STI Hedge Fund September Performance.

The STI Hedge Fund cash flow model is working as designed. The results for September are a pleasure to report with a annualized 24.09% gain for the month.  These results are nicely above our 18% goal.  Yes, we are still holding some significant carry forward losses, but these positions are still producing cash flow for the month. Our total forward month option positions are higher than normal but still well within tolerable levels.  As we had expected in last month's report our interest expense is well covered by dividends and added significantly to our monthly profit.  Trading expense was as expected and is included in the monthly net.  There is no denying that the higher than normal VIX, or market volatility, is helping our profits but again the fund is designed for anticipation of such moments. We also benefited from the 5 week cycle this month.  If we had not been so deep in the money for some of positions we could have almost doubled the monthly results due to the higher VIX, but as a hedge fund you make choices and our earlier choice was to deploy almost all assets. Lastly as noted in earlier reports we continue to err on the side of cautious stock selection a market trending downward. In any case we could not be more pleased with this monthly performance

 

Results for the now completed three quarters of 2012 is 16.73% net of expenses and interest expense. We expect to end the year at around a 15% gain with expected capital losses taken.

 

Profits for the month came from three nice tobacco stock trades.  Also a couple of real estate trades and almost every trade being above normal profit expectations.

 

Looking forward we still have good trading profits opportunities for October, but due to stock market downturn which has forced some forward option positions as noted earlier we are reduced to having about 50% of our trading positions open.  Dividend coverage should cover interest expense and might produce profit again there again.

 

We also began to sell in the money options to rid ourselves of several stocks that no longer fit our trading profile and those are now being optioned at a capital loss price.  These capital losses could effect performance in the remaining three months of the year. Even with that we expect some carry forward losses into 2012.  The idea is to produce above average market profits while protecting capital as much as possible.  Unlike many other hedge fund models our model allows for continue monthly income while waiting on recovery of stock values thus avoiding liquidation issues.