Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

October 2023
Market Update
(all values as of 04.30.2024)

Stock Indices:

Dow Jones 37,815
S&P 500 5,035
Nasdaq 15,657

Bond Sector Yields:

2 Yr Treasury 5.04%
10 Yr Treasury 4.69%
10 Yr Municipal 2.80%
High Yield 7.99%

YTD Market Returns:

Dow Jones 0.34%
S&P 500 5.57%
Nasdaq 4.31%
MSCI-EAFE 1.98%
MSCI-Europe 2.05%
MSCI-Pacific 1.82%
MSCI-Emg Mkt 2.17%
 
US Agg Bond 0.50%
US Corp Bond 0.56%
US Gov’t Bond 0.48%

Commodity Prices:

Gold 2,297
Silver 26.58
Oil (WTI) 81.13

Currencies:

Dollar / Euro 1.07
Dollar / Pound 1.25
Yen / Dollar 156.66
Canadian /Dollar 0.79
 

Portfolio Overview

Ocean Park Investors Fund fell 2.94%* in October, while the S&P 500 fell 2.20% and the NASDAQ Composite fell 2.78%.  While technology stocks were generally weak, there were some bright spots in the portfolio as Microsoft gained 7% and Crowdstrike gained 5%.

During the month, we reduced positions in the producer durables sector and increased exposure to the QQQ ETF.  In anticipation of disappointing earnings, we sold Match Group, OSO Systems, and Unity Software.  We initiated new positions in companies with brighter prospects including Zscaler, Gap, and Shift4 Payments.  We finished the month at about 97% net long, unchanged from September.

 

 

 

Daily updates on our activity are available on our Results Line, at 310-281-8577, and current information is also maintained on our website at www.oceanparkcapital.com. To gain access to the site enter password opcap.

*These results are pro forma. Actual results for most investors will vary. See additional disclosures on page 4. Past performance does not guarantee future results.

 
Equity Overview

Equity Overview

Nine of eleven sectors in the S&P 500 declined in October, with utilities the only meaningful gainer and consumer discretionary and energy the worst losers. (Oil prices dropped 10.8% for the month.)  Volatility increased as the S&P 500 moved more than 1% on 8 of 22 trading days, compared with 3 of 20 trading days in September.  Value stocks were marginally better than growth stocks.

Third quarter earnings reported in October were strong, but once again revenues were unimpressive.  With 49% of S&P 500 companies reporting, 78% beat consensus earnings expectations which was better than the one-year and five-year averages.  However, only 62% beat consensus revenue expectations, which was below the one-year and five-year averages. As occurred with second quarter earnings, the stocks of companies that beat earnings estimates, on average, sustained small price losses after their reports.  Given the general weakness in revenue, it seems that investors will not reward companies whose strong earnings are the result of increased margins rather than strong business activity.

The 12-month forward price/earnings ratio for the S&P 500 remained at 18, below the 5-year average of 18.7.  As we pointed out last month, this suggests that stock valuations are reasonable.

 

 

 
Macro Overview

Macro Overview

The Hamas invasion of Israel dominated headlines in October, but did not affect stocks materially.

Economic data released in October were mixed.  Employment was disappointing but durable goods orders were strong.  Inflation was slightly worse than expected as the CPI rose 0.4% month-over-month.  However, it was unchanged from the previous month at 3.7% year-over-year.  The benchmark 10-year Treasury note briefly hit 5%, the highest rate in 16 years.

The Commerce Department’s first estimate of third quarter GDP growth was startling at 4.9% annualized, the best in two years.  By way of comparison, GDP growth was 2.2% in the first quarter of this year and 2.1% in the second quarter.  Although the third-quarter pace is not expected to continue, it does diminish the likelihood of a recession.

 

 

 
Additional Disclosures

Additional Disclosures

Performance data for OPI reflect the reinvestment of dividends and other earnings on the fund’s assets.  Performance data for the major indices reflect only changes in the value of those indices, and would be higher if dividends were included. However, the index data do not reflect fees that would be paid to index fund managers and transaction costs that would be incurred when their component stocks are bought or sold, while OPI’s data do reflect quarterly fees and expenses incurred by the fund.  The information provided is believed to be reliable, but its accuracy or completeness is not warranted. This material is not intended as an offer or solicitation for the purchase or sale of any stock, bond, mutual fund, or any other financial instrument. The views and strategies discussed herein may not be appropriate and/or suitable for all investors. This material is meant solely for informational purposes, and is not intended to suffice as any type of accounting, legal, tax, or estate planning advice. Any and all forecasts mentioned are for illustrative purposes only and should not be interpreted as investment recommendations.

 

 

Ocean Park Capital Management · 2503 Main Street · Santa Monica CA 90405 · 310-392-7300