Q3 2024 Letter - Life Goes On

The U.S market rally broadened during Q3 with REITs and Utilitity sectors leading the way. Inflation continues to cool, economic data remains positive, and the Fed remains dovish.

Quarterly Performance

Seaside Private Capital (SPC) continues to follow-up on our strong performance through the year with the Fund up 36.43% YTD vs. the S&P 500 at 22.08%.

Life Goes On

SPC had another strong quarter, outperforming the S&P 500 TR by 2.41%. SPC is now outperforming the S&P 500 TR by 14.35% YTD. Our outperformance for the quarter derived primarily from the rebound in our REIT holdings, which account for a significant portion of our portfolio.

There isn't much to report for Q3 except that as we enter Q4, we are looking to rip the bandaid off on some of our underperformers. I have mentioned over the past few quarterly letters that we are slowly repositioning the portfolio from "classic value" to "high quality compounders". Given that we've taken some pretty hefty profits this year, it may be an opportune time to tax-loss harvest some of the underperformers. This will not only free up capital to deploy, but it will also free up more time and create less headaches.

As I write this letter, Donald Trump has officially been elected as the 47th president of the United States. I am completely agnostic when it comes to politics. History has shown that letting politics dictate your investment decisions is highly detrimental to your investment returns (see below).

Source: Bespoke Investment Group

Regardless of who you support, we should all make objective decisions and take the long-term view that America is more than any one individual. Each president will enact their individual policies that may have a social and economic impact on the margin, but our political system has checks and balances that limits their impact. So at the end of the day life goes on and regardless of who's in office, I would never bet against America.

Portfolio Update

We made no new purchases during the quarter. We did exit one investment the day after the presidential election as markets soared, but we'll save that for Q4. We currently have ~16% of our portfolio in cash. As we continue to tax loss harvest some of our underperformers, we expect our cash positiong to increase by year-end.

Concluding Remarks

As we enter the final months of the year, we remain cautiously optimistic on the markets and look to continue building our cash balances. The economic data continues to show positive signs while inflation continues to cool and the Federal Reserve continues to be accommodative and may lower rates again in the near future. The markets have also reacted remarkably positive upon Donald Trump's presidential election win with the prospect of lower corporate tax rates on the horizon. This is essentially a goldilocks scenario for the markets. A cautious counterbalance is that valuations are high and we will remain disciplined in deploying capital.

Sincerely,

Daniel Fas

Founder & CIO at Seaside Private Capital