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2019 Q2 Investor Letter

By April 1, 2019October 19th, 2021Fund Updates

May was the worst month for the markets since December. Trade war headlines dominated markets throughout the month, causing much of the sell-off. Fears of a China Trade-War coupled with fears of Mexico Tariffs created unprecedented volatility. Our return for the month of May was -7.13%, while the market returned -6.35%.

As of today, we are up approximately 7% for the month of June. We are pleased with these results as most of the losses in May have been made back. However, we cannot guarantee gains sustained through month-end. As of today, our fund is up approximately 20.5% YTD versus the S&P 500’s return of 17.5% YTD.

You are likely aware that the United States avoided tariffs with Mexico, which helped fuel the rally seen thus far in the month of June. Additionally, the hope that the Fed will cut interest rates in the near future added to the market’s June performance. This demonstrates that our viewpoint on the markets must be long-term, as short-term volatility is inevitable with highvolume markets.

This will be a telling week for the markets as a Trump-Xi meeting is set to take place at the G-20 Summit. We believe that a rate-cut and a China Trade deal has for the most part been baked into the market. The risks associated with the market’s assumptions are being navigated as it pertains to our portfolio. We have increased our China exposure in the form of a substantial investment in Home Depot. Additionally, we continue to hold Boeing, which has significant
exposure to China.

Boeing continues to be our fund’s largest investment. This past month, we have unwound our full-hedge on shares of Boeing as rumors of improvements to the MCAS system have begun circling the street. Once the FAA and other international aviation agencies lift their ban on the 737 MAX, we are confident Boeing will return to its all-time highs seen prior to the suspension of the MAX. Navigating short-term volatility is essential to our fund’s long-term success.