The Insiders Fund August Performance Update

The Fund was down -3.81% for August, now up about 3.59% YTD. August kept its reputation intact as a mediocre month for investors. All three leading market indexes lost ground, with the Dow Jones Industrial Average (DJIA) falling 2.5%, the Nasdaq down 2.2%, and the S&P 500 off 1.7%. The first two days of September have seen a sharp rally in energy stocks, so we have pretty much erased August losses. There is certainly folly in looking at short periods of time, but like moths drawn to the flame, we succumb to it repeatedly. I think a more realistic approach is looking at a 3-year average annualized return, and we are still knocking the cover off the ball. Our three-month unofficial return of 5.97% is not shoddy.

I expect our big bets that the path to net zero carbon will inflate hydrocarbon product prices due to a lack of capital investment. I can't look out much further than that, but when you penalize production, you get less supply. Unless you have a readily available alternative to an inelastic need like hydrocarbons, you get higher prices. It's just Econ 101. Higher oil and gas prices make producer stocks go higher.

Not to be labeled, a climate change denier, we have a sizeable investment in the world's largest lithium producer, Albemarle. Other big bets are Axon, the future of the legal and law enforcement's operating system, with evidence.com. We are also very big into drone warfare with Kratos. The Ukraine war has made drones front and center. Kratos moved years ago to be where the puck was going, and they are the leading provider of low-cost stealthy jet drones to the U.S. defense agencies. Admittedly, I am worried about Congress's dysfunction and lack of a budget that will allocate timely dollars to our vital defense budget. It's no way to run government It's certainly challenging for small defense contractors. I suppose I'll get an earful of that when I sit down with Eric de Marco, CEO of Kratos, later this month.

I feel good about where the portfolio is. It's an eccentric mix of bets, hedges, and investments. Unfortunately, we have missed the whole AI surge. According to the industry rags, Microsoft has gained nothing on Google's search business, so AI may yet be another overhyped investment theme. Our position in Intel has done surprisingly well for a company given up for dead. They talk a lot about the democratization of AI. Whether that's hype, hope, or real, I don't yet have the answer for it, but the stock is working. If China moves aggressively on Taiwan, Intel will be the best-performing stock in the market. This is something I don't know, but when you have 21% youth unemployment and stop reporting the employment numbers as China recently did, the drumbeats of war are a good distraction to societal unrest.

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All investments involve risk. This is what keeps me up at night. Past performance is not indicative of future results. The Insiders Fund is sold by prospectus only to qualified investors. NAV Consulting provides the official records of the fund,

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