September 2025: Episode 3

Hello and welcome to September 2025 episode of The Long and the Short of It, where the investment team at Oak Harvest recaps the last month for the Oak Harvest. Long, short, hedged equity mutual fund FDX. My name is James MacFarland, here with Chris Perras and Charles Scavone, as always. And the three of us represent the portfolio management team.

Now. For additional information on check out Oak Harvest funds.com. You can find the link in the description below. Now, before we get into the nitty gritty for this episode, let’s go over the return data for as of the end of September, as presented on the Morningstar website. First and foremost, we’re happy to say that the Nav, the net asset value for GFG and its investors hit a new all time high in September.

Year to date, the fund is up 15.14%, continuing to outperform the benchmark S&P 500. And in our peer group, ETF ranks in the 13th percentile year to date and the top 4% over a one year period. Now, with that said, let’s turn to the three questions. We look at every month. First, what was the portfolio management team thinking about heading into the month? What key investment actions did we take during the month? And finally, how did things play out? So let’s jump into it. Chris, talk us through what we were thinking heading into the month of September.

What We Were Thinking Heading Into September

Chris:
Thanks, James. Well, September. Normally the end of summer in most places in the United States. Not here in Houston. The news flow for companies, individual companies, it usually slows down trading volume. Slow down. Also, September is historically one of the worst months of the year in the stock market, and one of only two months that averages slightly negative performance on the month. So we were positive on the overall market, but it’s September, and so we didn’t want to get out over our skis too far as the fund was doing pretty well into the, end of the third quarter.

So short term, we bought some protection as we can. We bought some hedges. It was looking pretty cheap there. So on the SoC side, that’s pretty much what we did. So on the bond market side, we thought inflation is running above the Fed’s target. And growth was slowing. But we were afraid the fed wouldn’t pivot to a rate cut.

So September is the dead zone for earnings reporting. But the team thought the third quarter earnings would be setting up positively when they come out in October. As it turns out there was a lot of non earnings, fundamental and deal announcements in September that supported much better performance. Year in year to date names and sectors. Much better than we actually thought going into the month.

Key Investment Actions During the Month

James:
So all right. Thank you very much. So then what key investment actions did we take based off of that view heading into the month?

Travis:
Yeah. Well, really it was mostly just a continuation of, the secular growth themes that we talked about previous months. But then adding in some trading around positions, tactical trading around a handful of positions.

The Broadcom and Oracle earnings during the month, really went a long ways towards supporting, the thesis behind this AI infrastructure trade at, very much present in our, fund. We did add a few names, during the month, to the portfolio that, fit in our sales, marketing and return on invested capital, criteria.

Robinhood, is a, for instance, in the brokerage space, their expansion into, more crypto trading into prediction markets, really lends itself to strong revenue growth there, didn’t they make some announcement about billions of transactions already executed within that prediction space is just amazing.

Yeah. So there were a handful of specialty comp, firms that were in that space. But Robinhood as a platform company is very easy for them to, implement these same sort of, tools into their existing platform and drives huge leverage for them.

We also added, and Barella in the semiconductor space. They fall in with our robotics theme and that they make the optical, imaging, receivers that would be used in robotics.

We were really pleasantly surprised, with a name that we had added recently, Electronic Arts in the communications, services area, the video game company. They were, they were acquired all cash offer for them. And so we, we took the money and run real quickly.

James:
So when a company like that, a company that we own or that investor owns, when a company is acquired, what happens to that stock?

Travis:
Yeah, it depends. In this case it was an all cash transaction. So if we could have, chosen just to sit and do nothing and accept the cash when the deal was actually consummated, there’s risk that something goes wrong there. But it’s a cash deal, so we took the cash and ran.

If it’s a stock for stock merger, then on the date that the transaction closes, you would actually receive maybe some cash and some stock.

For us, the M.O. is almost always our investment thesis no longer exists. Exit the name, take the money and run it.

Like I said. Yeah, yeah, we sold the stock. We didn’t receive cash from the company. The deal isn’t supposed to close for almost another year. And the team made the decision that we didn’t want to wait the year to get the $210, I think was the cash price. So we took a little less time value of money. Move on. Find another investment.

Absolutely. Interested in, there’s there’s concern. It was in health care, a lot of talk about pricing pressure on on brand name pharma. And so, generics area is something of interest to us on the long side.

James:
How about on the short side of things?

Chris:
So you get, as you probably are well aware of by this time, the fund kind of operates on a three legged strategy. We’ve got the long side, our long book, the Short Side and then our hedging program. So Travis has just gone through the long side. Now turning to the short side.

Yeah that’s good clarification. Thanks, James. So so as markets have generally risen, we have been adding opportunistically, on the short side, in several new names.

But a lot of the names sort of play upon one theme that we’ve talked about before. It’s, credit concerns, particularly with low end consumers. And, and we’ve seen definitely seen signs of that manifesting itself in the auto finance area. And so that is specific portion of consumer credit has been of a particular interest, to us.

We, we, saw the just horrible reception of the StubHub IPO, another widely anticipated IPO. And it it really just resonated, the concerns we have with the event ticketing industry in general, which has been under scrutiny by the federal government, for a while and continues to be and we’re seeing more states get involved. And this is directly pointed at, the likes of, Live Nation and their Ticketmaster subsidiary.

And that, that that’s really it. On the short side.

James:
Okay. Very good. And then how about the hedging program in in real quick way to sum up what is what is the purpose of a hedging program. That’s kind of in the name.

Charles:
Yeah. So for us, our edge is as active manager stock pickers. And so we try and add value where we can. And we believe we do that through the stock selection process. But what we can’t control is the overall risk of the market. So we try we put together we spend a tremendous amount of time and effort. We should do a whole show on that.

How we built the a hedge, but very capital efficient means of doing that via the options market that, allows, if all goes well, the benefit of the stock selection process to flow through to the investor this month.

As Chris had mentioned earlier, being a pivotal month regarding Federal Reserve interest rate policy, markets have done very well seasonally, very weak period. We overheads we did we overheads. And that’s a decision that we made consciously. And the thought was that in the event that there is some sort of a hiccup in the market, we wanted to make sure that the downside is very well protected, didn’t happen.

And so as a result, the hedge turned out to be a bit of a drag on overall performance. But if the worst thing you can say is that this terrible thing didn’t happen, then that’s not too bad of a month.

I would always rather have a conversation with somebody that describes why I didn’t make as much money for it as possible, as opposed to having to explain myself what we did that was so stupid that we really did something down.

And and at the time that the fund was outperforming the S&P 500 and its peers year to date. And even with the the drag on the hedge for September, we still don’t know. That’s about.

James:
Absolutely. All right. Thank you very much Charles. And so with all of that said so how did how did things play out.

Chris:
Yeah. So there was a whole lot of news stories and a lot of nothing in volatility in the overall market.

So, historically, you know, the S&P 500 had, one of its comments months ever. It did not have a move up or down more than 1% at all during the month, which I guess hasn’t happened in decades. So this calm and, realized volatility actually hurt the hedging program that we did.

The fed resumed its interest rate cuts in September. And with the weakness in the labor markets, the market, has set up for, I guess, four more cuts in anticipation over the next 12 months.

The date overall, it’s kind of been a mixed bag. GDP numbers are better on the back of eye spending, but the labor markets and, the low end consumers weaker. So, you know, things are net net. I won’t call them Goldilocks, but they’re good enough overall in the market.

There was some decent news, as Charles said led by Oracle and Broadcom. But the earnings really probably wasn’t the big event. It was it was more the announcements during that those quarters about some huge massive AI spending by chat GPT owner OpenAI and what that means for capital investment over the next one, three and five years.

So those stocks exploded higher, during September, which is usually a very sleepy month, usually down, actually.

So, that kind of it helped us on the single stock side because we own a lot of AI, beneficiaries. But it did hurt us on the, hedging side.

A lot of speculative commodity names actually soared during the month. Along with gold prices. The market had its best September in 15 years, and I think the second best the last 27 years.

The fund was up a little over 3%, did lag the S&P 500 by about a half a percent on the month. But we’re doing better than the S&P 500 still a year today.

We’re a growth stock fund. Growth stocks have been working. They had a very good September. Behind the scenes, if you look beyond the hedging program, our single stock selection I think was up over 6.5%. I think that was the number someplace in there.

So that was it was a great month for our stock selection and sector allocation. So, you know, at the heart, this is a growth fund with hedges and shorts. We do on some juice here as, as Charles likes to say, emerging, growth stocks in the, quantum computing. There you go. Quantum computing area.

We don’t own a lot of real asset names, so we do own a gold stock. We don’t do we do own a material stock or two. We don’t own a lot of the real speculative ones that have no revenue. Haven’t even begun mining. And those were up, you know, 200, 300, 500% during September.

So, people ask us sometimes, why don’t you own cryptocurrency or why don’t you own a bunch of material stocks and things like that? And it’s like, well, it’s doesn’t really fit within our our what our focus is. Right? We need we’re looking at productive assets. We need to put a pencil to paper and look at sales margins, return on invested capital. You know, that’s that’s what our specialty is. So we try not to we don’t venture too far out of the box there.

Right? I mean, it’s it’s easy to find a stock that’s gone up tens, hundreds of percent over any given time period. But unless you have a defined strategy for getting you in and out of those names, I mean, you’re going to blow yourself up at some point, which is obviously not something we’re willing to agree to. And we always refer to that as just being process driven investors.

Exactly, exactly.

On the single position area, had a great month with, year to date winners kind of leading still in September, which is a little unusual. The optical and quantum computing space, had some big moves. I space, we own a optical company, Siena, which has been around since the com days. It was up over 66 0% during the month and added about half a percent to the fund.

So that was a big winner. Vertov is another AI infrastructure year play. It was up over 26% in September. It added over I think 35 basis points on the month outside the AI stocks.

There was a domestic, brokerage company that Charles mentioned, Robinhood. That was up and contributed a lot to the fund. I think it was up 30% just in four weeks during the month. So that really helps owning something like that.

And then we own one of those, investable stocks, in the discretionary AI, foreign AI space, Alibaba. It gained almost 35% on the month. And it also helped over 40 basis points on the month.

So, on the negative side, you know, a lot of the sectors that have hurt throughout the year hurt again in September, largely the software area has been a laggard. It was a laggard, in third quarter September, including, so that was that hurt us some in the fund then single stock names, low end consumer and a lot of restaurant stocks also suffered.

So I hate to say it, but we got Winged in Wingstop. It was down over 20% I think on the month. And it was a drag of, someplace in that 20 to 30 basis points.

And you can see that a lot of tax loss selling by some funds have been going on. And some of these names at the end of September when what is tax loss selling and how does that play into like this period of time?

A lot of large institutional investors who run funds, tax years, in fiscal years and the end of September, end of October, then it takes some 2 to 3 months to square their books, get the dividends, that they’re going to distribute onto their shareholders in line. So then they can pay them out in mid to late December for individuals who tax years and pretty much at the end of the year.

James:
All right. Well, thank you very much, Chris. And thank you again for joining us in this episode of The long and the short of it, we, as always, will continue to focus on executing our highest conviction names, staying nimble and looking to continue to outperform our benchmark and our peers.

For more information on and investing with us in ETF checks, you can go to Oak Harvest funds.com link in the description.

Thanks again for watching. Thank you Charles. Thank you Chris, and we’ll see you in the next video.

Mentioned Holdings 9-30-2025 and Top 10

OHFGX June 30 2025 Trailing Performance (1)

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