January 2026: Episode 7

James McFarland (00:00.088)
Hello everyone. Well, as hard as may be to believe we are already at the end of January, 2026. And this is our first episode of the long and the shorter. Thank you for joining us. My name is James McFarland. I’m joined by Charles Scavone and Chris Paris. We represent the portfolio management team of OHFGX. That is Oak Harvest’s Long Short Hedged Equity Mutual Fund. And in this show, we generally talk about what we, the portfolio management team, we’re thinking about going into the month, what happened during the month and how the month ended up. So with that in mind, let’s just get right into it. Chris, what were we thinking headed into January, 2026?

Chris Perras (00:39.436)
Thanks, James. So January tends to be a positive month in the market. We didn’t have any reason to expect it wouldn’t be. However, most all the gains usually come in the first week because of flows and then some tax selling and stuff kicks in after that. But we didn’t see anything that would negate the positive January headed in. Bond market, we thought Fed may not raise lower rates because they were seeing strong data, although behind the scenes the bond market was saying data wasn’t quite as good as the Fed was thinking.

James McFarland (01:13.858)
Right? Okay, so we weren’t thinking much heading into the month. All right, thank you very much, Chris. So then based on that, what kinds of things were we looking to do in the OHGFX portfolio?

Chris Perras (01:19.707)
Nope.

Charles Scavone (01:29.326)
It continues to be a difficult time for growth managers. One of the big headwinds we’ve faced with is this idea of value style outperforming growth as people sort of regage what their economic forecast sort of as Chris highlighted. what we did though, we stuck to our knitting. We’re growth investors. So we kind of did more of the same, right? We took a look at the first part of earnings reporting season. One of the things that we saw, we saw a couple of the large hyperscalers reported and what they were reporting was just an incredible amount of capital expenditures for AI infrastructure build out. And so what we’d like to do is just take this, the Levi Strauss strategy, right? So, know, invest in the guys who sell the picks and shovels as opposed to taking all the risk being out there on the bleeding edge. So we do a lot of supply chain analysis. We look and see where, you know, companies are just absolutely embedded that are going to be the beneficiaries of all that spending. We spend a lot of time focusing there. And not all that’s in technology. Some of it is in old school industrials, right? You have to supply electrical power, cooling, the infrastructure. So a lot of old line industrial companies that are, their businesses are changing rapidly and are beneficiaries of some of that same spending.

James McFarland (02:50.424)
That’s really interesting. when people think of growth, as you say, we’re growth investors, people think of growth, they always think of technology, AI recently and similar names. But as you highlight, you can find growth in a lot of different places sometimes that people might not expect.

Charles Scavone (03:02.99)
You might not expect yeah, I mean some typically cyclical industries can become great Growers not always for a long period of time, but we do see an elongated Spending cycle here and we have a greater deal of comfort even going out to you know through 26 and into 27 so that it’s a good observation because typically we’re in the growth sectors of the economy. You just don’t think industrial so much. So that was pretty much it on the long side. On the short side, we were taking advantage of some of the market volatility to trade around positions, but our primary focus there continues to be on things like strains with consumer credit. We’re seeing some of that showing up, particularly in auto loans. And then this whole used car game is kind of unwinding. Hedging was just a slight drag on performance this month on the short side looking for the weak areas of the economy.

James McFarland (04:00.0)
Do you think that the K-shaped economy idea is playing into that as we look for weakness?

Charles Scavone (04:08.206)
Oh yeah, for sure. that’s why you see companies that, you know, their earnings, revenues and all remain strong that serve strictly a low end consumer, right? And then you see it other side, you know, on the high end. But the sort of if you’re caught in the middle or have a mix of the two, you have a problem.

Chris Perras (04:27.656)
Yeah, the index performance with the sectors, there are 11 sectors, I think, the S &P would show that in January. The technology, think, was one of the down sectors, which is a growth sector. The ones that outperformed were largely kind of staples and boring. Some energy, I think, outperformed too. But the areas that we tend to traffic in, a lot of health care, a lot of technology, were actually the worst performing sectors. But the fund actually did pretty well from a stock picking perspective, was able to move around in the month.

James McFarland (05:01.058)
That’s we always try to do, of course. All right. So with that in mind, and how did the month kind of play out? We’ve touched on that a bit already.

Chris Perras (05:07.726)
Sure, yeah, the month was positive in the S &P, but the sector-wise, three sectors were down. As I mentioned, think healthcare, financials, and tech all underperformed, which tend to be the growthier areas. Areas like materials, which historically haven’t had a large exposure in, but we do have some. Energy, more cyclical, industrial, as Charles mentioned, the build out of AI, been a big tailwind for them. They all did pretty well. International did great. We’re not a big international shop. Small cap did great. We’re not a big small cap shop. So there was, there are a lot of headwinds for our style, which is generally mid cap, large cap growth with.

Charles Scavone (05:48.37)
Well, we have, though, you make a point, we continue to this broadening out of the market, in the market, and away from mega cap tech and some of these huge, you know, concentrated positions. And we’ve been doing that for a while now, and so we’ve actually lowered our average market cap within the fund and are real comfortable moving down into that mid cap sector, tend to avoid small cap stocks.

James McFarland (06:10.968)
Right. All right. Well, I think that is where we will call it for the month of January 2026. Thank you, Charles. Thank you, Chris. Thank you for joining us. If you want more information about investing in OHFJX with us, you can go to www.ocarbisfunds.com. And for more information on the fund itself, you can also go to Morningstar’s website. They have a lot of metrics and figures you can check out if you are interested. Thanks again for joining us. We’ll see you in the next video.

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