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.
MARKET CURRENTS SHIFTED BEHEATH A SMOOTH SURFACE
July’s headline index performance appeared benign and uneventful on the surface. The S&P 500 ended July nearly unchanged and the NASDAQ declined roughly 3%. Beneath the headlines, momentum securities sold off sharply, as evidenced by the MSCI USA Momentum Index declining 13% in July1. Additionally, AI-related names whipsawed hedge fund strategies and even forced AI-focused hedge fund Situational Awareness to seek a rescue from Citadel. Dispersion widened sharply across sectors and market capitalizations as investors rotated out of expensive technology exposure and into more value-oriented and defensive corners of the market.
Several forces were at work, including renewed conflict in the Middle East and uncertainty ahead of the Fed’s interest rate decision. In our opinion, the more consequential development was growing investor scrutiny of mega-cap technology companies’ accelerating capex plans as demonstrated by the breakdown in correlation within the Magnificent Seven itself. We have repeatedly expressed our concerns about escalating AI-related capex and weakening free cash flows.
LBAY was well-positioned for July’s shifting dynamics. We were pleased with the portfolio’s breadth of winners and its relatively short list of detractors. Both books contributed meaningfully: our longs gained more than 4%, while our shorts added more than 2%. Long exposure in Energy, Staples, Financials, and Health Care led the way, while CoreWeave, AppLovin, Tesla, Rigetti Computing, and Credo Technology Group were the top individual short contributors.
TOP INDIVIDUAL CONTRIBUTORS FOR JULY 2026
Phillips 66 (PSX). The energy sector caught a bid as renewed conflict in the Middle East pushed oil prices higher, with refining margins drawing additional investor interest. PSX capped a strong month by announcing a $10 billion increase to its share repurchase authorization2, which is a testament to the shareholder-return discipline that first drew us to the name.
Exxon Mobil (XOM). Shares rallied in July on the same tailwind: higher oil prices tied to renewed Middle East conflict and elevated refining margins.
Lamb Weston Holdings (LW). This food processing company is one of the world’s largest producers of frozen potato products. Its shares surged in July after reporting strong results as earnings per share and revenue beat expectations. Demand held steady and margins improved on easing cost pressures.
Intercontinental Exchange (ICE). Shares of the global exchange operator, including the NYSE, rallied heading into the company’s quarterly earnings report. Results beat expectations for multiple metrics, and the company announced plans to acquire bond trading platform, MarketAxess.
Vail Resorts (MTN). The company’s share price rose in July on improved investor sentiment. Rumors circulated of a potential proxy fight brewing, led by an activist investor, to reshape the board of directors and consider property sales. In the final days of July, the company announced a former MGM Resorts executive was appointed to its board of directors. We previously discussed our Vail Resorts position in our June Insights, Inside LBAY: Past to Present.
TOP DETRACTORS FOR JULY 2026
Modest detraction was attributable to positions in miners, including Alamos Gold (AGI) and Hecla Mining (HL). This was primarily due to range-bound gold prices during the month. We took the opportunity to selectively increase our long exposure to gold and silver miners on weakness.
NOTABLE TRADES EXECUTED FOR JULY 2026
Buys (Long):
Comcast (CMCSA). We initiated a new position in the global media giant, which announced plans to split into two separate companies. One company will be a pure media and entertainment business, while the other will be a technology and services provider. We believe the transaction can unlock value with each business better positioned to pursue a focused strategic plan, which could lead to stock re-ratings. Additionally, Comcast carries a healthy dividend yield of approximately 5%.
We opportunistically added to our gold and silver miner positions during the month. Elsewhere in the long book, we added to Essential Utilities (WTRG), Lamb Weston Holdings (LW), and SLM Corp (SLM).
Sells (Short):
Vertiv (VRT). We initiated a timely short position in the data center infrastructure and services company as we did not believe its valuation was sustainable. The stock sold-off late in July as investors broadly rotated out of momentum AI stocks, and Vertiv missed revenue expectations in its quarterly results.
We maintained our short positions in Rigetti Computing (RGTI), CoreWeave (CRWV), Applovin (APP), and Tesla (TSLA).
POSITIONING NOTES AS OF 7/31/2026
We expect volatility to persist for the remainder of the year as investors reassess risk heading into the midterm election. As we have previously discussed, we think momentum-driven valuations have become stretched beyond sustainable levels. Even the largest, higher-quality AI-related names have shown strain from aggressive capex plans as their free cash flow has significantly declined. Additionally, we think geopolitical tensions and high debt-to-GDP levels provide an attractive backdrop for precious metals. Looking forward, we believe the miners offer the most opportunity.