By Anna Peel. Originally published at ValueWalk.
Livermore Partners update for the month of May 2022, titled, “The World Is On Fire.”
May continued to be a very volatile time in the market and one with sharp downdrafts and rallies… All in all, markets ended the month right where they started. Near flat.
As you know, we have been positioned for a “new world order” in which high inflation and slow global growth rule the day. Therefore, our performance is holding in very well as we closed the month up +12% MTD and where Livermore Strategic Opportunities (LSO) is now up appx. +20% YTD. A nearly 3300% BPS increase over the S&P 500 which is down -13% YTD.
Commodities are the drivers and energy has provided much of the performance. with Brent crude closing in on $120bbl. A huge windfall for our focused names Jadestone Energy (LON:JSE), Vista Oil and Gas (NYSE:VIST), Kolibri (TSE:KEI) and added in late Q1, Paramount Energy (TSE:POU).
Hedging The Portfolio
Recently, we have been more aggressive on the short side in order to be both opportunistic as well as hedge the portfolio. In reality, our portfolio is in itself a hedge given its deep value and tangible make-up, so in essence, short positions can be alpha generators. Our short book is derived from a handful of situations in Tesla Inc (NASDAQ:TSLA), Coinbase Global Inc (NASDAQ:COIN), SPDR S&P 500 ETF Trust (NYMARKET:SPY) and Carvana Co (NYSE:CVNA). Combined, they have helped add appx 1-2% to the overall fund. Even so, I feel our path ahead remains strong and ripe for new investment. Although always trying to prepare for ways we can insulate and add to alpha.
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