EHLS: Strong November Gains

Outperforming the S&P 500 by a wide margin

Explore our newly released fact sheet for a closer look at the November month-end portfolio highlights.

View November Fact Sheet

Growth of $10,000 since Inception

The fund's inception was 4/2/2024. The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when sold or redeemed, may be worth more or less than their original cost, and current performance may be lower or higher than the performance quoted. For standardized performance, visit https://www.evenherd.com/ehls.

Looking Back

The Even Herd Long/Short ETF (EHLS) delivered a strong return of 9.83% in November, significantly outperforming the S&P 500, which gained 5.87%. This was achieved despite maintaining a large short portfolio ending the month with only slightly over 66% net equity exposure. This performance was driven by financials and indistrials, which were overweight and rallied sharply following the election results, surprising many market participants who believed the outcomes were already priced in.

Healthcare experienced a sharp relative decline, likely due to concerns over potential policy changes under the new administration. Basic Materials and Real Estate also saw relative declines within our system. The Energy sector showed mixed results. However, midstream companies like TRGP, held by the fund, demonstrated strong outperformance, while solar-related companies continued their downward trend. Our system flagged weakness in solar as early as mid-2022, and this trend persists. If subsidies are removed as proposed, the solar industry could face significant challenges.

Within the Energy sector, Texas Pacific Land Corporation (TPL), an E&P long position, posted impressive gains and was added to the S&P 500. Uranium also showed renewed strength, with Cameco Corporation (CCJ) benefiting from improving sentiment after developments like Microsoft's and Constellation Energy's (CEG, also held in the fund) announcement. In contrast, Basic Materials was the hardest-hit sector in November, with gold, silver, and copper companies showing notable declines on a month-over-month basis.

We're pleased to observed so much upside capture while maintaing such a large short portfolio in a month with strong overall equity performance. The fund’s performance underscores its ability to adapt to shifting market dynamics, leveraging relative momentum and proprietary insights to navigate opportunities and challenges across sectors.

Looking Forward

Heading into December, a month that is often seasonally strong, particularly in election years, the fund intends to hold a net equity exposure around its current levels. This exposure is considered average and provides some reassurance in not being overly long after November's strong performance. Financials and Industrials are likely to remain overweight positions for December with Technology also gaining steam, barring any sharp market moves.

Regional Banks have shown remarkable strength, likely driven by market anticipation of improved margins as the yield curve steepens. Financials overall have the largest spread over other sectors in our system, making it unlikely this leadership will change before year-end. Most other sectors remain tightly grouped, with Industrials and Technology maintaining a slight edge. The fund is expected to adjust exposure dynamically, aligning with emerging trends to ensure it remains positioned in sectors that demonstrate sustained outperformance.

While markets seem overextended and jubliant, we remain focused on the underlying trends, which currently seem poised to carry over into the new year. For the short side of the portfolio, no sector stands out in underperforming, so the portfolio will likely see some movement in underweighted sectors as trends finally emerge. As of month-end, the fund was most only net short the Consumer Defensive sector. Basic Materials and Energy continue to underperform, but this could easily shift throughout the remainder of the year given the current tightness of sectors. We'll continue monitoring this to underweight secetors that show potential to break out to the downside.