A Smooth Ride
Whale watching this week
Welcome to the 120 new subscribers that have joined this month!
In this newsletter, we cover weekly portfolio updates and actionable market insights exclusively from Tuttle Ventures.
Let’s revisit TV’s core portfolio holdings and performance as of 5/27/2022:
Our Fund Factsheet and Investment Performance are now posted online.
A Smooth Ride
There were no changes to the portfolio this week, as the portfolio bounced back in tandem with the overall market, ahead of Memorial day weekend.
We are pleased to report that the portfolio continues to provide a smoother ride relative to the benchmark.
Over the last 21 weeks, the portfolio has outperformed the S&P 500 in 19 out of 21 weekly returns, providing positive weekly returns 7 times when the S&P 500 was negative.
The aggregate underperformance during the other 2 weeks was ~1%.
We believe this YTD track record demonstrates our commitment to provide uncorrelated, diversifying returns that reduce investors sensitivity to the overall market particularly given the challenging market environment.
We believe we are not overextending ourselves with a target market Beta of 0.5 while providing asymmetric upside during negative weekly periods. This explains a majority of our outperformance for the year.
It’s this smoother ride that we continue to focus on as a principle component of risk management to grow and preserve our clients wealth.
Keeping a Watchful Eye
We are actively considering lowering our market Beta from 0.5 to 0.25 next week. This is due to our concerns over tightening Financial Conditions and a runoff of the Fed’s Balance Sheet starting on June 1st.
Based on our research, at current levels, we are a market crossroads.
Either we continue to tighten financial conditions or the trend reverses this week.
The boxes in green suggest that if there is further tightening, there could be a lower floor for equity markets to fall.
Periods of '00 and '08 stand out as outliers based on % Change YoY of the Financial Conditions Index and Wilshire 5000 total market cap.
The truth is that we do not know what will happen for sure, but it seems like there is a good chance that equity prices could still meaningfully adjust lower as the game of chicken with the hawkish Fed slowly collides with investors.
Whale Watch
Olin Corporation- $OLN, global manufacturer and distributor of chemical products and ammunition, jumped +6.83% this week, +27.96% for the month.
At $66.82, we have now exceeded our price target of $65.00, based on our net profit margins model. It appears hedge fund manager Scott Ferguson of Sachem Head Capital Management decided to unload 21% of their existing position of $153m at $60/share.
This news was a big surprise to us.
After conversations with other portfolio managers and the street, our understanding is Sachems’ $OLN position was getting disproportionately large and Scott felt they had to sell. At least that is their explanation at the moment.
We don't have any info on who bought and/or if it was a hostile takeover but we may get clarity soon and will continue to monitor the situation.
We still believe that our position in $OLN is unique for our investors. A lot of investors won't touch the stock until they sell the ammo business at maximum value, which we explained in detailed related to our ESG perspectives here.
Overall, we think management is executing really well, and this is the second time this month the $65 price target has been breached. For this reason, we plan to stay disciplined to our price target and take some profits next week, while keeping the position in the ~5% range.
Know what you own
When it comes to investing, there are a lot of different strategies that people can use in order to try and achieve success.
However, one thing that many investors don't realize is that if you have multiple passive holdings, the chances are that you're overlapping your risk is high.
We take great care in our active individual stock holdings and diversifying mutual funds and ETF’s to ensure we have uncorrelated return profiles and a rationale for every position.
We know what we own.
Final Word
Spend less than you're making and invest:
as soon as you can
as much as you can
as consistently as you can
We take care of the rest.
Thank you for reading and I am grateful and humbled to be able to learn, grow and invest alongside you at Tuttle Ventures.
Don’t forget to follow Tuttle Ventures on Twitter, LinkedIn or Instagram.
Check out the website or some other work here.
Best,
Darin Tuttle, CFA
NOTE - This is not investment advice. Do your own due diligence. I make no representation, warranty or undertaking, express or implied, as to the accuracy, reliability, completeness, or reasonableness of the information contained in this report. Any assumptions, opinions and estimates expressed in this report constitute my judgment as of the date thereof and is subject to change without notice. Any projections contained in the report are based on a number of assumptions as to market conditions. There is no guarantee that projected outcomes will be achieved. Unless there is a signed Investment Management or Financial Planning Agreement by both parties, Tuttle Ventures is not acting as your financial advisor or in any fiduciary capacity.