Fiduciary Impact

Managing Total Risk

When I started Bay Street, I wanted to make sure it was clear to clients that our goal was not to maximize returns by taking unnecessary amounts of risk. Instead, our firm focuses on increasing total assets and income by placing a higher priority on managing total risk and volatility.

The first half of 2020 has given us the opportunity to prove our investment thesis as we seek to add value to our clients.

Since my last update on June 17th, the Lens of History Fund (LOHF) has increased from $2,766,054 to $3,834,510. Our current month-to-month rolling performance since fund inception is 38.5%, up 7.4% since June 17th. The S&P over the same time June 2019 to July 2020 time frame is 3.9%.

As we enter into the second half of this extraordinary year, I’ve watched as firms and individuals explain where things went wrong and how they will respond during the “the next wave.” When we launched our LOHF, our goal was to ensure that regardless of market conditions, we would add value for our clients by investing in companies that will outperform through the lens of history. We’ve taken a stringent, rule-based approach to all investments and overweight technology and renewable energy.

Our current top 20 holdings as of August 6th are:

  • Tesla
  • Brookfield Renewable Partners
  • Zillow
  • Qualcomm
  • Apple
  • Square
  • Lam Research
  • Dexcom
  • Brookfield Asset Management
  • MTBCP
  • Chegg
  • Workhorse
  • Amazon
  • Lemonade
  • Hannon Armstrong
  • Northland Power
  • Mercadolibre
  • Atkore
  • ServiceNow
  • Alibaba

For investors who follow my memos, you’ll notice we completely liquidated several positions since my last update. Most notably, we exited our WRTC position on 7/22 after insider’s started reducing their positions. When a company insider sells stock in a young company, it usually signals there is something that would cause the stock to pull back. Since the 22nd, WRTC has declined 18%. We only realized a 7% gain with our 11% position as a result of the pullback, but it provides a great example for investors looking to understand what’s actually going on under the hood when we say we are managing total risk and volatility. It may be true that you can’t “time the market” but we seek to show investors that it is possible to select specific points in time where it is appropriate to buy or sell a position. If the market turns against us in a specific position, we’re willing to step aside and wait for the right time to reconsider.

Since July, Ekenna Anya-Gafu & Arnaldo Brasil have also joined Bay Street.

Ekenna joins Bay Street Capital as Director of Planning. Prior to Bay Street, Ekenna spent five years in the brokerage world with Charles Schwab and TD Ameritrade. He provides personalized guidance to individuals and families in the Bay Area to define and accomplish their financial goals.

Ekenna is one of the few African American advisors that has earned the Certified Financial Planner (CFP®) designation. Only 1.5% of all CFP® holders are African American and of those, even fewer work for minority-owned firms. He has also earned his Accredited Asset Management Specialist (AAMS®) designation and graduated from Black Hills State University after completing 4 years of collegiate football with a BS in Finance & Economics.

Arnaldo joins Bay Street as Chief Lending Officer after serving 10 years at JPMorgan Chase. He will oversee all lending operations for homeowners and investment buyers and be responsible for maintaining Bay Street’s loan portfolio.

Arnaldo was a collegiate swimmer for the University of Brasil and studied Kinesiology and Exercise Science. After moving to the Bay Area, he attended Diablo Valley College as an English major. He is fluent in English, Portuguese, and Spanish.

Both will be leading webinars this month to review the LOHF and introduce themselves to investors looking to add our strategy to their portfolio.

To participate, please email ekenna@baystreetcapitalholdings.com and reference this memo.

 

 

 

William Huston, CCO, AIF

Author William Huston, CCO, AIF

Galatians 2:20

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