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Q4 2023 Long/Short Opportunity Fund Commentary

Market Commentary

During the fourth quarter of 2023, the Easterly Long/ Short Opportunity Fund (SNOIX) rose 7.5% while the benchmark Russell 3000 Value Index rose by 9.8%. Our market hedge and sector allocation were the primary reasons behind the relative underperformance. Stock selection was a positive contributor, with the information technology, consumer discretionary and energy sectors contributing the most.

October results were down 3.3% but were offset by a broadening market rally in November and December, of 6.2% and 4.5%, respectively. The broadening rally was led by a decline in bond yields during the fourth quarter, that allowed smaller-cap and economically sensitive sectors, including consumer discretionary, information technology and financials to each rally ~20%.  The decline in bond yields was a function of the Federal Reserve (Fed) signaling a “pivot” in their stance of restrictive monetary policy. With disinflation expected to continue in the short term, the Fed feels comfortable communicating that this tightening cycle is over.  Fed Funds futures are now implying between six and seven 25 basis point rate cuts by year-end 2024.  We feel that the market has likely gotten ahead of itself in terms of the amount of rate cuts that will happen by year-end 2024, especially if labor markets remain tight and economic indicators remain strong.  Outside of a financial crisis, we feel that a higher-for-longer interest rate environment will have lagged effects across the economy. These effects have started to show their signs yet are not reflected in broad equity valuations.


We are pleased with Q4 performance in the Fund given the dichotomy that is present in current equity markets. Additionally, we are happy to report that once again, stock selection continues to be a driver of overall performance.

During the quarter, our long portfolio returned 11.3%. Holdings in financials, information technology, industrials and consumer discretionary generated the bulk of our gains. Relative to the benchmark, we remain overweight energy, materials, information technology, heath care and financials.  We have been consistently underweight real estate, consumer staples, communication services and utilities, where earnings are particularly sensitive to rising interest rates.

Over the past few quarters, changes to sector allocation have come from consolidating positions within the consumer discretionary sector and selling winning industrial positions as they reached 52-week highs.  Over the last quarter, we have increased our allocations to the financials, materials, energy and information technology sectors.

During the quarter, our short portfolio detracted 300bps from overall performance. The majority of losses were associated with our market hedge position.  While frustrating in a bull market, we believe this positioning is prescient given current valuations and uncertainty around the economic outlook.

Net exposure was 68% at the end of the fourth quarter.  Option premiums on both short puts and short calls declined along with market volatility, giving us the opportunity to reduce exposure in selective names. We also added to our market hedge with more laddered option strategies to provide support at various strike prices and expiries, primarily on the S&P side, as we believe the market in general appears expensive, especially the massive outliers in terms of year-to-date returns

Past performance does not guarantee future results and current performance may be lower or higher than the performance data quoted. The investment return and  principal value of an investment will fluctuate, so that shares when redeemed may be worth more or less than their original cost. For performance information current to the most recent month-end, please call 888-814-8180 or visit

Contributors and Detractors

Our top three contributors from the long portfolio came from different sectors.

Shares of PVH Corp. (PVH) surged as quarterly results reflected strong operational execution, against a backdrop of recessionary concerns. Despite resilient performance and the healthy outlook provided by the company, shares remain attractively priced, trading at 11x forward earnings.

Shares of Advanced Micro Devices Inc. (AMD) added to performance in the quarter as investors digested takeaways from the company’s Advancing AI event where growth opportunities in inference workloads, the process of running live data through a trained AI model to make a prediction or solve a task, were highlighted.  AMD also gave a positive update on the potential AI accelerator tangible addressable market to upwards of $400B by 2028, a 70% compounded annual growth rate from today’s market opportunity set.

JPMorgan Chase & Co. (JPM) rallied during Q4. Federal policy indicating the tightening cycle is ending, combined with reduced odds of a recession in 2024 fueled JPM’s rally. JPM continues to see strong execution from the acquisition of First Republic Bank. Credit card loan growth, coupled with strong credit performance has helped grow earnings, and the company’s pristine balance sheet continues to command a premium valuation relative to peers.

Our top three detractors from the long portfolio included Hasbro Inc. (HAS), Sanofi (SNY), and Marathon Oil Corp. (MRO).

Shares of HAS sold off during the quarter as the entertainment and consumer products company reported quarterly results that missed expectations, in addition to resetting 2023 guidance reflecting a weaker holiday season for the Consumer Products segment and a desire to exit the year with clean channel inventory. Given the deteriorating fundamentals, we chose to sell the position and allocate proceeds to investments with more immediate catalysts.

Shares of global pharmaceutical company, SNY, sold off during the quarter, with management resetting expectations around operating margins for 2024.  Despite the revised near-term earnings expectations, SNY has multiple drug readouts slated for 2024, which should prove to investors their pipeline is more robust than the market currently values.  SNY has a strong balance sheet and pays a robust dividend, allowing us to remain patient as we await positive pipeline news.

Shares of oil exploration company, MRO, sold-off during the quarter due to concerns around oil demand.  Despite continued strong operational performance highlighted by better-than-expected earnings and production, macro uncertainty around a recession depressed equity performance for much of the energy sector.  Over the past eight quarters ending September 30, MRO has repurchased 26% of its outstanding shares. These repurchases have facilitated increases to the base dividend, leading to a 12% annual shareholder yield at $75/barrel oil. With energy stocks trading at a wide discount to historical valuations, we feel macro uncertainty has already been discounted in the sector.

Looking Ahead

We cannot predict the future, but we can identify areas of opportunity in any market. Although market volatility comes with increased fear, we find that confusion in the marketplace presents some of our best investment opportunities. With a longer-term investment horizon, we welcome short-term disruptions as many investors are not willing to do their homework or jump in when not all lights are green.  Nevertheless, risks are ever-present, especially in a contrarian value strategy where our portfolio companies are often in the midst of a turnaround. We feel strongly that a hedging strategy complements the value investing process and helps reduce the likelihood of negative outcomes. In addition, by opportunistically buying and selling options to build or reduce position sizes, we capture attractive premiums that increase fund income.

A dislocated macro backdrop, such as the one we see today, suits our style well.  In 2023, the largest 10 stocks in the S&P 500, contributed 86% of the market’s total return.  This despite relatively consistent overall earnings contribution for 2023.  There continues to be attractive areas of the market that have yet to recover after pricing in a recession throughout most of 2023. This bifurcated environment has only started to correct. Smaller capitalization stocks as well as economically sensitive sectors continue to look attractive in terms of valuation, particularly in an environment where board market valuations are at-or-near fair value.  The strategy’s long portfolio has an 87% active share relative to the benchmark (Russell 3000 Value) and 107% active share when including our short and hedge positions. We believe enables us to pick what we perceive as best-of-breed companies, where our fundamental research process can identify the best opportunities, where valuations don’t reflect underlying fundamentals.

About Easterly Investment Partners

Easterly Investment Partners (EIP) is the advisor of the Easterly Long/Short Opportunity Fund. EIP is the traditional, fundamental based investment arm of Easterly Asset Management’s multi-affiliate platform. EIP’s current investment line-up spans the entire value equity market cap spectrum. Guided by a consistent contrarian investment philosophy, our value strategies are led by industry veterans and experts that have refined their craft and delivered strong performance through multiple market cycles. As of December 31 2023, EIP had approximately $1.7 billion in AUM.


Long/Short Morningstar Category: Long-short portfolios  hold sizeable stakes in both long and short positions in  equities and related derivatives. Some funds that fall into this category will shift their exposure to long and short positions depending on their macro outlook or the opportunities they uncover through bottom-up research. Some funds may simply hedge long stock positions through exchange-traded funds or derivatives. At least 75% of the assets are in equity securities or derivatives.

I Shares7.56%10.82%10.82%10.65%10.97%5.24%6.06%
Morningstar Long/Short Equity Category6.01%10.61%10.61%4.97%7.09%3.94%2.84%
70%/30% Blended Index7.32%9.90%9.90%7.08%8.51%6.40%5.69%
Russell 3000 Value9.83%11.66%11.66%8.81%10.84%8.28%7.17%

Past performance does not guarantee future results and current performance may be lower or higher than the performance data quoted. The investment return and  principal value of an investment will fluctuate, so that shares when redeemed may be worth more or less than their original cost. Investors cannot invest directly into  an index. For performance information current to the most recent month-end, please call 888-814-8180.

SOURCE: Morningstar Direct. 70%/30% Blended Index: 70% Russell 3000 Value TR and 30% ICE BofA 3 Month U.S. Treasury Bill Index. Prior to June 29, 2018, the Fund was  named the Snow Capital Opportunity Fund.

The Fund’s management has contractually waived a portion of its management fees until June 30, 2024 for I, A, C and R6 Shares. The performance shown reflects the waivers without which the performance would have been lower. Total annual operating expenses before the expense reduction/reimbursement are 1.36%, 1.61%, 2.35%, and 1.36% respectively; total annual operating expenses after the expense reduction/reimbursement are 1.36%, 1.61%, 2.35% and 1.13% respectively. 5.75% is the maximum sales charge on purchases of A shares.

The Fund’s investment adviser has contractually agreed to reduce and/or absorb expenses until at least June 30, 2024 for I, A, C and R6 Shares, to ensure that net annual operating expenses of the Fund (excluding front-end and contingent deferred sales loads, leverage, interest and tax expenses, dividends and interest on short positions, brokerage commissions, expenses incurred in connection with any merger, reorganization or liquidation, extraordinary or non-routine expenses and the indirect costs of investing in other investment companies) will not exceed 1.30%, 1.55%, 2.30%, and 1.00%, respectively, subject to possible recoupment from the Fund in future years. For more information, please refer to the Fund’s summary prospectus and prospectus.

Investors should carefully consider the investment objectives, risks, charges and expenses of the Fund. This and other information is contained in the Fund’s  prospectus, which can be obtained by calling 888-814-8180 and should be read carefully before investing. Additional Fund literature may be obtained by visiting

Risks & Disclosures

Past performance is not a guarantee nor a reliable indicator of future results. As with any investment, there are risks. There is no assurance that any portfolio will  achieve its investment objective. Mutual funds involve risk, including possible loss of principal. Effective 10/2/2023, the Easterly mutual funds are distributed by Easterly Securities, LLC. Easterly Investment Partners, LLC and EAB Risk Solutions, LLC are affiliates of Easterly Securities, LLC, member FINRA/SIPC. Orange Investment Advisors, LLC and Ranger Global Advisers are not affiliated with Easterly Securities, LLC. Certain associates of Easterly Securities, LLC are registered with FDX Capital LLC, member FINRA/SIPC.

Short sales involve unlimited loss potential since the market price of securities sold short may continuously increase.

Diversification does not assure a profit nor protect against loss in a declining market.

Derivatives may involve certain costs and risks such as liquidity, interest rate, market, credit, management and the risk that a position could not be closed when most  advantageous. Investing in derivatives could lose more than the amount invested.

Mutual fund investing involves risk; principal loss is possible. Investments in smaller companies involve additional risks such as limited liquidity and greater volatility. Investments  in foreign securities involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks are greater in emerging markets.

Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. The fund may invest in lower-rated  and non-rated securities which present a greater risk of loss to principal and interest than higher-rated securities. The fund may invest in other investment companies, and the  cost of investing in the Fund will generally be higher than the cost of investing directly in the shares of the mutual funds in which it invests. By investing in the Fund, you will  indirectly bear your share of any fees and expenses charged by the underlying funds, in addition to indirectly bearing the principal risks of the funds. The fund also invests in  ETFs. They are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF’s shares may trade at a discount to its  net asset value (“NAV”), an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact  the Fund’s ability to sell its shares. The Fund may use options and futures contracts which have the risks of unlimited losses of the underlying holdings due to unanticipated  market movements and failure to correctly predict the direction of the securities prices, interest rates and currency exchange rates. This investment may not be suitable for all  investors. Small- and Medium-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies. Performance over one year  is annualized.



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