The month-end performance estimate, as of November 30, 2015 for Horse Cove Partners Absolute Return Strategy is 3.67%, net of fees1. Since the inception of trading in December 2010, the Strategy has achieved a total cumulative return of +202.94%.
Market Recap and Commentary
The S&P 500 Index was basically flat for the month. There were more indications that the Federal Reserve intends to raise interest rates at its December meeting. Still no sign that the bull market is over, but it does appear as if the market has lost some steam.
The VIX opened the month at 15.41%, hit a peak of 20.67% in the middle of the month, and then fell into month end closing at 15.18%.
As of October 31, 2015, the S&P 500 has returned to positive territory, up 3.01% year to date. In comparison, the Horse Cove Absolute return Strategy is up 15.89% year to date.
Performance and Trading Update
For the month, the Horse Cove Absolute Return Strategy composite returns were up 3.67% compared to the S&P 500 Total Return Index that was up 0.30%. Since the beginning of the year, the Horse Cove Strategy is up 15.89% versus the S&P 500 up 3.01%.
Calmer markets brought the return of volatility below 20% this month, and that lent itself to a nice environment for harvesting options premium. We had one week in which the market was moving against our call positions, but we exited the trade with a small profit for the week and “lived to write another day”.
IRA Update
Here are the returns for the consolidated IRA accounts for the periods indicated:
IRA accounts must use Reg. T Margin which, means that fewer option contracts can be written than in the “regular” accounts that use Portfolio Margin. Over time, this will result in lower returns when compared to the “regular” accounts.
Thanks and Milestones
In November each year, we celebrate giving thanks. It is against that backdrop, we are thankful for the opportunity to serve our clients. To all of our clients and business partners that have helped make Horse Cove Partners a success...Thank you!
November marks an important milestone for Horse Cove Partners and our Absolute Return Strategy. We have successfully completed 5 years of live trading of our strategy. Our compound annual growth rate is 24.82% (without allowance for taxes). $1,000,000 invested on day one in December of 2010, would be worth $3,029,360.76 as of the end of November 2015.
Our numbers, compared to an investment in the S&P 500 Index itself are noted above. We outperform in every slice of time noted.
We ran a screen at Morningstar to see how our performance stacks up against Equity Fund Categories.
Fund Category Performance: Total Returns
Data through 12/2/2015. Returns are simple averages.
Name 1 Year(%) 3 Year(%) 5 Year(%)
Horse Cove Partners 19.37 21.46 24.82
U.S. Equity Fund
Large Growth 6.98 16.53 13.03
Mid-Cap Growth 4.25 14.81 11.20
Small Growth 6.45 14.91 11.56
Large Blend 2.27 14.83 12.34
Small Blend 3.72 13.64 10.66
Mid-Cap Blend 1.08 14.02 11.14
Large Value -0.06 13.52 11.57
Mid-Cap Value 0.97 14.19 11.28
Small Value 2.44 13.1 10.23
The above are the average returns for the funds in each category. There is no single mutual fund that is a part of any of the above categories that has outperformed Horse Cove over the last 5 years. If you had the good fortune of a “crystal” ball capable of picking the top performer of any Equity Category 5 years ago, the Primecap Odyssey Aggressive Growth (PAOGX) would have returned 18.35% per year versus HC at 24.82%.
We went another step and looked at the 5 year returns of all mutual fund categories listed in the Morningstar Universe. Here are the top 5 performing categories compared to Horse Cove:
5 Year (%)
Horse Cove Partners 24.82
Health 22.26
Consumer Cyclical 14.61
Large Growth 13.03
Large Blend 12.34
Consumer Defensive 12.32
http://news.morningstar.com/fund-category-returns/
We strongly believe that there is a better way to invest. It involves doing something different from what everyone else is doing. That is the only way to achieve different (better) results. Our track records stands in testament to that philosophy. We welcome the chance to show you how.
About Horse Cove Partners LLC
Profiting from the art and science of taking risk.®
Horse Cove Partners was founded by Sam DeKinder and Kevin Ellis in January of 2013 with the commitment to help grow clients’ assets with a highly disciplined investment strategy, replicated weekly, to extract absolute returns from the market by trading short volatility option spreads. The firm was launched after more than two years of trading experience with personal assets that began in December of 2010. The firm is built on the strength of hedge fund trading expertise developed beginning in 2002.
Assets under management at the end of November 2015 were $18.2 million.
“We do not believe we are smarter than the market, nor can we time the market in any given week or month. As a result, we take an investment approach similar to an insurance company in that our investment strategy focuses on probability of success and the management of risk. We believe that it is possible to realize positive returns through disciplined focus on the risk of each trade with a weekly investment horizon, and accepting intelligent losses when risk events occur.”
We would like to thank you for your continued support and look forward to being in touch with you in the near future.
Sincerely,
Sam DeKinder, Kevin Ellis
John Monahan, Michael Crissey and Greg Hyde
sdekinder@horsecovepartners.com
kellis@horsecovepartners.com
jmonahan@horsecovepartners.com
mcrissey@horsecovepartners.com
ghyde@horsecovepartners.com
Horse Cove Partners LLC
1899 Powers Ferry RD SE
Suite 120
Atlanta, GA 30339
678-905-5723 main
1Net estimate on a consolidated basis of similar accounts as of 11.30.2015, which is preliminary and subject to revision. Performance estimate described herein as “YTD” are net of fees and expenses including a 2% per year management fee and 20% incentive fee and also assumes investors have been invested with no withdrawals.
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Finally, to the extent that performance information is contained in this message, you are hereby advised, and you acknowledge it, that past performance does not assure future results, which are not guaranteed by Horse Cove Partners LLC or any of its affiliated entities or by any insurance mechanism.
IRS CIRCULAR 230 NOTICE. Any advice expressed above as to tax matters was neither written nor intended by the sender or any Horse Cove Partners LLC affiliated entities to be used and cannot be used by any taxpayer for the purpose of avoiding tax penalties that may be imposed under U.S. tax law.
