December 2025: Episode 6

James McFarland (00:00.684)
Hey everyone, welcome to the December 2025 episode of The Long and the Short of It, where the investment team at Oak Harvest recaps the last month for Oak Harvest’s long short hedged equity mutual fund, OHFGX. I am James McFarland here with Chris Parris and Charles Scavone. The three of us make up three of the five team members running the OHFGX fund. And for additional information on OHFGX, check out oakharvestfunds.com. You can find the link in the description below.

Now, as usual, before we get to the meat of today’s video, let’s go over the return data for OHFGX as of the end of December as presented on Morningstar’s website. The NAV, the net asset value for OHFGX hit a new all time high in the early fourth quarter, but in the December a bit softer. For 2025, as of the end of the year, OHFGX gained 14.44%, slightly under the S &P 500, which came in at 17.5%.

Now with all that said, let’s turn to the three questions we look at every month. First, what was the OHFGX portfolio management team thinking heading into the month? Second, what were the key investment actions that we took during the month? And finally, how did things play out? So let’s jump into it. Chris, what were we thinking heading into December?

Chris Perras (01:17.88)
Thanks, James. yeah, heading into December, we were thinking that December is historically a month, but almost all the gains for the month usually come in the second half, literally after Christmas for the most part. So we didn’t really have any reason to think that this December was going to be any different. So the market had spent most of the quarter, most of October and November rotating away from the year to date winners, which had been growth stocks. And it was rotating away from AI and into commodities, healthcare, and a few other bias to the value factor that kind of works against us. So that rotation usually lasts two to three months as managers try to lock in gains of previously strong groups and rotate into some laggards. We didn’t want to play that game that’s not really our game or a growth manager. So we stuck to our guns. That was what was going on on the stock side.

The bond side, we thought the Fed should cut rates in December. I think like most people did, they did. The job market’s kind of weakening, so we think they actually should be moving a little faster, but that’s just us.

James McFarland (02:27.406)
Well, thank you very much, Chris. So then we turn to our second question. Looking at December, what were some of the key investment actions we took in the fund?

Charles Scavone (02:35.96)
Yeah, well, thanks, James. Just piggybacking upon what Chris was talking about, it really was a tough month and a tough quarter for growth investors. And I just want to reemphasize that we are growth investors, and that is sort of the attribute we try and express in the portfolios that we run, and particularly in our fund. So it creates a challenge. It is very frustrating from the fund manager’s perspective, but we don’t just sit idly and just watch it happen. We continued what we talked about a little bit before, broadening out our exposure primarily in economically sensitive sectors.

In industrials, for example, we’ve found another handful of good opportunities in aerospace and defense where backlogs continue to build for commercial aviation and we’re seeing a pickup in some of the types of defense spending. And so we’ve been pretty active there. Also in industrial metals. Previously, year to date, we had been very successful in some of the precious metals. And to Chris’s point again, we saw some weakness in those names, right? But it is as investors rotate, as we did too, in some of the industrial metals to try and get engaged in economically sensitive sectors. And we think that’s going to work for us going forward.

Within health care, MedTech had been a big laggard in the first part of the year. And so we see some opportunities within MedTech, particularly in this cardiac rhythm management area, and particularly ahead of the JPMorgan Health Care Conference, where a lot of these companies come out and give investors a very good idea of what they’re doing. A lot of them pre-announce really good earnings. gave us an opportunity to take advantage of what was going on in that space. In technology, though, some bread and butter of what we’ve been doing so far this year, we continue to see opportunities in, I’m not calling it AI anymore, I’m calling it accelerated computing, right? Because everything’s getting labeled AI, right?

And so it has more to do with this idea of this accelerated computing and the requirements that are necessary to get you there. And so we can continue to place emphasis on investing in companies that are in the way of this massive amount of spending that’s going on. So we don’t need to pick the winners and losers of a particular element of AI. We want to be more involved in the picks and shovels company. So that’s led us back to some names that is becoming apparent there, the software winners, right, we had talked about that before, where there’s been some losers or fear.

A lot of that’s almost, mostly been sentiment driven in a lot of respects. And as you get back to the fundamentals, we’re finding some winners in software. And then more exposure in semiconductor and semiconductor test equipment, test and measurement equipment, and capital equipment, where we just see that there’s a big cycle occurring there.

That’s really the highlights on the long side. OK. Yeah, on the short side, not a whole lot new, really. And that happens. The same themes and cross currents that we’ve been talking about or where we’ve been focused. We tend to trade around some of these short positions. The stocks go up. We may short more. Stocks go down. We may cover. One thing that was interesting in the month, one of our larger short positions got added to the S &P 500.

James McFarland (05:58.072)
How about on the short side of things?

Charles Scavone (06:24.652)
And you can’t really forecast something like that. So what do you do? Well, there was a big price spike in the stock. We shorted more stock. And then sure enough, as the month played along, all of that sort of premium, if you will, bleeds out of the name. And we covered it right back at the level it was before the announcement. it just took advantage of sort of a structural issue within the market provided an opportunity for us to trade around the position.

Chris Perras (06:56.302)
Yeah, on the short side, the saying goes, know, don’t get sore short more. And, you know, when it gets added to the S &P 500, it can be a tough couple of days because there’s just passive buying that goes against you.

Charles Scavone (07:12.322)
Yeah, there’s nothing you can do about it. yeah, try and take advantage of it. But that’s really it on the short side. And with the market hedge, yeah, it was a tough month for hedging. Hedging was a detractor of return for the fund’s performance. There’s a baseline amount of hedging activity that we make sure that it’s always in place.

James McFarland (07:18.678)
Alright.

Charles Scavone (07:40.16)
And we try and do it in a very thoughtful way whereby it allows us to try and capture most of the upside in the market, but it always makes sure that we have in place something that protects us on the downside should something unforeseen happen. as Chris highlighted to earlier, markets generally trended higher, and volatility just bled out of the market.

And that is sort of the worst case scenario you can have for the type of market hedge, we do. Additionally, it was not a very productive month for a covered call writing strategy to try and offset some of that cost. So no benefit really to our hedging strategy.

Chris Perras (08:23.886)
Yeah, when we carry that hedge, kind of that baseline hedge in months that have lots of holidays and vacation days, it tends to bleed out a lot more just because you’re buying protection for those days, but they don’t trade. they do get priced into the market though. So, you know, with Thanksgiving and late November and then all the holidays in December and early January, it was tough.

James McFarland (08:48.704)
Right, right. Well, continuing with that theme then, so how did the month end up playing out?

Chris Perras (08:53.23)
Yeah, so we got a ton of data from the government since the government had been shut down. The market really didn’t seem to care about it. And as the data came out, it didn’t really move one way or another based on it. Year to date, in 2025, the growth leaders lagged again in December. That was much like it was all of the fourth quarter. The S &P 500 was, I think it was slightly down. But the growth indexes, like the NASDAQ, were down considerably more almost three quarters of a percent.

And up until the last week, they were down even more than that. So that was a major headwind for the fund in December. Breth did expand outside of technology and kind of the prior leadership, as Charles mentioned, industrials, commodities, those had really good December’s, international stocks, which, you know, we don’t have a huge focus there. We tend to get our international exposure through domestic companies that have sales overseas non-tech cyclical stocks, I think they were up like 3%, you know, so way on the other side of just the index returns.

Precious metals, they were ripped in December, you know, I think silver was up 27 % in the month. New all-time high in silver, industrial metals like copper also hit new all-time highs. So within technology, semiconductors and laser optical components did have a pretty good month that helped the fund because we own a number of names there. But given the growth bias of the fund and that factor kind of underperforming in December, it was a tough month. It was a tough month.

James McFarland (10:32.96)
That will take us to the end of another episode of The Long and the Short of It. As always, we will continue to focus on being able to move quickly and effectively and executing our highest conviction ideas and continuing to outperform our benchmark and our peers. Thank you, Charles. Thank you, Chris. And thank you for watching. For more information on investing in OHFGX, check out oakharvestfunds.com. That link will be in the description below. Thanks again for watching, and we’ll see you in the next video.

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