. TSLA stock is a driftless geometric Brownian motion with a volatility matching that of the general market, and happened to get a 700% return purely by chance, or
2. The fund manager, due to his exceptional skill, knew that TSLA was going to be up 700%.
The OP is rejecting option (1) and then concluding that option (2) must be the case.
Of course in reality neither is the case and the OP's calculation is totally irrelevant.
But what matters is not the volatility of the market as much as the cross-sectional dispersion of stocks. If correlation was high and all the stocks hade beta one and were almost identical to the market there would be little opportunity for a stock-picking fund like this, whatever the volatility of the market.
The market has moved a lot. But the point is that if the fund goes 100% TSLA at the beginning and does nothing else it would have outperformed massively and the volatility of the market would be completely irrelevant.
That seems closer to what they did than timing the market, don't you think?
My point was that to "test" if a concentrated stock-picking fund can get that result by luck you don't look at how often the market with such and such return and volatility gets that performance or how often randomly trading the market would you get this performance.
You look at how rare is it that a concentrated portfolio of random stocks has a very good performance. The answer is "not that much".
(Not GP.)