On strong quarterly equity performance despite headline risk…

While news outlets and other media were no doubt harping on “Brexit” in late June (and several weeks before that), the initial impact was short lived. In fact, even accounting for the two-day selloff on June 24th and 27th, the S&P 500’s total return for the month was actually a small gain (+0.26%). While this is nothing to be ecstatic about, all things considered we find it respectable given the headline risk of Brexit.


For the entire second quarter the total return of the S&P +2.46%—a total much easier to stomach.


On an under-reported yield shrinkage…

A generally less covered development over Q2 was the yield on US 10-Year Treasuries, a common interest rate benchmark. Entering April, the 10-Year yield stood at 1.77%. By the end of June, it closed yielding 1.47%. In a vacuum, a 30 basis point move over three months might not seem like a big deal, but 10-year U.S. treasuries gave up 16.95% (0.30% divided by 1.77%) of their already historically low yield in an extremely short period of time. That decline and its impact on fixed income markets as a whole has made investing in bonds something of a challenge and may also be driving equity markets forward as yields remain incomprehensibly low.


On current firm growth…

In closing, we couldn’t conclude the quarterly newsletter without addressing recent multi-front expansion at Narwhal. As most of you know, we launched Tusk Media in this summer as a way to connect more frequently with clients and the outside world. By the time you read this Tusk Media podcasts and videos will have been viewed more than 50,000 times. We are absolutely blown away by the positive response and thank you for your participation.


Additionally, the team at Narwhal continues to grow. In June, Ben Nye and Sam Frost joined our Investment Committee. Ben came on board as a Senior Equity Analyst and Assistant Portfolio Manager. Sam is serving as a Junior Investment Analyst and Assistant Portfolio Manager. Their arrival combined with the involvement of Matt Krebsbach (who celebrates his 1-year anniversary at Narwhal next week), has greatly bolstered our investment process and convictions. Further, it is great to have all five member of the Investment Committee contributing to this newsletter.


Lastly, as we type this we are surrounded by an incessant hammering sound. While we might be less mentally stable in the short-term (seriously, this thing doesn’t let up!), we’re excited about our office expansion that should be completed sometime late this fall. The expanded office space will more than double our current square footage and allow for us to put all our new folks (as well as our displaced accounting department) in offices under one roof. Be on the lookout for a housewarming event of some type later this year.


The entire newsletter is available here.


Andrew Hall is the Vice President of Narwhal Capital Management.

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