Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

November 2020
Market Update
(all values as of 03.31.2021)

Stock Indices:

Dow Jones 32,981
S&P 500 3,972
Nasdaq 13,215

Bond Sector Yields:

2 Yr Treasury 0.16%
10 Yr Treasury 1.74%
10 Yr Municipal 1.08%
High Yield 4.42%

YTD Market Returns:

Dow Jones 7.76%
S&P 500 5.77%
Nasdaq 2.78%
MSCI-EAFE 2.83%
MSCI-Europe 3.52%
MSCI-Pacific 1.72%
MSCI-Emg Mkt 1.95%
 
US Agg Bond -3.37%
US Corp Bond -4.65%
US Gov’t Bond -4.28%

Commodity Prices:

Gold 1,709
Silver 24.48
Oil (WTI) 59.64

Currencies:

Dollar / Euro 1.17
Dollar / Pound 1.37
Yen / Dollar 110.19
Dollar / Canadian 0.87

Portfolio Overview

Ocean Park Investors Fund gained 7.17%* in November, while the major indices all rose by double-digits. We attribute the discrepancy to the conclusion of the election and the improving prospects for vaccines.  This led to a subtle market shift favoring value stocks over growth stocks, and the fund is largely weighted toward growth stocks.  We are sensitive to this trend and are responding to opportunities among the value group.  In any event, the fund is up 27.21%* for the year to date, which is well ahead of the S&P 500 (up 12.10% for the year to date) and the HFRI Equity Hedge Index (up 11.92% for the year to date).  Among the portfolio stocks which outperformed during the month were Etsy (up 32%), RH (formerly Restoration Hardware, up 35%), and Trade Desk (up 59%).

During November, we increased positions in the technology and financial services sectors and reduced positions in the consumer discretionary and service sector.  Exclusive of our short position in QQQ options, we finished the month at about 98% net long, up from about 97% in October.  Taking into account our remaining QQQ short option hedges (most of which we covered in November), our effective net long exposure was closer to 90%.

 

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

Stocks posted extraordinary gains in November.  The S&P 500, the NASDAQ Composite, and the Dow Jones Industrial Average hit all-time highs, with the Dow crossing the 30,000 mark for the first time.  Energy stocks rose smartly and led all sectors, while utilities were the laggards.  As noted above, value stocks outperformed growth stocks.  Small cap stocks, which had underperformed dramatically all year, rebounded spectacularly with a gain of 18% in November.  Volatility was high as 10 of 21 trading days generated swings greater than 1% in the S&P 500.

3rd quarter corporate earnings reported in November continued the impressive pattern set in October.  With 95% of S&P 500 companies reporting, 84% beat consensus earnings estimates and 78% beat consensus revenue estimates, in both cases meaningfully above the one-year and five-year averages.  The blended earnings growth rate came in at negative -6.3%, better than the October number (-9.8%) and significantly better than the analyst consensus at the beginning of the quarter (-21%).

 

 

 
Macro Overview

Macro Overview

The election of Joe Biden and positive developments in Covid-19 vaccines powered the stock market in November.  The stock market reaction to Biden’s election came with a touch of irony, as Trump had warned of a collapse if Biden won.  Instead, the S&P 500 gained 10.8% for the month.  This compared to a gain of 3.4% in November 2016, when Trump was elected.

Economic data reported in November were decidedly mixed, as manufacturing and housing were strong but unemployment worsened as the month progressed and consumer confidence was weak.

The Commerce Department’s revised estimate of 3rd quarter GDP confirmed a dramatic recovery:  an annualized gain of 33.1% compared to a loss of 31.4% in the 2nd quarter.  However, since the 3rd quarter percentage reflected improvement from the depressed 2nd quarter number, economic growth remains well below pre-pandemic levels.  And future economic performance is uncertain, particularly with Congress failing to reach agreement on additional stimulus in November.  Analyst consensus points to a recession in early 2021, followed by a strong rebound later in the year.

 

 
Additional Disclosures and Privacy Notice

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.

 

Privacy Notice

Federal privacy laws require that we explain to you how we handle “nonpublic personal information.”  This is information we receive or develop about you in the course of our relationship with you.  It includes information you provide to us orally or in the Confidential Investor Questionnaire or other forms, and information we learn about you in the course of providing services to you.

We do not disclose nonpublic personal information about you to third parties, except in certain limited circumstances.  These circumstances include (a) disclosure to our attorneys, auditors, prime brokers, or custodians in the course of providing services to you, (b) disclosure with your consent, or (c) disclosure where required by law or judicial process, such as a court order.

We also restrict your nonpublic personal information to those employees who need to know such information in order to provide services to you.  And we maintain physical, electronic, and procedural safeguards to protect your nonpublic personal information.

Please call us at (310) 392-7300 if you have any questions.