Sr Portfolio Manager
Welcome to the Lions Bay newsletter!
If you tuned into the news last week, I hope the market sell-off on Monday and Tuesday didn’t send you into a tizzy. This latest panic was, once again, a reaction to comments from the commander-in-chief down south. With political risk in full effect, I want to open a dialogue with you periodically, especially around the next bout of volatility.
Since it takes two to make a conversation, I welcome your opinions and
feedback. We can walk through your questions and concerns about the
market’s mood swings. So let me know what you think, whether you agree
Last week, President Trump suggested that there won’t be any resolution to the China trade deal until after the 2020 US election in November of next year. Although we’ve heard it before, several times, investors still spun into a sell frenzy.
With Lions Bay, we seek to always be prepared for situations like this. We use hedging strategies to minimize the volatility of the portfolio and protect it from downturns.
This past Tuesday, December 3rd, benchmarks across the board closed in the red. The Dow Jones was down 192 basis points through Tuesday, while S&P 500 was down 150, At the end of the day, Lions Bay was not only fully protected from the selling spree, strategically placed put options on single stocks and index ETFs allowed the fund to generate positive returns over the 2-day period.
Of course the market always bounces back, as it did the next day on Wednesday. But, what happened last week is a perfect use case of how we invest with volatility in mind. You can bet that “Trump volatility” will strike again. You can also be sure that Lions Bay will strive to provide cover for your investments the next time it gets cloudy.
The Lions Bay Fund is a North American focused equity fund. We strive to generate superior risk-adjusted returns through three principal strategies: a core portfolio of long term investments in high-quality companies, a transactional portfolio that allows us to generate returns through tactical trading strategies, and a hedging portfolio, which employs a disciplined risk management strategy that aims to protect our investors from market declines. Through these three strategies, working in conjunction, we look to provide our investors with equity-like returns that have significantly lower volatility than broader equity markets.View Fund