Monthly Portfolio Update #8 | Outpacing the S&P by 15% with Quality Investing
June 2025: how a concentrated portfolio of great businesses continues to outperform in a noisy market...
Hi, Investor 👋
I’m Jimmy, and welcome to the June edition of the Stellar Capital Management newsletter! As we wrap up the first half of 2025, it’s a good moment to take stock of how our portfolio is performing - and where we’re headed next.
In this update, we’ll walk through our most recent trades, highlight the key drivers behind our results, and share our current macro view as we position for the second half of the year.
In case you missed it, here are some recent insights:
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Monthly Introduction:
June was a strange month.
Markets were confronted with rising geopolitical tensions - including the early signs of a potential conflict in the Middle East - yet asset prices barely flinched.
Equities hovered, credit spreads remained tight, and volatility stayed muted. It was the kind of month where the headlines felt louder than the price action.
Through it all, we stayed the course.
Our portfolio remained anchored in high-quality businesses - the kind we’d be comfortable holding through any storm.
And that consistency continues to pay off: our performance remains well ahead of the broader indices, even as macro narratives shift by the week - and it holds true across all time frames.
Over the last 12 months, our portfolio is up +28.3% vs. +13.6% for the S&P 500 - delivering an alpha of +14.7 percentage points.
Year-to-date, we’re up +17.8%, compared to +5.5% for the S&P 500.
In June, our portfolio returned +3.69%, slightly below the benchmark’s +4.96% gain.
Since 2023, the power of consistency has become increasingly clear.
With a concentrated portfolio of great businesses - bought at fair prices and run by exceptional management teams - we’ve compounded +138.4%, compared to +61.6% for the S&P 500.
Put differently, in just 30 months, a $10,000 investment in our portfolio would have grown to $23,842 - generating $7,681 more than the same amount invested in the S&P 500.
No leverage. No options. No hot small caps.
By the way, if you’ve been following our performance and want to go deeper, our premium subscription offers full access to the portfolio behind these results.
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Macro Update & Outlook:
Tariffs:
Since January, over 50 tariff actions have been announced, hitting goods from China, autos, metals, and more. The average effective tariff now stands at 14%, translating to $400B+ in annualized costs for businesses and consumers.
Based on past cycles, the pass-through to consumer prices typically peaks 2 to 4 months after implementation - meaning June to August could bring a temporary inflation spike.
Key impacts include:
Higher prices for imported goods
Slower capital investment amid global trade uncertainty
Softer foreign demand for U.S. exports
Labor & Consumption:
Consumer spending remains positive, buoyed by real income gains and expanded benefits. But early signs of slowing are emerging, especially in the labor market.
Recent revisions suggest monthly job growth may have already dipped below 100,000, and further softening could produce negative prints in coming months.
Supporting signals:
Voluntary quits (JOLTS) are falling - often a leading wage indicator
Wage growth is stabilizing below 4%
Immigration-driven labor supply is declining
While not recessionary, these dynamics point to a slower engine beneath the surface.
Inflation & the Fed:
After a smooth disinflation from 5.6% to 2.5% in core PCE, tariffs may push inflation back up this summer. Consensus sees 3Q core PCE at 4.6% (annualized), with some cooling after.
Fed officials are signaling patience. The next cut is widely expected in December, with three more cuts projected for 2026, taking rates toward 3.25 - 3.50%.
The Fed’s framework review wraps up later this year and is likely to reaffirm a more traditional, pre-2020 approach to inflation targeting.
Until then, the FOMC appears committed to waiting out the shock.
What We’re Watching:
As Q3 begins, keep an eye on:
July/August inflation prints, especially in goods
Any negative payroll surprises
The fiscal package moving through Congress
Jackson Hole (August) as a potential pivot point for Fed communication
The soft landing is still in play, but the runway is getting shorter. For investors, the next few months will be about reading the data - and avoiding overreactions.
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Portfolio Overview:
As you already know, our portfolio is intentionally concentrated - reflecting our belief that generating alpha in a highly competitive market stems from focusing on a select group of high-conviction companies.
After this month’s trades - including one major exit and a significant new addition - here’s how our portfolio is currently positioned:
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