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. Performance current to the most recent month-end can be obtained by calling (833) 417-0090. The gross expense ratio for the fund is 1.27%.
View LBAY standardized performance here.
The Fund’s NAV is the sum of all its assets less any liabilities, divided by the number of shares outstanding. The market price is the most recent price at which the Fund was traded.
*The S&P 500 Index includes 500 leading companies and covers approximately 80% of the available market capitalization. The S&P 500 Dividend Yield is the estimated sum of all dividends paid by the index’s stocks in the last 12 months, divided by the index market capitalization as reported by the S&P. The dividend yield does not represent or predict the performance of the Fund. Indexes are unmanaged and it is not possible to invest in an index. The 30-day SEC yield is calculated with a standardized formula mandated by the SEC. The formula is based on maximum offering price per share and does not reflect waivers in effect. The 30-day SEC yield is calculated from the 30 days ending on the last day of the previous month. This figure reflects income less expenses and approximates the yield an investor would receive in a 12-month period if a fund continues earning the same rate for the rest of the year. View the 30-day SEC yield here. The US Treasury yield reflects the interest rate the US government could expect to pay to borrow money for different periods of time.
YIELDS RISE, METALS AND MINERS RALLY
Geopolitics and AI financing remained in focus, but long duration bond yields stole investors’ attention in August. The 30-year Treasury yield rose to 5.32% during the month, its highest level in 19 years1 which led Treasury Secretary Scott Bessent to announce the U.S. Treasury would double the size of its bond repurchases, totaling approximately $4 billion.
“Governments defending prices against fundamentals always lose. The only variable is how much they spend before conceding. The U.S. shouldn’t put itself on the wrong side of that trade, not with the most important price in the world, and not when that price is trying to say the one thing Washington most needs to hear: Let the bond market speak.” —Stanley Druckenmiller, “Let the Bond Market Speak,” The Wall Street Journal, August 25, 20262
The news initially pushed 30-year yields lower before markets shrugged it off, and long-dated yields rebounded. The prices of metals, including gold, copper and silver rose as investors interpreted Bessent’s move as another sign of loose policy and an inflationary threat. The NYSE Arca Gold Miners Index climbed 33% in August. Semiconductor industry names saw choppy trading through much of the month but received a brief lift after Nvidia delivered a strong earnings report. Momentum stocks were broadly subdued for a second straight month with the MSCI USA Momentum Index finishing flat in August.
The August metals rally benefited our miner positions, including Hecla Mining (HL), Barrick Mining (B), Newmont (NEM) and Alamos Gold (AGI), which significantly contributed to LBAY’s performance for the month. We noted in last month’s July Portfolio Review that we thought the miners offered the most opportunity after their brief pull-back, and we selectively added to our positions at that time. Long positions in the energy, healthcare, and financials sectors also contributed. Top contributing individual short positions included AppLovin (APP), Dycom Industries (DY), Western Digital (WDC), and Chipotle Mexican Grill (CMG). Shorts in Palantir Technologies (PLTR) and Carvana (CVNA) detracted.
We are optimistic about the investment opportunities that we are finding, but we are cautious of the excesses we see in markets, and we are managing risk accordingly. While the popular narrative says the economy is healthy, we are very cognizant that a significant portion of GDP has been driven by AI investment and asset price appreciation. We are closely watching AI financing as the supporting demand relies heavily on just a few players and the outcomes of upcoming IPOs. History has also shown us to expect volatility heading into the midterm elections.
TOP CONTRIBUTOR
Becton, Dickinson and Company (BDX). Following its spin-off and Reverse Morris Trust transaction with Waters Corporation in February 2026, BDX is now a pure-play medical technology company spanning vascular access and blood collection devices, patient monitoring, drug delivery systems, and interventional solutions. The stock rallied 13.6% in August and traded near a 12-month high as investor sentiment was lifted by a strong quarterly earnings report which beat expectations for earnings per share and revenue. Our thesis that the new BDX is a more focused MedTech company has shown strong early momentum. We remain long BDX, but we did trim the position as it re-rated significantly higher in August.
TOP DETRACTOR
Honeywell Aerospace (HONA). The recently spun-off stock faced significant selling pressure during the month after a disappointing earnings report. The company missed consensus expectations on earnings per share and lowered its full-year guidance, citing supply chain constraints and slower-than-expected production ramp-up. While we were surprised by the earnings report, we note that its order backlog showed that demand is strong, and the stock trades at a discount relative to other aerospace names. We maintain our long position and added modestly on weakness.
NOTABLE BUY
Franklin Templeton (BEN). We initiated a position in this asset manager as the firm’s strategic improvement initiatives have become evident in its operating performance. Franklin Templeton’s most recent quarterly results3 showed margin expansion and positive long-term flows across all asset classes and regions. The company completed $348 million in share repurchases during the quarter, and its stock carries a 3.9% dividend yield. As industry peers have struggled with asset outflows and fee compression, we are optimistic that Franklin has found its footing, and the business appears to be poised for continued success.
NOTABLE SELL
Phillips 66 (PSX). We decided to take profits and exit Phillips 66 at a healthy gain. The position has contributed significantly to the portfolio’s performance this year, and we felt our thesis has largely played out. Considering the stock’s recent price appreciation and stabilizing oil prices, we believe further upside is limited.
SHORT BOOK ACTIVITY
We covered our short exposure to cryptocurrency-related businesses prior to August’s Bitcoin rally, closing short positions in Strategy (MSTR), Robinhood Markets (HOOD), and Bitmine Immersion Technologies (BMNR). We also covered short positions in United Airlines (UAL) and Dycom Industries (DY). We initiated new shorts in Valero Energy (VLO) and various consumer-related names discussed below.
POSITIONING THEMES
The current investing backdrop leads us to prefer tangible businesses and hard assets. Key portfolio exposures falling into this category include our materials and mining industry holdings and our position in Vail Resorts (MTN), which we have previously discussed. As one of the larger publicly traded water utilities in the U.S., Essential Utilities (WTRG) is another top holding with these characteristics. The company is in the process of being acquired in an all-stock deal by American Water Works (AWK), the largest water utility in the U.S. The deal is expected to close in early 2027. In the meantime, Essential Utilities stock carries a 3.5% dividend yield and trades at a slight discount to the deal price. We expect to maintain a long position in AWK after the deal closes.
We have concerns about consumer strength heading into the holiday season. It is commonly known that lower-income consumers have felt persistent pressures due to inflation and higher fuel prices. We think spending by higher-income households has been supported by the perceived wealth effect from elevated asset prices, and periods of market volatility could weigh on confidence among these segments. During August, we reduced our consumer exposure by selling Home Depot (HD) and initiating short positions in SharkNinja (SN) and CAVA Group (CAVA). We also continue to maintain a short position in Life Time Group (LTH).