Ocean Park Capital Management

2503 Main Street

Santa Monica, CA 90405

Main: 310.392.7300

Daily Performance Line:  310.281.8577

December 2020
Market Update
(all values as of 04.30.2021)

Stock Indices:

Dow Jones 33,874
S&P 500 4,181
Nasdaq 13,962

Bond Sector Yields:

2 Yr Treasury 0.16%
10 Yr Treasury 1.65%
10 Yr Municipal 0.98%
High Yield 4.20%

YTD Market Returns:

Dow Jones 10.68%
S&P 500 11.32%
Nasdaq 8.34%
MSCI-EAFE 5.63%
MSCI-Europe 7.77%
MSCI-Pacific 2.03%
MSCI-Emg Mkt 4.36%
 
US Agg Bond -2.61%
US Corp Bond -3.59%
US Gov’t Bond -3.44%

Commodity Prices:

Gold 1,767
Silver 25.90
Oil (WTI) 63.52

Currencies:

Dollar / Euro 1.21
Dollar / Pound 1.39
Yen / Dollar 108.83
Dollar / Canadian 0.81
 

Portfolio Overview

2020 was an extraordinary year for the Ocean Park funds.  The Ocean Park Investors Fund gained 31.38%*, almost double the performance of the S&P 500 (up 16.26%) and the HFRI Equity Hedge Index (up 17.41%).  Technology stocks generated outsized gains, with standout performance from, among others, Coupa Software, Crowdstrike, Docusign, Nvidia, Service Now, and Zoom Video.

In any year, we make innumerable decisions about which stocks to buy or sell, and our performance is the accumulated result of the accuracy of those decisions.  But this year one of our most important decisions was neither a buy nor a sell, but a decision not to sell.  As we pointed out in the April newsletter, rather than trying to time the market, we chose to maintain the portfolio essentially intact during the dramatic downturn in March.  This allowed us to participate fully in the equally dramatic upturn which followed, and put us in position to outperform for the rest of the year.

During December, we increased positions in the financial services sector and the autos and transportation sector, and reduced positions in the consumer discretionary and service sector.  We also closed out our short position in QQQ options and we finished the month at about 93% net long, down from about 98% in November.

We once again thank you for your investment in the Fund, as we strive to build upon our long-term performance and earn your continued confidence.

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

Equity markets took a wild ride in 2020.  After a promising start, the S&P 500 fell 34% from its February high, only to rebound more than 67% from its low by year’s end.

All the major indices finished the year at or near all-time highs.  But the gains were not uniform, as growth stocks rose by more than 30% while value stocks rose about 2%.  Technology stocks (up 42%) and Consumer Discretionary stocks (up 28%) led the sectors, while Energy stocks got slaughtered (down 37%).

Major international stock markets in China, Japan, and Germany showed solid double-digit gains, while Britain suffered Brexit shock and lost 10%.

 

 

 
Macro Overview

Macro Overview

2020 will be remembered as the year of the pandemic.  It wrought biblical-level suffering and remains the dominant concern in economies worldwide.  In the US, inept response by the executive branch exacerbated the impact.  Fortunately, the Fed controlled monetary policy with a steady hand, bringing short-term interest rates to near zero, entering the bond markets in unprecedented fashion, and indicating its intention to maintain its easing for as long as necessary.  In addition, the legislature passed massive fiscal stimulus early on, supplemented with additional stimulus at year’s end.

The result was that the broad economy survived.  GDP, which contracted more than 30% on an annualized basis in the second quarter, rose by more than 30% in the third quarter.  But much damage has yet to be repaired.  At year’s end, unemployment remained at historically high levels, the numbers out of work for more than 6 months were growing, and millions had left the work force altogether.  Entire sectors were devastated, including travel and restaurants.  Consumer sentiment, while improved from the lows in mid-year, remains at historically depressed levels.

One bright spot was the unprecedented speed with which vaccines were developed.  The time from inception of research to distribution of vaccines was reduced from the usual period of about 10 years to an astonishing 10 months.  Along with the beginning of widespread vaccination came hope that substantial economic recovery would follow.

In the midst of all this, of course, we had elections for congress, the senate, and the presidency.  Democrats hit the trifecta and now control all three branches of government.  This makes it likely that we will see a more comprehensive pandemic strategy and additional fiscal stimulus.

The US has recovered from significant economic shocks on numerous occasions in the past, most recently in 2001 and 2008.  While it is far from certain, it appears that we may be on a path to return to some semblance of normalcy.

 

 

 
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.