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Moor Funds Quarterly Investor Letter No. 2

Mar 8, 2023

March 8, 2023



Dear Investor, thank you for your continued investment with Moor Funds.



OVERVIEW

The following represents performance for the quarterly period 28th November 2022 to 28th February 2023 from live-cash portfolios. The ‘long-only’ Moor Equity Select Fund returned +2.37%, vs benchmark S&P 500 +0.16%; the Moor Select Equity relative outperformance versus the S&P 500 for the quarter was +2.22% and +3.73% for the six-month period beginning 28th August 2022 (live portfolio period). During the same quarterly period, the Moor Equity Market Neutral fund returned +1.09% vs the pro-rata average 2-Year US Treasury yield of 1.11%.


The quarterly performance for both ‘live’ equity strategies continue to correlate with the historical model portfolio multi-year returns (see factsheets at www.moorfunds.com). We were again encouraged by the Moor Select Equity portfolio’s positive returns in another challenging quarter with a returns rank for the quarter rank in the top 9% (200th of 2,332 funds) for US long-only funds focusing on US large and mid-cap. (Charles Schwab funds data).


HIGHLIGHTS & OUTLOOK

Moor Funds utilize proprietary artificially intelligent processes to identify a subset of US companies exhibiting operational and financial factors with a high probability of delivering relative outperformance to other publicly listed stocks. Our investment team selects a portfolio, from this subset of companies, with a focus on companies exhibiting positive cash flow and operating momentum. Our investment portfolio typically contains 70 stocks of which 10 stocks will account for approximately 80% of the total invested capital; however, no single stock can be greater than 10% of the capital invested.


Reviewing notable portfolio positions for this quarter; stocks with a combined 20% share of the portfolio - Tesla (TSLA), Boeing (BA), and Booking Holdings (BKNG) delivered approx. +21%, +8%, and +23% respectively. Notable poor performers were Amgen (AMGN) and Home Depot (HD) falling -14% and -9% respectively. We won’t pretend that single-quarter narratives on market behavior deliver any value. In the wider listed blue-chip environment, there appear to be no ‘sacred cows’ when it comes to corporate cost-cutting (looking at you GS and META!); when consumer demand finally stabilizes, we foresee a myriad of attractive US blue-chips with strong balance sheets, lean cost metrics and cashflow.


In summary, we are beholden (like everyone else) to Fed policy execution over the course of 2023. Whilst we will shortly expand our machine-driven IP to include corporate credit strategies, in the ‘here and now’ we are equity investors and as such the US 2-year risk-free-rate at approx. 5% (and how long it remains there) matters for the relative attractiveness of equities. Furthermore, communication around the Fed’s long-term US inflation target seems important assuming they’ve learned the previous lessons of asset bubbles and negative real rates. If 3% inflation is the ‘new normal’ and risk-free rates >4% we’d better familiarize ourselves with companies able to generate both FCF and positive IRR with that use of cash. Maybe the easy money in equity markets is over and we’re all going to have to start going retro by understanding the link between stocks returns and corporate use of cash to drive returns through 1) Price cuts, 2) Acquisitions, 3) R&D or 4) Dividends and Buybacks … expect a demand spike for Graham & Dodd books!


Sincerely,


Edwin Hagan-Emmin, Chief Investment Officer



IMPORTANT DISCLOSURE

In considering investments investors should carefully consider the fund’s investment objectives, risks, charges, and expenses. For further details on the funds presented in this document please request a summary fund brochure by contacting Moor Funds LLC by email at invest@moorfunds.com or by telephone at +1 800 819-5185.


The material presented in this document is not intended to be an investment recommendation or investment advice; does not constitute a solicitation to buy, sell or hold a security or an investment of any type. Investment advice or recommendations can be provided only after careful suitability consideration regarding an investor’s objectives, guidelines, and restrictions. Furthermore, the information provided in this document does not consider the specific objectives or circumstances of any investor; or suggest any specific course of action.

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IMPORTANT INFORMATION

Moor Funds LLC (“Moor Funds”) is an investment firm aiming to create long-term investor value, increase investor participation, and representation of under-served demographics. Moor Funds LLC is an investment adviser registered in the State of Texas; pertinent regulatory information about our firm can be found at https://adviserinfo.sec.gov/. Alternatively, a copy of  Moor Funds LLC Form ADV Part II can be found here. At Moor Funds we care about your privacy and do not sell your data;  a copy of our Privacy Policy can be viewed here.

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This website may contain forward-looking statements, which reflect Moor Fund's current views concerning, among other things, Moor Fund's performance. You can identify these forward-looking statements using words such as “anticipate” “approximately,” “believe,” “continue,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “seek,” “should,” or “will,” or the inverse of these words or other comparable words. Forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated on this site. Moor Funds undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, or otherwise.

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The description of Moor Funds investment results herein may have in whole, or part, derived from a model portfolio. Furthermore, Moor Fund's investment process and strategy are intended to be representative but may be changed from time to time and thus Moor Funds may alter the information at its discretion. Moor Funds utilizes both machine-based and portfolio manager-led analysis tools to identify suitable portfolio companies; over time Moor Funds will incorporate metrics measuring how those companies strategically engage with their employees, communities, and the environment. All investments contain risk and may lose value. Investing in securities and other financial instruments entails substantial risk, including the possible loss of principal. Investors should conduct their analysis and consult with professional advisors before making any investment decisions.

 

The investment opportunities discussed or referenced herein may not be suited for all investors, and potential investors must make an independent assessment of the appropriateness of any investment opportunity based on their objectives and circumstances, including the possible risk and benefits of entering such an investment opportunity. References to other securities are not an offer to buy or sell. The information contained herein is not complete, may change, and is subject to, and qualified in its entirety by, the more complete disclosures, risk factors, and other information contained in offering materials. The information is furnished as of the date shown. No representation is made concerning its completeness or timeliness. This information is not intended to be, nor shall it be construed as, investment advice or a recommendation of any kind. Certain information has been obtained from third-party sources and, although believed to be reliable, has not been independently verified and its accuracy or completeness cannot be guaranteed. Past performance is not a guarantee of future results.

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Registered office: Moor Funds LLC,  142 W 57th Street, 11th Floor, New York, NY 10019. (Tel: +1 800 819-5185)

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