Lumos Alpha Q1 2025 Investment Report

Portfolio Performance

In the first quarter of 2025, the Lumos Alpha Flagship Portfolio delivered a return of 0.93%, outperforming the benchmark S&P 500 Index (-4.59%) a market environment with heightened volatility and rotation across sectors.

Portfolio Adjustments

During Q1, we executed several strategic reallocations aimed at enhancing long-term performance and risk-adjusted returns:

• NVDA (NVIDIA): Trimmed early in the quarter and later re-entered the position at a more favorable valuation on the last trading day of March.

• BRO, CRM, BX: Fully exited these positions between January and February due to valuation concerns. We remain open to reinitiating positions should their valuations become attractive again.

• General Reductions: Positions across other holdings were moderately reduced to manage risk and rebalance exposure.

• New Additions:

  • BABA (Alibaba Group)

  • ALL (Allstate Corporation)

  • SYF (Synchrony Financial)

All three new additions were selected based on compelling valuations, strong fundamentals, and bright outlook.

• Hedging Position: Initiated a position in a leveraged ETF to hedge against broad market movements.

As of March 31, 2025, the portfolio is fully invested with no cash holdings.

Portfolio Characteristics vs. S&P 500

Below is the summary of important fundamental indicators of our portfolio:

By comparing these indicators to those of S&P 500 Index, we can see our portfolio has superior financial strength, operational efficiency, and shareholder value creation. In particular,

• Financial Stabilities: Our portfolio has an average Debt-to-Equity ratio of 0.7, compared to 1.5 for the S&P 500—indicating much lower financial leverage. This is one of critical metrics measured a company in bear markets.

• Capital Efficiency: The ROE (42.4%) and ROIC (34.3%) of our portfolio are far superior to those of the S&P 500 (ROE: 19.1%, ROIC: 9.8%).

• Profitability: Our portfolio’s gross margin (59.0%) is almost double those of the S&P 500 (32.5%).

• Valuation Metrics: The free cash flow yield (5.4%) of our portfolio is also much better than that of the S&P 500 (2.5%).

The figure below illustrates the industry breakdown of our portfolio. As shown, the portfolio is well-diversified and not concentrated in any specific industry. We believe this level of diversification is especially important in today’s environment, given the uncertainties surrounding Trump’s tax policies and global trade dynamics.

Outlook

As we move into Q2, the Lumos Alpha remains focused on identifying undervalued, high-quality companies with strong financials and sustainable competitive advantages. We will continue to adjust positioning based on macroeconomic trends, valuation metrics, and company-specific developments.

Thank you for your continued trust in the Lumos Alpha Portfolio Management.