Business As Usual

Steady progress with a net return of +6.70% since mid December 2024

In this bi-weekly conversation, our opening remarks went as follows:

It's still a fluid situation back and forth with the tariffs, but we do see some cracks in consumer discretionary companies, like for example Lululemon, Target.

Now, for our strategy, it really doesn't make a difference right now. The VIX is at 18-19%, which is pretty normal, but we still see that the longer-term volatility, if you take two, three, four months out, then it's still closer to 21%. So the market is still in this kind of wait-and-see mode, is expecting more volatility, but is kind of waiting for confirmation that indeed tariffs will have a more profound impact on businesses.

Our return including the updated P&L from the 1-year setups, which we’ve talked about in this presentation, amounts to +7.03% and there’s still some leftover time value in short-term June 2025 positions. There’s still plenty of room for this return to get better in the second half of this year, as the P&L contribution from our 1-year setups (29% of the portfolio) will gradually accelerate.

Overall, there’s little to highlight, except that our directional exposure is a lot lower versus passive investors who need the stock market to go higher. With our approach, time’s on our side. The annualized return target remains unchanged at 7-9%, although we’re now exceeding this goal (10-11% in 2025 would be very nice).

It’s fair to say that today’s uncertainties are already well-known, and hence won’t provide us with an equally attractive setup to scale our allocations (which we did earlier this year). Nonetheless, this strategy adds attractive diversification to our long-only stock investment portfolio.

The slide deck and transcript can be downloaded below.