Article written by Matthew Goodson, Salt Funds Management – 4th September 2020

After several strong months, the Fund gave some performance back in August with a return of -1.81%. While several of our key stock calls delivered good results, some of our previous winners retraced a little and our generally low beta longs struggled to keep up with what was a buoyant albeit volatile market in August. Conversely, several of our ultra-expensive shorts became even more expensive even though they delivered mixed results.

Evidence continues to build of bubble-like market conditions. We are being careful with our positioning in the red-hot technology sector names as valuation has ceased to have any relevance to performance in a number of cases.

While net length has lifted to the 45% region, we still carry sizeable protection from the short-side and are doing well on negative days. There are just too few of them. From the long side, we are avoiding structurally challenged value traps and looking to aggressively own names which have solid outlooks and are under-priced. With leadership in this bubbly market being very narrow, there are a surprising number of attractive potential longs if one has patience to wait until the market identifies them.

Regards,

Matthew