Stanphyl Capital: January Update

2 Feb

Stanphyl Capital: January Update

Below is Stanphyl Capital’s January update in full. The firm has got off to a rocky start to the year but is still beating its benchmarks by a wide degree since inception.

Stanphyl Capital: January Update

Friends and Fellow Investors: For January and year to date 2017 the fund was down approximately 3.9% net of all fees and expenses. By way of comparison, the S&P 500 was up approximately 1.9% while the Russell 2000 was up approximately 0.4%. Since inception on June 1, 2011 the fund is up approximately 119.2% net while the S&P 500 is up approximately 91.2% and the Russell 2000 is up approximately 73.9%. (The S&P and Russell performances are based on their “Total Returns” indices which include reinvested dividends.) As always, investors will receive the fund’s exact performance figures from its outside administrator within a week or two. Although this month we had some great news (and returns) from a couple of our microcap long positions (LTRX and MGCD), the fund’s negative performance was heavily influenced by its short position in Tesla Motors, which was up considerably despite an onslaught of negative fundamental developments. Here are the portfolio specifics… We continue to hold a large short position in the Russell 2000 (via the IWM ETF; short basis: $135.29; January close: $135.23). I think this is a good hedge for our microcap long positions in what I perceive to be a dangerous (expensive and increasingly protectionist) market, and as the companies in the index collectively have no earnings a potential Trump corporate tax cut can’t help them, while valuation (EV to EBITDA) is off the charts:

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