Kirwan Capital

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CURRENT NEWSLETTER

2019 THIRD QUARTER NEWSLETTER

October 15, 2019

The prominent investment themes from the 2nd Quarter continued into the 3rd, producing volatile trading

but little movement overall, resulting in gains of less than 2% for the S&P 500 Index. The U.S./China

trade conflict captured investors' attention and seesawed markets, while the Federal Reserve lowered rates

for the 2nd time this year. That, combined with slowing global economic growth, produced an inverted

yield curve, which has historically been a harbinger of economic downturns. This knowledge produced

selling that contributed to the volatility we saw during the period. Non-U.S. stocks once again lagged the

U.S, as the global economy remained focused on the trade dispute and continued to grapple with below

average growth and waning investor confidence. While energy sector prices fell on a combination of high

supply and lower forecast demand, precious metals surged on a push for safety.

Our Kirwan Capital Strategy portfolios gained 2.31% for the quarter**, versus the market as measured by

the S&P 500 ETF*, which finished with a gain of 1.76%. For the year to date, we have earned 21.68%

versus 20.40%. Our average compound annual return after fees since Jan 1, 2013 is 13.49%, which would

have turned a $10,000 investment into $23,489 in 6 3/4 years.

The one material transaction we initiated during the quarter was selling Phillips 66. While I continue to

believe PSX is a good company, I think there are headwinds the company will face long term, as electric

cars continue to gain share of the road and stricter efficiency standards take effect. Since the stock has

done well for us over our holding period and I feel it was trading near fair value, I chose to bolster cash

and await future opportunity. We also took a minor amount of profits off the table in Visa and Starbucks

after nice gains, and took some Apple profits in accounts with an outsized position, but for the most part

we are simply staying the course and continuing to enjoy the fruits of owning great U.S. companies.

As the economic expansion grows long in the tooth, I remain attuned to the possibility of an economic

contraction in the U.S., and if the inverted yield curve does correctly foretell a downturn, we will be better

positioned with the bit of cash we now hold. Currently, however, the highest quality companies are

trading at a premium, making opportunities scarce. Patience and a risk averse stance is the prescription

that I think will likely offer the greatest long term reward in this environment.

Thanks again for your trust, and I wish you the best as we round out the year.


Patrick J. Kirwan

President and Portfolio Manager

Kirwan Capital LLC

KIRWAN CAPITAL, LLC.

Patrick J. Kirwan

13000 CR 348
St. Joseph, MO 64505

Missouri 816.385.5266

Nebraska 402.212.0519

Toll Free 888.666.8117

pk@kirwancapital.com
www.kirwancapital.com



NOTICE:

 * The benchmark I use against which to gauge our performance is the SPDR S&P 500 ETF (ticker symbol SPY). It's purpose is to closely track the stocks in the S&P 500 Index. Often cited as a proxy for the U.S. equity market, it is the most heavily traded security in the world. It can thus easily be purchased by any investor, as opposed to the oft quoted S&P 500 Index, which is simply a calculation, and does not include costs of ownership. ** Kirwan Capital Strategy quoted returns are calculated using the quarterly composite average of all accounts using the strategy in aggregate. Due to the individually managed nature of our accounts, not all accounts have similar performance. Factors such as available cash, tax considerations, and timing of previous purchases or sales can effect returns. In addition, transactions noted may or may not have been made for all accounts.  


* The SPDR S&P 500 Trust ETF is an Exchange Traded Fund that seeks to provide investment results that, before expenses, generally correspond to the price and yield performance of the S&P 500 Index.

^ Due to the individually managed nature of our accounts, not all accounts have identical performance. While usually similar, factors such as available cash, tax considerations, and timing of previous purchases or sales can effect returns. In addition, transactions noted may or may not have been made for all accounts, and are a generalization of transactions completed for all accounts in aggregate.  

This site is for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security which may be referenced herein. We suggest that you consult with your financial or tax advisor with regard to your individual situation. This site has been published in the United States for residents of the United States. The firm, and persons mentioned in this site may only transact business with residents of Missouri or Nebraska or residents of other states where otherwise legally permitted subject to exemption or exclusion from registration requirements.


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