We are pleased to announce that the Horse Cove Partners strategies have been featured in BarclayHedge’s monthly performance rankings:
Horse Cove Partners Enhanced Yield strategy was ranked #7 in their Option Strategies category in May 2023.
Horse Cove Partners Absolute Return Strategy was ranked #10 in their Option Strategies category for May 2023.
*These strategies were ranked based on the data in BarclayHedge’s Database for the month of May 2023. No compensation was paid for this award.
Horse Cove Partners LLC Portfolio Composite Summaries of net returns for August 2023
The Enhanced Yield Strategy was up 0.89%.
The Money Plus Strategy was up 0.59%.
The Absolute Return Strategy-Composite Portfolio Margin was up 0.70%.
The Absolute Return Strategy-Composite Reg. T Margin was up 0.59%.
Equity Market Recap and Commentary
The S&P 500 was down 5.5 percent at its low on August 18 and despite an impressive late-month rally, ended the month with a 1.8 percent decline. This ended a 5-month long streak of positive gains for the S&P 500. More than two-thirds of the index's composite stocks lost value as a lack of catalysts sidelined buyers. Still, the index held its June low and remained above its peak from August 2022. August is historically a tough month for the S&P, posting an average monthly decline of .1% over the last 20 years. This is typically a result of lower trading volumes and some investors booking profits before September, which is historically the worst month for the S&P.
Investors faced some anxiety over China early in the month as fears of a collapsing real estate market and its impact on lending institutions could be a contagion that spread around the globe. Now that money markets and T-Bills are sporting 5% yields, investors have a comfortable place to sit on the sidelines. This tends to limit the buyers willing to jump in when the market is falling, or fears are elevated.
Investor’s fears about China eased after the CCP released massive multi-front stimulus measures. In the US, investor’s dreams of a soft landing for the US economy gained traction. Big tech continued to lead the charge and helped the indexes recover much of their early losses.
Fixed Income Commentary
In August 2023, performance in the U.S. fixed-income market was mixed. Ongoing discussions regarding monetary policy from the Federal Reserve continue to keep the market choppy. Corporate bond spreads tightened slightly amid relatively stable credit conditions, and municipal bonds saw continued demand driven by tax benefits. The fixed-income market in the short term will continue to be driven by monetary policy, and expectations of FED news from what seems like daily data dumps on the economy. Yields overall remain strong and continue to provide solid competition for equity markets.
Performance Updates and Benchmarks
Here are the composite net returns for the Enhanced Yield Strategy for the periods indicated:
Bloomberg US Agg. Bond Index, formerly known as Barclays US Aggregate Bond Index.
*Trading of HCP Enhanced Yield accounts began in June 2017.
Source: http://bloomberg.com/quote/LBUSTRUU:IND
Here are the composite net returns for the Money Plus Strategy for the periods indicated:
*Trading of HCP Money Plus Strategy began in August 2020. Composite returns effective September 1, 2021. According to the new marketing rule, gross fees may only be shown with net fees.
Here are the composite net returns for the Absolute Return Strategy-Portfolio Margin for the periods indicated:
Source: www.spdji.com
*Trading of HCP Portfolio Margin accounts began Dec. 2010.
Here are the composite net returns for the Absolute Return Strategy-Reg. T for the periods indicated:
*Trading of HCP Reg. T. accounts began in Sept. 2014.
IRA accounts must use Reg. T Margin, which means that fewer option contracts may be written versus the “regular” accounts that use Portfolio Margin. Over time, this may also result in lower returns when compared to the “regular” accounts.
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 the client’s 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 2010. The firm is built on the strength of hedge fund trading expertise developed beginning in 2002.
The firm offers clients multiple option strategies, including overlay strategies on equity and bond portfolios as well as: Absolute Returns, which commenced trading in December 2010, Enhanced Yield, which began trading in June 2017, and Money Plus, which began trading in August 2020.“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 the probability of success and the management of risk. We believe that it is possible to realize positive returns through a disciplined focus on the risk of each trade with a weekly investment horizon, and accepting intelligent losses when risk events occur.”
We thank you for your continued support.
Sincerely,
Sam DeKinder, Kevin Ellis
Greg Brennan
Don Trotter
sdekinder@horsecovepartners.com
kellis@horsecovepartners.com
gbrennan@horsecovepartners.com
dtrotter@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 8.31.2023, which is preliminary and subject to revision. Performance estimates described herein as “YTD” are net of fees and expenses including a 2% per year management fee and 20% incentive fee and assume investors have been invested the entire time with no withdrawals. Individual account returns may vary depending on cash flows, the time period assets are invested, and restrictions placed on the account.
This was prepared by Horse Cove Partners LLC a federally registered investment adviser under the Investment Advisers Act of 1940. Registration as an investment adviser does not imply a certain level of skill or training. The oral and written communications of an adviser provide you with information about which you determine to hire or retain an adviser. Additional information about our firm is also available at www.adviserinfo.sec.gov. You can view the firm’s information on this website by searching for our firm name.
THIS MESSAGE AND ANY FILES TRANSMITTED WITH IT ARE CONFIDENTIAL AND PRIVILEGED. IF YOU ARE NOT THE INTENDED RECIPIENT, PLEASE NOTIFY THE SENDER IMMEDIATELY AT 1 (678) 905 5723. IF YOU ARE NOT THE NAMED ADDRESSEE YOU SHOULD NOT COPY OR DISCLOSE THE CONTENT OF THIS MESSAGE AND ANY FILES TRANSMITTED WITH IT TO ANY OTHER PERSON.
Internet communications are not secure and subject to possible data corruption, either accidentally or on purpose, and may contain viruses. The content of this message should not be construed as investment advice unless explicitly stated as such in the text of this message. Further, this message should not be construed as the solicitation of an offer to purchase or an offer to sell any securities or other financial instruments, including, without limitation, interest in any private investment managed by Horse Cove Partners LLC or any of its affiliated entities.
This material has been prepared solely for informational purposes only. Strategies shown are speculative, involve a high degree of risk, and are designed for sophisticated investors.
Past performance is not a guarantee of future results. Investing involves risk, including the possible loss of principal and fluctuation of value. The information herein was obtained from third-party sources. Horse Cove does not guarantee the accuracy or completeness of such information provided by third parties. All information is given as of the date indicated and is believed to be reliable. Performance results are estimates pending verification. The returns are based on the Investment Manager's strategy and the compilation of actual client account trades. The Horse Cove Absolute Return and IRA Return strategies seek to extract absolute returns from the market by trading short volatility option spreads. The Enhanced Yield strategy seeks to achieve a targeted return trading only puts with a high probability of success.
The strategies reflect the deduction of advisory fees and any other expenses that a client would have paid or actually paid. The S&P 500 Index is used for comparative purposes only. The volatility of an index is materially different from that of the model portfolio. The S&P 500 refers to the Standard and Poor's 500 Index which is a capitalization-weighted index of 500 stocks. The index is designed to measure the performance of the broad domestic stock market. The VIX (CBOE volatility index) is the ticker symbol for the Chicago Board Options Exchange (CBOE) Volatility Index, which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities of a wide range of S&P 500 index options. This volatility is meant to be forward-looking and is calculated from both calls and puts. The VIX is a widely used measure of market risk and is often referred to as the "investor fear gauge." Investors cannot invest directly in an index. An index does not charge management fees or brokerage expenses, and no such fees or expenses were deducted from the performance shown. Options trading entails a high level of risk. The models do not include the reinvestment of dividends and capital gains because options don't pay dividends. Please read the Characteristics and Risks of Standardized Options available from the Options Clearing Corporation website: http://www.optionsclearing.com for further details.
