Performance Update (May 2020)
Titan clients are now up +6-8% YTD after fees (vs. S&P 500 which is down -5% and Wealthfront/Betterment which are down -9% to -12%).
Our return of +12% in May (vs. S&P +5%) was driven mostly by idiosyncratic alpha, with our more niche holdings like Twilio up +76%.
See disclosures.
Since our Inception Date (2/20/2018), Titan Flagship has gained +34% in total return (after fees). This is ~2x the market's return and well above Betterment, Wealthfront, and other managers.
Key Drivers
Here were the key drivers of our May returns:
1) Idiosyncratic alpha. Several Flagship co's reported blowout Q1 results, proving resilient amidst COVID-19 (e.g., Twilio +76%, PayPal +26%).
2) Better than feared trends. Software, payments, and other industries saw trends improve in May, much better than many investors feared.
3) Improving sentiment. We saw investors turn increasingly optimistic, driving FOMO as investors worried they missed the bottom.
Despite the rally, we continue to recommend "light offense." Our full hedges remain activated per our indicators. As mentioned in our April memo, plenty of risks still remain, and the skew looks unfavorable at the index level.
Stay heavily invested in your Titan portfolio, but keep some cash as dry powder until the skew materially improves. We'll let you know when it does.
May Movers
Gainers:
Twilio (TWLO) +76%
PayPal (PYPL) +26%
Uber (UBER) +20%
Detractors:
Netflix (NFLX) +0%
Amazon (AMZN) -1%
Schwab (SCHW) -4%
See disclosures.
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