Monthly Newsletter - June 2024

To begin, please join me in wishing Senet Capital Enhanced Equity Fund, LP, a happy birthday!? The Fund has reached its first major milestone and celebrated turning one year old this past weekend on June 2, 2024.?

?

To be fair, I have no human children of my own, but I would imagine that the emotions experienced during this first year of life are very similar: late nights, early mornings, alternating periods of joy and anguish, and innumerable tantrums.? I doubt that any parents will openly admit to questioning their life choices, but now that I have a one-year-old of my own, I am certain that the feeling is more common than we know.

?

Senet Capital Enhanced Equity Fund, LP gained 7.91% net of all fees and expenses in May.? The Fund generated net returns of over 31% during its first year, compared with gains in the S&P 500 of 24%.? Year to date, the Fund is up over 15%, with the S&P 500 up slightly over 10% during the same period. ?

?

The Fund is currently 151% long equities, while being short calls on the SPY ETF at multiple strike prices.? The Fund also holds put options set to expire in July 2024.? We will opportunistically add to all of our equity and derivative positions as the month progresses. ?

?

While gains have been strong, volatility has also been more prevalent in equities this year, which has been a net positive for Senet Capital Management.? We continue to adhere to our systematic approach of mitigating risk through the use of covered calls and protective puts, and the short-term volatility has allowed the Fund to lock in gains in months where the market has appreciated, while being able to buy back some or all of our underlying shares during subsequent periods of price weakness.

?

A strong start for U.S. equities in 2024 suggests that we will have above average performance for the remainder of the year, according to data from Goldman Sachs.? Going back to 1950, there have been 21 periods where the S&P 500 was up more than 10% by the end of May.? Out of these, the only two years where the S&P 500 ended the rest of the year down were 1986 and 1987.? The index has gained in the second half of the year the remaining 90% of the time.?

?

While this is certainly no guarantee of success, our belief in long-term averages and the Fund’s asymmetric upside versus downside capture gives us the confidence we need to stay invested, even if there is risk of potential underperformance in the short-term.? This year’s economic headwinds, geopolitical uncertainty, and media headline risks may seem more dire than in previous years, but pick a year, any year, and we will be happy to share that year’s market-tanking crisis of the day.

?

As always, if you are not already a Limited Partner of ours and you find that our approach to investing is something that your current portfolio may be lacking, we encourage you to reach out to us and learn more about what makes us unique.? We take pride in being able to articulate our investment thesis and portfolio positions concisely and plainly.? After all, what better skill to have when dealing with a one-year-old.?

?

Happy hunting,

David Jeffress and Jonathan Berkowitz