Our Latest Quarterly update
Here is our short quarterly recap for the Hedge Fund my team and I manage. It was published at our firm a couple of weeks back. Much like many funds, we enjoyed a very profitable quarter.
QF Capital, LLC April 2019
The QF Yield Fund 1st Quarter Update 2019
Dear Partner:
The QF Yield Fund was up 12.8% net of all fees and expenses in the first quarter. A dramatic rally in dividend stocks, and equities in general, led to large and mostly unrealized gains. As always with our high-yielding Fund, significant dividend income was also collected during the quarter.
At 12/31/18 our portfolio of dividend securities was yielding 11.4%. After the rally of Q1, the yield is now 9.7%. Since inception in 2009, our strategy has returned slightly less than net 10%. Even after the sizeable rally, we still pilot a very diversified portfolio that today yields close to 10% (over 80 holdings, largest position is 1.64% of the portfolio). We are confident these higher yields will continue to accrue. Yours truly has a sizeable family and personal investment in the Fund and have no plans to make any changes.
During the 4th quarter of 2018, the serious decline in equity markets allowed us to buy a number of large cap well-established stocks with large yields (ex. IBM and General Mills). In our opinion, these stocks are now expensive, but my team and I are still able to find smaller companies more than reasonably priced and with significant dividends that are paid from existing cash flows. Despite the overall market rise, there are still bargains to be found.
Our goal is to find undervalued stocks that are paying large dividends from existing cash flows. Many of our current holdings are trading beneath tangible book value. Our current portfolio has a Beta of approximately 0.80, indicating that it is about 80% as volatile as the market. There undoubtedly will be periods of rising and falling valuations in dividend paying stocks and our portfolio will move accordingly. But the constant backdrop should be the repeatable collection of sizeable dividend income.
Steve Massocca