| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 0% | 4.4% |
LVS Advisory's Defensive Portfolio gained 4.4% in the first nine months of 2023, outperforming its high-yield bond benchmark. Manager Luis Sanchez argues that despite the S&P 500's 14% gain, most financial assets remain in a bear market, with small caps down 3% and bonds down 2%. The market's performance is driven entirely by the Magnificent 7 technology stocks benefiting from AI investments, while the average S&P 500 stock is flat. This concentration creates both opportunity and risk. The portfolio benefited from an event-driven trade in Seneca Foods, purchasing shares at $36.50 after index deletion forced selling, then selling at $51 for a 40% gain within a month. The manager views current conditions as attractive for long-term investors, emphasizing buying assets on sale rather than timing economic cycles. Key risks include market concentration in large tech stocks and persistent inflation pressures on corporate margins. The strategy focuses on identifying undervalued opportunities created by technical selling and market dislocations.
Most financial assets remain in a bear market despite S&P 500 gains, creating attractive entry points for value-oriented long-term investors willing to buy quality assets at discounted prices.
The manager believes we are still in a bear market for most financial assets, which creates attractive entry points for long-term investors. He emphasizes that many stocks are attractive today relative to what they will earn through the cycle, and buying these assets when they are on sale will result in satisfactory investment returns without the need to overthink timing.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Oct 18 2023 | 2023 Q3 | SENEA | Bear Market, Concentration, Index, small cap, technology, value | SENEA | Despite S&P 500 gains, most assets remain in a bear market driven by Magnificent 7 tech concentration. LVS Defensive gained 4.4% YTD, capitalizing on event-driven opportunities like Seneca Foods' 40% gain after index deletion. Manager sees attractive entry points for long-term value investors willing to buy quality assets at discounted prices rather than timing cycles. |
| Jul 18 2023 | 2023 Q2 | ADBE, DCP, GOGO, IBKR, MA, NFLX, SSNC | Concentration, Event Driven, Merger Arbitrage, risk management, value |
DCP ADMA ADBE GOGO ACGL|CHH|FDS|GWRE|IBKR|IDXX|MTN|SPOT|TSLA |
LVS Advisory employs merger arbitrage and event-driven strategies, successfully capitalizing on DCP Midstream's acquisition for 19% returns. The Growth Portfolio concentrated to 13 positions with strict 10% position limits, exiting Mastercard and Adobe while adding to Gogo and Interactive Brokers. Focus on asymmetric opportunities with disciplined risk management. |
| Apr 13 2023 | 2023 Q1 | AVID, BJ, GOGO, IBKR, JYNT, NFLX, SCHW, SSNC | Banking, CVR, Event-Driven, interest rates, M&A, Options, Streaming |
AVID SCHW ACGL|CHH|FDS|GWRE|IBKR|IDXX|MTN|SPOT|TSLA AAPL|MSFT|NFLX|NVDA|UNH BJ JYNT GOGO |
Event-driven strategy targeting M&A arbitrage and mispriced options generated 0.6% returns in Q1 despite banking sector volatility. Portfolio repositioned away from deposit-sensitive Charles Schwab toward Interactive Brokers and Netflix. Abiomed CVR position offers potential 34x upside from milestone achievements. Manager expects Fed pivot toward rate cuts as inflation concerns give way to hard landing risks. |
| Apr 1 2023 | 2022 Q4 | BJ, BLK, GOOGL | - | - | |
| Oct 11 2022 | 2022 Q3 | AVID, IBKR, NFLX, SCHW, SSNC, XPEL | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2023 Q3 |
AILarge technology companies have benefited from increased investments in artificial intelligence, with investors paying higher valuation multiples for perceived quality and safety of these select companies. AI investments are driving outperformance of the Magnificent 7 tech stocks. |
Artificial Intelligence Technology Valuation Investment Quality |
Small CapsSmall cap stocks are underperforming with the S&P 600 Small Cap Index down 3% for the year while the S&P 500 is up 14%. The manager views this as creating attractive entry points for long-term investors in smaller companies. |
Small Cap Underperformance Value Entry Point Long-term | |
ValueThe manager emphasizes buying assets when they are on sale, citing Seneca Foods trading at 4x cash flow and less than 1/3 of book value as an extremely attractive valuation. Many stocks are attractive relative to what they will earn through the cycle. |
Valuation Cash Flow Book Value Cycle Attractive | |
| 2023 Q2 |
Capital MarketsThe manager discusses merger arbitrage strategies and event-driven investments as alternatives to traditional bond markets. Focus on non-binding acquisition offers and their success rates, with detailed analysis of deal structures and negotiation dynamics. |
Merger Arbitrage Event Driven Acquisition Deal Structure Risk Arbitrage |
| 2023 Q1 |
Biopharma M&AThe letter discusses multiple pharmaceutical M&A deals including Pfizer's acquisition of Biohaven and Johnson & Johnson's acquisition of Abiomed. The manager focuses on event-driven investing in these transactions, particularly highlighting the embedded options and contingent value rights that create additional upside potential beyond the base deal consideration. |
CVR Milestones Spin-offs Deal arbitrage Regulatory risk |
StreamingNetflix is positioned as the winner of the streaming wars, with the manager noting that most major streaming platforms have announced plans to contain spending growth. The investment thesis centers on Netflix's ability to better monetize its account base through advertising tiers and paid sharing initiatives while holding expenses flat. |
Content spending Monetization Advertising tier Paid sharing Market share | |
Capital MarketsThe banking crisis in March 2023 significantly impacted the manager's positioning, leading to the exit of Charles Schwab due to liquidity concerns and deposit flight. Interactive Brokers is favored for its superior business model that shares upside from higher rates while taking virtually zero balance sheet risk. |
Banking crisis Deposit flight Interest rates Balance sheet risk Market share |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 18, 2023 | Fund Letters | LVS Advisory - Defensive | SENEA | Seneca Foods Corporation | Consumer Staples | Packaged Foods & Meats | Bull | NASDAQ | Canned Vegetables, consumer packaged goods, Event-driven, Forced Selling, Index deletion, LIFO accounting, Technical trade, Value | Login |
| Jul 18, 2023 | Fund Letters | LVS Advisory - Defensive | DCP | DCP Midstream | Energy | Oil & Gas Storage & Transportation | Bull | NYSE | Event-driven, Joint venture, Majority Squeeze-Out, Merger Arbitrage, midstream energy, Natural gas liquids, pipeline, strategic asset | Login |
| Jul 18, 2023 | Fund Letters | LVS Advisory - Defensive | ADMA | Mastercard | Financials | Data Processing & Outsourced Services | Neutral | NYSE | consumer spending, International Travel, Market dislocation, Opportunity-Cost, Payments, Reopening Trade, Valuation Discipline | Login |
| Jul 18, 2023 | Fund Letters | LVS Advisory - Defensive | ADBE | Adobe | Information Technology | Application Software | Bear | NASDAQ | Artificial Intelligence, capital allocation, M&A, Management Quality, shareholder dilution, Software, strategic acquisition, valuation multiple | Login |
| Jul 18, 2023 | Fund Letters | LVS Advisory - Defensive | GOGO | Gogo | Communication Services | Wireless Telecommunication Services | Bull | NASDAQ | Aviation, Business Aviation, Conviction Buying, In-Flight Connectivity, market inefficiency, Opportunistic Entry, Technical Decline | Login |
| Jul 18, 2023 | Fund Letters | LVS Advisory - Defensive | ACGL|CHH|FDS|GWRE|IBKR|IDXX|MTN|SPOT|TSLA | Interactive Brokers | Financials | Investment Banking & Brokerage | Bull | NASDAQ | Automated Trading, Electronic Brokerage, Interest rates, KPI Metrics, Margin Loans, net interest income, Rate Environment, trading volume | Login |
| Apr 13, 2023 | Fund Letters | LVS Advisory - Defensive | ACGL|CHH|FDS|GWRE|IBKR|IDXX|MTN|SPOT|TSLA | Interactive Brokers Group Inc | Financials | Investment Banking & Brokerage | Bull | NASDAQ | Balance Sheet Safety, Commission Revenue, Competitive Advantage, Electronic Brokerage, global markets, Interest Rate Upside, market share gains | Login |
| Apr 13, 2023 | Fund Letters | LVS Advisory - Defensive | AAPL|MSFT|NFLX|NVDA|UNH | Netflix Inc | Communication Services | Entertainment | Bull | NASDAQ | Advertising Tier, Content, monetization, Paid Sharing, Revenue Growth, Streaming, Subscription | Login |
| Apr 13, 2023 | Fund Letters | LVS Advisory - Defensive | BJ | BJ's Wholesale Club Holdings Inc | Consumer Staples | Hypermarkets & Super Centers | Bull | NYSE | consumer staples, East Coast, Fee Increase, grocery, Membership, same-store sales, Warehouse club | Login |
| Apr 13, 2023 | Fund Letters | LVS Advisory - Defensive | JYNT | The Joint Corp | Health Care | Health Care Services | Bull | NASDAQ | Alternative Healthcare, Chiropractic, Franchising, growth, Healthcare services, Quality Business | Login |
| Apr 13, 2023 | Fund Letters | LVS Advisory - Defensive | GOGO | Gogo Inc | Communication Services | Wireless Telecommunication Services | Bull | NASDAQ | 5G, Aviation Connectivity, business jets, high margins, Monopoly, Penetration Growth, Satellite, subscription revenue | Login |
| Apr 13, 2023 | Fund Letters | LVS Advisory - Defensive | AVID | Avid Technology Inc | Information Technology | Technology Hardware, Storage & Peripherals | Neutral | NASDAQ | Audio Production, Content Creation, Entertainment Technology, Media Technology, Professional Software, Streaming, Video Production | Login |
| Apr 13, 2023 | Fund Letters | LVS Advisory - Defensive | SCHW | The Charles Schwab Corporation | Financials | Investment Banking & Brokerage | Bear | NYSE | Banking Crisis, Brokerage, capital return, Deposit Flight, interest rate sensitivity, liquidity risk, wealth management | Login |
| TICKER | COMMENTARY |
|---|---|
| SENEA | Seneca Foods is a consumer-packaged goods company that sells canned vegetables in the US. The opportunity to buy the stock came when it was removed from the S&P 600 index at the end of June. The stock declined by over 25% within a few weeks as many funds that track the S&P 600 became forced sellers. In addition to the index deletion, the company took a massive LIFO accounting charge obscuring the company's reported earnings. After adjusting for this non-cash accounting charge, Seneca's stock was trading for just 4x cash flow and less than 1/3 of its book value. I viewed this as an extremely attractive valuation for an otherwise staid business. We purchased shares of SENEA stock in July for approximately $36.50 per share. Other participants in the market started to catch on to the value offered by Seneca. The company reported solid financial results in August and the stock quickly caught a bid. Within a month, the stock rallied 40% and we were able to sell our shares in August at a price of around $51 per share. Seneca isn't a bad business, but it isn't a super high-quality business either; therefore, the plan was always to sell the stock once it appreciated back to its fair value range. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||
