A note from Clay

Wednesday, Nov 9th 2022

Investor Update

Login to the Titan app to see your personalized October portfolio recap.

After reaching new year-to-date lows in September, the market surged higher in October. It was certainly a welcome reprieve from the relentless selling pressures we saw in the prior two months.

Consumer spending remains strong, GDP grew in the third quarter marking the end of the technical recession, wage gains are healthy, and there are almost two available jobs for every one person looking for work.  

From afar, the economy actually seems OK. 

But while it may seem counterintuitive, the Fed actually needs to see things get worse in the economy to know it's achieving its goal of reducing inflation. As the Fed raises interest rates, it becomes more expensive to borrow money.  If it's more expensive to borrow money, let's say for a house or a piece of machinery for a business, there will likely be less buyers and demand will falter. As demand falters, typically you see prices come down.

While these macro indicators are important, the future is uncertain. It's from this vantage point that we tend to focus on how the macro may impact company fundamentals, which historically have been a much better indicator of long-term success.

Many of our portfolio companies began to report their Q3 earnings in October. 

We view the mega-cap tech players within Flagship, aka “The Generals”, as a nice bellwether for the broader economy given their global reach with consumers and businesses alike and the large percentage of the S&P 500 earnings that they make up.  In short, these companies foresee slower discretionary spending from the consumer and sluggish enterprise spending over the coming quarters.

These trends showed up in our research, and my team elected to trim Alphabet and Microsoft early in October.

With energy being the strongest performing sector in October, our thesis continues to play out nicely, and we were excited to add more energy exposure in both Flagship and Offshore during the month. The Biden administration announced plans to begin restocking the Strategic Petroleum Reserve if the price of oil falls between $67 and $72. Anything can happen, but in our eyes, this provides a nice “floor” for prices in the short term.

We continue to generate new ideas at a high velocity and are excited to deploy fresh capital into stocks that we believe are well-suited for an environment where profits and cash flow are king. From a watchlist perspective, we’re keenly focused on a handful of semiconductor companies, a few enterprise SaaS names that have seen their valuations get slashed by 50%+, and a handful of more under-the-radar companies.

It’s important to remember that during bear markets, vicious relief rallies are to be expected and head fakes in stock prices are all too common.

If you recall from our Q3 update we said, “we’re not in the business of calling bottoms, but we’re confident that we’re closer to the end than the beginning of this historic correction.” 

This remains true today, and we believe many long-term investors can benefit from slowly adding capital at today’s depressed prices. We have a hard time seeing a world where stock prices aren’t higher three years from now, and while no one can time the market bottom, dollar-cost averaging is a time-tested way to benefit from compounding without needing to try.

We also believe it’s an interesting environment to diversify across asset classes. By adding investments that generate consistent income like real estate or credit, clients can build a more resilient portfolio. 

In our opinion, Credit is particularly interesting in this environment; with interest rates now multiples higher than they were just 6 months ago, credit investors are being paid more to take risk today than they have in decades. The teams at Carlyle and Apollo are extremely excited about the opportunity ahead, and we’re happy to be able to recommend investments into these funds.

As always, we’re here for you. To the extent you have any questions about the month, reach out to our investor relations team and we’re happy to help.


Co-Founder, Co-CEO, CIO

Titan Global Capital Management USA LLC ("Titan") is an SEC registered investment adviser. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is a registered broker-dealer and member of FINRA/SIPC. This content is intended for educational and informational purposes only. Certain Registered Investment Company (“RIC”) products (“interval funds”) are offered by third-party fund families and investment companies on Titan’s platform as one of many potential investment options available to Titan’s clients, that may or may not be recommended based on an individual client’s investment objectives and risk tolerance. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. You should read the fund’s prospectus in its entirety before investing. The fund’s prospectus contains the fund’s investment objectives, risks, charges, expenses, and other information, which should be considered carefully before investing. You can access the fund’s prospectus, or if available the fund’s summary prospectus, by visiting the SEC’s website. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not ensure a profit or protect against loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and clients may lose money, including their original investment and principal. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or any other product offered by Titan or any third party. Please visit www.titan.com/legal for important disclosures. 

You can view Apollo Diversified Credit Fund's prospectus here.

You can view Carlyle Tactical Private Credit Fund's prospectus here.

As of this writing, GOOG, MSFT were a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.

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