Lumos Alpha Portfolio Update — November 2025

In November 2025, Lumos Alpha’s Quant Portfolio I incurred a loss. The cash account posted a monthly return of -4.85%, while the year-to-date (YTD) return remained strong at 36.4%. The margin accounts experienced a more pronounced drawdown, with monthly losses in the range of -8% to -15%, depending on the leverage ratio relative to equity.

There were two primary drivers behind the larger losses in the margin accounts this month:

1. High use of leverage in a historically favorable month for tech.

   Historically, over the past decade, November has been one of the strongest months of the year for technology stocks. Our models incorporated this seasonal pattern and therefore increased leverage in the margin accounts, allocating most of the borrowed funds to technology names. However, in November this year, tech stocks underperformed due to a short-selling report by Michael Burry, and the anticipated seasonal tailwind did not materialize.

2. Market reaction to Michael Burry’s short positions in NVDA and PLTR.

   News of Michael Burry’s huge short positions in NVDA and PLTR triggered a wave of risk-off sentiment in certain technology stocks, particularly AI-related names. Several of our large leveraged positions saw double-digit declines in a short period, including NVDA, PLTR, and other related holdings. While we respectfully disagree with Burry’s analysis on NVDA and PLTR —we view his framework as more appropriate for traditional businesses and believe that high-growth AI names require a different long-term lens—we also recognize the impact of sentiment and crowding on these stocks. In light of the shift in market psychology, we intend to remove this category of AI growth stocks from the stock universe of Quant Portfolio I going forward.

Figure 1. Monthly return comparison between Quant Portfolio I (cash account) and S&P 500 Index Fund.

Quant Portfolio II recorded a monthly return of -5.43% in November, with a YTD return of 57.7%. Because this strategy is inherently focused on trading high-beta stocks, the margin accounts did not employ heavy leverage in technology names. Instead, the small amount of leverage used was allocated to non-tech sectors such as healthcare and consumer staples. As a result, the performance gap between the margin accounts and the corresponding cash accounts for this strategy was pretty small in November.

Figure 2. Monthly return comparison between Quant Portfolio II (cash account) and S&P 500 Index Fund.

Lumos Alpha’s flagship portfolio returned -4.36% in November, bringing its YTD performance to 13.7%. The flagship portfolio’s weaker performance this month was driven by two factors. First, more than 30% of the portfolio is allocated to the Quant Portfolio I strategy, which, as noted above, was negative in November. Second, within the remaining 60%+ long-term holdings, the portfolio maintains sizable positions in NVDA, along with smaller positions in PLTR and other AI stocks. These positions were also adversely affected by the Burry short-selling report and subsequently experienced significant drawdowns.

As mentioned, we do not share Burry’s negative view on NVDA and other leading AI names. Accordingly, within the flagship portfolio we have chosen to maintain our core long-term positions in NVDA, and related holdings.

Looking ahead into December, we will continue to adjust the flagship portfolio’s positioning to achieve what we believe is a more appropriate balance among long-term technology holdings, long-term non-technology holdings, and positions held via our quantitative strategies.

Figure 3. Monthly return comparison between Flagship Portfolio (cash account) and S&P 500 Index Fund.