4th Quarter

William Huston, CCO, AIF®
by in Published on October 06, 2020
4th Quarter

October marks the last quarter of 2020. Despite the circumstances, Bay Street has had an amazing year. I’m hoping to finish out this year strong and I’m thankful that Bay Street’s clients have all done well. We do what we can, but God is in control. One promise that I’ve seen to be true in my life is “if you honor God, He will honor you.” Win or lose in the markets, my hope is that God is pleased with my life and with my work.

For our Lens of History clients, everyone is outperforming the market, regardless of when you joined. That’s pretty wild! *For clients who’ve been with us since Jan 1, 2020, you’re all at or around 48% return for the year. The S&P is only up 4% over that same Jan 1 – Oct 7 period. *

For our Lens of History income strategy, ORCL and ABT will pay dividends in Oct., MSFT in Nov., and WMT in Dec.

Here are my thoughts on where we are and what we can expect as we finish out 2021:

  • Nextera (NEE) will split on Oct. 25. They are up 24% YTD, which is right in line with their historical performance. NEE (Nextera) is the largest renewable utility in the US. They just surpassed Exxon’s market cap. https://www.cbsnews.com/news/nextera-wind-solar-power-most-valuable-energy-company-america-exxon/

    • 2016 was 18%
    • 2017 was 30%
    • 2018 was 13%
    • 2019 was 40% I’ve always viewed NEE as one of our “foundation stocks” because of their strong management team and consistent performance.
  • Of all of our renewable positions, solar went through the roof (accidental pun) over the last few weeks. Instead of chasing them and adding to the positions on the way up, We will wait for them to pullback. Most portfolios only hold 1% of the names I’ve been tracking. We will rebalance and carry a heavier weighting now that they’ve shown their hand. DQ, JKS, FSLR, RUN, CSIQ are on our radar. Several of you will see FSLR, DQ, CSIQ, and/or RUN in your portfolio depending on when you opened your account. JKS has a large contract with NEE, so in a way, by holding NEE, we have a synthetic position in JKS. That said, JKS will be more attractive once it cools off from the current run.

  • Folks keep asking about the election and how it’s going to affect performance.

    • I’m not political. I only follow politics to understand how sentiment and legislation will affect our portfolios. My general opinion is that whatever happens will be a short-term movement, regardless of direction. I’m more focused on avoiding what I think will be a very difficult 2021 for the broader economy. In April, I led a seminar where I highlighted that Feb 2020 marked the start of the U.S. recession. If services, transportation, hospitality, entertainment, education, retail, commercial real estate, etc. don’t make a comeback, it could get really weird for renewable and tech positions that are currently enjoying all-time highs.

The data doesn’t look good, but where there is uncertainty, there is always opportunity…

As always, please reach out with any questions, concerns, or ideas. Also, if you have someone or some organization in mind that you think would be a good fit for Bay Street, please have them schedule an intro call with Ekenna at baystreetcapitalholdings.com/ekenna or 650-832-6162.

Thanks for choosing to work with our team and making Bay Street possible.

Medase,

William