Hi {{first_name}}
The fund gained +3.2% in October while being positioned conservatively. We spent most of the month in cash, using discipline and timing rather than exposure to generate returns.
MSCI AW is the MSCI All World in Australian dollars. Our upside capture ratio is 117% with beta of 0.2. We have not had a down month yet, so there is no downside capture. A positive up/down capture ratio and steady compounding remain the focus.
INVESTMENT STRATEGY
We run a concentrated global long short portfolio built for volatile, mispriced markets. We hold 5 to 20 positions, cut losers quickly, and let winners compound. Shorts are used mainly for hedging. Ideas come from deep fundamental work and our AI engine that flags regime shifts and trend changes early. Read more about our strategy on the website.
MARKET COMMENTARY
October began strongly but became increasingly selective as the month progressed. Market leadership narrowed further to a small group of dominant large caps - a continuation of the trend driving most of this year’s index performance.
This concentration isn’t irrational: the largest U.S. companies continue to post the strongest long term growth opportunity, high margins, with proven scale and resilience.
Still, narrow leadership comes with risk. Breadth across the S&P 500 is now at its lowest level in over two decades, as shown below.
While the megacaps have continued to rally, the equal weight S&P 500 has delivered roughly 0% total return over the past year, highlighting how uneven performance has become.
Earnings season reinforced the pattern: results were generally strong, but reactions were mixed. Many stocks with solid reports still drifted or sold off as money rotated away from crowded positions.
This is a market transitioning toward higher dispersion and volatility - one that rewards being selective over being fully invested. We had already reduced exposure early in the month, and as volatility increased, our stops and hedges worked as intended.
Preserving capital and staying liquid keeps us ready to act when conditions improve. When leadership narrows, volatility rises, breadth weakens, and quality stocks sell off on good results - those are signals to stay defensive. When the setup turns, we’ll quickly shift to offense.
PORTFOLIO POSITIONING
By late September, net exposure had been reduced to 25%. By the second week of October, the portfolio was around 95% in cash after stops systematically reduced exposure. The +3.2% return was achieved with the fund being mainly in cash for ¾ of the month. The result was driven by process, not beta or broad market exposure.
As of month end, the fund’s gross exposure was 48% and net exposure of only 10%.
Our edge lies in nimbleness. We won’t force cash into the market if the opportunities aren’t there. The goal isn’t to always be invested, but to remain flexible always be ready.
POWER CONSTRAINTS IN AI
The AI buildout is evolving from a computing challenge into an energy infrastructure transformation. Demand for reliable power and high capacity networks is becoming one of the defining constraints, and opportunities.
Google CFO: “We expect to remain in a tight supply demand environment through 2026.”
Microsoft CEO: “We are capacity constrained through at least FY26.”
Amazon CEO: “The bottleneck is power… as fast as we bring it in, we monetise it.”
This cycle marks one of the largest coordinated investment waves since the early industrial era. Data centres, utilities, transmission operators and equipment suppliers are all in high demand.
Source: Wall Street Journal
Some second order effects we are considering include:
• Rising grid demand driving utility and government investment.
• Supply chain constraints across transformers, switchgear, copper and power equipment.
• Increased debt issuance to fund infrastructure.
• Tight labour markets in technical and blue collar trades.
• Hyperscalers becoming capital intensive industrials, with lower FCF margins warranting lower multiples than the prior high margin SaaS style businesss models.
It’s reminiscent of the early industrial era, when nations built factories for steel and machinery. Today the world is building factories for tokens, the building blocks of digital intelligence. We expect energy policy and power grid capacity to remain central to economic debate over the next year
COMPANY FOCUS - ALPHABET
Alphabet has been the largest holding in the fund since inception and it remains the benchmark for sustainable AI economics. It designs its own chips, runs its own models, operates the world’s largest cloud infrastructure, and monetises directly through products used by billions. It’s the only genuine full stack AI player.
The October quarterly result showed clear acceleration, with revenue up +16% to $102 billion (from +14% last quarter). Cloud +34%, YouTube +15%, and Search +15% (putting to rest any talk that “search is dead”). EPS +35%, margins expanded, and capex remained disciplined. The Google Cloud growth chart is a standout example of scaling laws:
Source: Fiscal.ai
Gemini now has 650 million monthly active users, underscoring Google’s unmatched scale and execution across the AI stack. The company continues to deliver double digit top line growth, strong free cash flow and expanding profitability, already monetising AI across the stack while peers remain in heavy investment mode.
The position averaged 5.4% of NAV, returned 13.4%, and contributed +0.67% to October performance. We trimmed into strength but continue to hold a core position.
KEY CONTRIBUTORS AND DETRACTORS
Investors are often told to watch for “style drift” which is when a specialist fund ventures outside its niche. For us, adaptability is part of the design.
The Laser Beam Fund invests predominantly in listed equities, with select opportunities in derivatives and futures for risk management or tactical exposure.
Our process remains consistent - concentrated positions, strict sizing, defined risk/reward, and active hedging. We invest wherever the setup is compelling, but always with discipline.
Key Contributors
AMD (+1.6% contribution) - The largest contributor following its landmark deal with OpenAI to supply 6 GW of GPUs for next-generation data centres - an estimated $100 billion opportunity over five years. The deal includes warrants for up to 160 million AMD shares (~10%), validating AMD as a credible NVIDIA alternative.
Palladium (+0.9%) - A tactical trade added to returns after we captured an 18% move. The rally reflected a long building supply deficit and firm industrial demand.
Alphabet (+0.7%) - A strong contributor from our core long, following another solid quarterly result.
Crispr Therapeutics (+0.4%) - The stock gained on renewed optimism around its gene editing pipeline, supported by encouraging trial updates. We entered with a small position size given the early stage of commercialisation.
Meta short (+0.1%) - While revenue hit a record GAAP EPS collapsed which saw the stock decline almost 9% post results. We have quested Meta’s AI spend and strategy which is playing out in the share price. Google, in contrast, continues to monetise its AI spend with discipline.
Key Detractors
ZIP (-0.8%) – While the business delivered strong growth investor caution remains around regulatory risk, ANZ customer softness and funding cost execution.
Nasdaq hedge (−0.6%) – The portfolio has maintained a Nasdaq futures hedge most the time since inception. While it has modestly detracted from returns during market strength, it has provided valuable downside protection and ensured that any major market correction would be cushioned — a deliberate trade off to preserve capital through volatility.
Reddit (-0.4%) – Post earnings enthusiasm faded as monetisation lagged user growth.
OUTLOOK
The fund remains conservatively positioned, with core longs offset with hedges. A few smaller residual positions may drift with the market.
We expect conditions to stay dynamic rather than directional. The focus remains on preserving capital, and being ready for the next opportunities.
At the time of writing (7 Nov), the Nasdaq is down almost 3% for the month. We are net short and the fund is flat. This is obviously subject to change.
The stocks that hold up best through this phase often become the next leaders, and those are the names we’re working on.
OPERATIONS
Daily unit pricing is scheduled to go live by mid-November, following a short delay in legal documents. Once live pricing is active, the performance dashboard will also go live.
The dashboard will display little more detail than the NAV portal, including exposures, contribution, and key metrics. I’ll share the link later this month once it’s ready — the screenshot below shows sample data.
I have personally increased my investment in the fund during October, and will continue to do so in the future. Please email or call any time if you’d like more detail.
Regards
Portfolio Manager
The Laser Beam Fund
