Meeting · chair Daniel

book brief. nav one million flat, no marks moved yet — unrealized and realized both zero. one position: spy, 1,321 shares, 99.9pct of nav. cash $689.92, basically nothing, 0.07pct. that's the whole book — a single index ETF, no active names on yet. concentration reads top-5 99.9pct but it's all benchmark, so it's not drift, it's a cold start sitting in the sweep-equivalent. sector look-through is just spy's own weights: infotech 31.0, financials 13.0, consumer disc 11.0, health care 11.0, comm services 9.0, industrials 8.0, staples 6.0, energy 4.0, utilities 3.0. nothing for the analysts to react to except the obvious — every active position from here is a deliberate step off this spy base, and we're carrying zero of them right now. no rejects, no breaks, no halts. one fill on the tape: the spy buy. waiting on style and the first names. handing back to the chair.

The tell this fortnight is the 10-year real yield. The 10-year backed up roughly 20bps to 4.45%, having tagged 4.67% mid-May, and the move is almost entirely real — 10-year reals climbed from ~1.90% to 2.06% (peak 2.18%) while the 2-year sat pinned near 4.00%. That is a bear-steepener led by term premium and real rates, not a cut-driven steepener. The Fed funds rate has held 3.64% since January; the FOMC is parked, data-dependent, and in no hurry while CPI is still grinding higher (headline index 332.4 in April, ~6.4% three-month annualized off the Dec base). Restrictive reals above 2% are the binding constraint here.

Credit refuses to care: high-yield OAS tightened to 274bps and VIX is at 15 — complacency, not stress. The broad dollar is firm near 119.3. Oil rolled over ~4% on the month (USO -4.2%), softening the near-term energy tape even as it stays the cleanest inflation hedge structurally.

Tilt stands: quality and cash-flow yield over long-duration growth while 10-year reals sit above 2% and the nominal is north of 4.30%. Keep the modest low-vol bias — credit is priced for perfection and that is the asymmetry to respect.

Sector / factor stance — Daniel.

Gross stays ~100%: cash is a residual, no derivatives, no shorts, so the lever is composition, not exposure. We move the book away from index-default weights, not away from being invested.

Riding Priya's frame — late-cycle, real-rate-led bear-steepener, 10y 4.45% / reals 2.06%, HY OAS 274, VIX 15.3. That gates three tilts:

• Factor I'm sponsoring: quality + cash-flow yield, modest low-vol. Reals >2% and 10y >4.30% keep the long-duration-growth UW on. High FCF yield, low leverage, pricing power. Low-vol is a hedge against the complacency in a 274 OAS / 15 VIX tape — priced for perfection.
• Underweight: long-duration growth and high-beta size. The index is 31% InfoTech at default — that's our biggest passive duration bet. Trim toward quality compounders, not the speculative long-end.
• Energy: structural OW vs the 4% index weight as the inflation hedge, but oil's -4% on the month, so I scale in, not a market order today.

The board as a quality×valuation 2x2: I want the book top-left — high quality, reasonable multiple. Margaret brings names into those quadrants; I size and pair them against this frame. No index-relative sector bet exceeds the risk envelope until Iris sets the bands.

Correction first: the hard single-name gate is 3.5% of NAV, not 15%. So no individual pitch can become a 150bps-gap problem this week — the gate caps each name at $35k of NAV, and the top-5 cap holds the five biggest under 22%. Those are well-policed. The concentration risk that policy WON'T catch lives in the SPY unwind itself. We sit 31% Information Technology today purely by holding the index. As we fund active names by selling SPY, the gate lets tech ride up to 1.6x benchmark — call it ~50% — without a veto. That is the build-out path I'm watching: a book that drifts to a tech-and-megacap factor bet nobody voted for, one 3.5% name at a time. Same with beta — every quality/low-vol name we add pulls toward the 0.9 floor; a cluster below it is a stance, not an accident. Mid-week flag triggers: tech crossing ~45%, beta nearing 0.9, or any sector funded past 1.4x while we still hold residual SPY. VOTE: approve.

Three sub-themes I'm working, all consistent with Priya's late-cycle, real-rate frame.

First, toll-booth compounders — businesses that take a clip of volume regardless of price level: the card networks, the exchanges, the index/data franchises. When reals sit above 2% and the cost of capital is real again, I want owners' earnings I can actually count, not 2030 terminal value. Visa and Mastercard convert ~50% of revenue to free cash and buy back ratably; that's the cash-flow yield Priya is asking for, dressed as growth.

Second, integrated energy as the inflation hedge — but I buy reserves and returns-on-capital discipline, not the oil tape. Exxon and Chevron are underwritten at mid-cycle crude with double-digit distribution yields; a soft month doesn't break the thesis.

Third, consumer-staples float — Costco's membership fee, the subscription hiding inside a retailer. Watching, not chasing at 50x. Conviction lives in the franchise, not the multiple.

Numbers reconcile to the FY2025 10-K (SEC XBRL): S&P Global did $15.34B revenue, +7.9% YoY off the as-filed $14.21B base — Daniel's +10.4% is the EODHD TTM-MRQ cut, both honest, just different windows. $6.48B operating income is a 42% as-filed op margin (EODHD TTM 44%), $5.65B operating cash flow, and ~9M shares retired (307.8M→298.8M). EPS $14.66 vs $12.35 prior. This is the index/ratings/data toll booth — it taxes capital-market volume, and in a bear-steepener that means more issuance and re-ratings flow. Top-left quality, conviction 4, 2.5% clears the gate.

One structure flag, not an objection: SPGI is GICS Financial Services. With V at 3.0% and CME at 2.5% already on the floor, SPGI adds another ~2.5% — that's ~8% of the active book in one bucket before we've filled anything else. Each clears standalone; I just want Iris and Daniel watching the financials band as the next names land. I'm a yes at 2.5%.

Not my name to pick — read this as the overlay read on SPGI. The macro state is unchanged from this morning's frame: 10-year reals at 2.06% (peaked 2.18% on 19-May), the 2-year pinned near 4.00%, VIX at 15.3, broad dollar firm. SPGI is the cleanest expression of the late-cycle / real-rate frame on the board — an index/ratings/data toll-booth that clips capital-market volume, not price level, and beta ~1.1 keeps us inside the band. I endorse the 2.5% starter.

The one thing I'm watching is factor crowding, not the name. V + CME + SPGI = 8.0% in Financial Services, three toll-booths levered to the same rate-repricing thesis. The sector-vs-SPY band caps the sleeve near 20.8% of NAV (financials ~13.0% of index x1.6), so we have headroom today — but as the book fills, four names answering one macro question is correlation, not diversification. Size it knowing the next financials add gets scrutiny.

Clears the gate — 2.5% under the 3.5% single_name_weight_band, top-5 fine while we're still 99.9% SPY. So nothing here stops it but us. On a 2.5% position ($25k), a -10% gap is ~25 bps of NAV; a stress -20% is ~50 bps. Bounded, and I'll wear it.

Two things on the record. First, earnings 2026-07-30 — that's a print inside any normal holding window, and SPGI gapped on its last four (surprises +3.1%, -0.9%, +7.3%, +5.0%). Size it knowing the catalyst is real, or accept we trim before late July. Second, SPGI is beta 1.105 — the first name that lifts us off the low-vol floor, and it stacks Financial Services to V+CME+SPGI ~8% as the book fills. Watch, not a block. VOTE: approve

eod 06/01. meeting tape only, no fills worked. four names on the floor — v 3.0, cme 2.5, xom 2.0, spgi 2.5 — book still 1,321 spy @ 756.48, 99.9pct nav, $689.92 cash. spgi is liquid, 3.3mm adv, a $25k clip is dust; no slippage concern at this size. holding for style instructions on whatever clears the vote.

FILLED — BOUGHT 58 SPGI @ $429.19 (now ~2.47% of NAV), funded by trimming the SPY block. Book: 2 names, SPY ~97.4%, cash $1,006. This name is set — no need to re-table it.

This is my leg and I'll vote it. What does Exxon actually do? It's an integrated major that pumps, refines, and sells — and the thesis isn't the oil tape, it's the distribution machine on top of it. Per the FY2025 10-K, $52B operating cash flow held above $50B even with crude softer on the month, ~4% of float retired YoY, a 2.84% forward yield ($4.12 rate, ex-date 5/15 passed), and beta 0.18 — the structural inflation hedge on Priya's frame with low correlation to the book. Sized to 2.0% deliberately: 3% trips the energy sector-vs-SPY band with the index ~4% energy, and I won't chase with oil down 4%. Gate clears clean at 2%. Conviction 4. Aye, and file.

Overlay read on XOM, not a name pick — the energy leg is the right structural hedge for this frame. The macro state is unchanged: 10-year reals at 2.06% (peaked 2.18% on 21-May), the 2-year pinned at 3.99%, the 10-year off its 4.67% high to 4.45% — the real-rate-led bear-steepener still in force, with CPI grinding and credit complacent (HY OAS 274bps, VIX 15.3). Energy belongs in this regime as the inflation hedge. One correction to the room: WTI is not cheap. The clean series shows crude ran to ~$112 mid-May and has only pulled back to ~$98 — you're adding near the upper third of a $86–112 range, not into weakness. So Margaret's distribution underwrite (52B OCF, beta 0.18) is exactly the right way to own it — own the cash machine, not the tape. The 2.0% sizing to clear the energy sector-vs-SPY band is the disciplined call; leave room to add if crude rolls back toward the low $90s. Endorsed.

Clears the gate — 2.0% sits under the 3.5% single_name_weight_band, top-5 untouched while we're still ~97% SPY. So nothing stops it but us, and at this size I'll wear it.

Loss path: on a $20k position, a -10% gap is ~20 bps of NAV, a -20% energy-stress -40 bps. Beta 0.18 means the real risk isn't index beta, it's the oil tape — but Margaret's underwriting the distribution, $52B OCF, not the crude print, and the size respects that. Earnings 2026-07-31 land inside the window; the recent prints have been mild (±3-12%, not gappy like SPGI), so no freeze needed at 2%. Sized to 2% it also stays under the energy-vs-SPY band. Bounded, acceptable.

VOTE: approve

no fills worked this turn — xom 2.0pct on the floor, vote in progress. clean read: ~138 shares at 145.26 funds to ~$20k, ~16mm adv so a $20k clip is dust, no slippage concern. funded by trimming the spy block same as spgi. book stands 2 names — spgi ~2.47pct, spy ~97.4pct, cash $1,006. waiting on style from the chair before i lift it. no rejects, no breaks.

FILLED — BOUGHT 135 XOM @ $148.56 (now ~1.96% of NAV), funded by trimming the SPY block. Book: 3 names, SPY ~95.4%, cash $1,462. This name is set — no need to re-table it.

This is my leg and I'll lead it. What does Visa actually do? It runs VisaNet — the rails clip a fee every time money moves, with zero credit risk parked on the balance sheet. Per the FY2025 10-K: $40.0B revenue, $24.0B operating income at ~60% margin, $23.1B operating cash flow against $20.1B net income — over 100% cash conversion, the cleanest owners' earnings in the index. +17% revenue YoY, beta 0.784. At 28x I'm paying up for quality, not buying cheap-and-bad; that's the right trade when reals sit above 2%. Gate dry-run: clears at 3.0%, no breaches. Conviction 5, buy 3.0%.

Overlay read on V, not a name pick — Margaret's leg, and the factor fit is clean. The frame is unchanged: 10-year reals at 2.06% (28-May, off the 2.18% peak), 2-year pinned ~3.99%, the real-rate-led bear-steepener intact. V is the toll-booth quality + low-vol expression that pairs with SPGI on exactly this thesis — a volume clip with no credit duration, which is what you want while reals sit restrictive and credit is priced for perfection.

My one structural flag to the room: V at 3% lands it next to SPGI in Financial Services — combined active financials ~5.5%. We're inside the ~20.8% band cap, so there's headroom and I endorse it here. But this is now the binding constraint, not the single-name gate. The next financials add gets scrutiny.

V 3.0% clears the live gate — would_clear=true, no breaches, under the 3.5% single_name_weight_band. Funded out of the ~95% SPY block, so this is migration not concentration; top-5 stays full of SPY+actives.

Loss path on a ~$30k clip: a -10% gap is ~30 bps of NAV, a -20% stress -60 bps. Beta 0.784 is low-vol, no earnings inside the holding window per Margaret — bounded, and I'll wear it.

Watch, not a block: V+SPGI put Financials active sleeve ~5.5% and the active book keeps clustering low-vol (V 0.78 / XOM 0.18 / SPGI 1.105). Beta drift remains my binding mid-week trigger as SPY funds out, not single-name size. Nothing breached.

VOTE: approve

v 3.0pct = ~$30k = ~92 shares at 326.36 last close (2026-05-29 bar)
~8mm adv, $30k clip is dust — no slippage concern
funded by trimming the spy block, same as spgi/xom
still no working style on any order — asked, waiting on chair. vwap-over-session vs marketable-limit-open. ops doesn't vote.

FILLED — BOUGHT 94 V @ $320.34 (now ~3.06% of NAV), funded by trimming the SPY block. Book: 4 names, SPY ~92.4%, cash $915. This name is set — no need to re-table it.

This is my leg and I'll close it. What does CME actually do? It owns the rate-complex derivatives venue — Treasury futures, SOFR, eurodollar successors — and clips a fee per contract cleared. The asset gross-up to $198B is clearing collateral; ignore it. The business is the fee engine: per the FY2025 10-K, $6.52B revenue, $4.23B operating income at ~65% margin, $11.16 diluted EPS, $4.28B operating cash flow. Beta 0.26. This is the counter-cyclical leg — Priya's bear-steepener forces rate-repricing, which drives hedging ADV directly into CME's till. Gate clears at 2.5% (would_clear, no breaches). One structural flag for the room: CME stacks onto V+SPGI, taking Financials to ~8% active vs SPY — fine today, but that band is the binding constraint as the book fills, not the single-name gate. Tell to watch: quarterly rate-complex ADV. Voting aye, conviction 4, 2.5%.

Overlay read on CME, not a name pick — Margaret's leg. Frame unchanged: 10-year reals 2.06% (28-May, off the 2.18% peak), 2-year pinned ~3.99%, a real-rate-led term-premium bear-steepener. CME is the cleanest macro expression I have of that: it monetizes rate-complex repricing — the more Treasury/SOFR hedging the steepener forces, the more contracts clear. Beta ~0.26, a low-vol leg, counter-cyclical to V/SPGI. One structural flag, not an objection: CME is Financials, so V+SPGI+CME push the sector to ~20% effective against a ~20.8% band cap. Headroom is thin. From here the Financials band is the binding constraint, not the name gate — next financials add needs a trim. Endorsed.

CME 2.5% clears the live gate — would_clear=true, no breaches, under the 3.5% single_name_weight_band. Funded out of the ~92% SPY block, so migration not concentration; top-5 stays full of SPY+actives. Loss path on a ~$25k clip: a -10% gap is ~25 bps of NAV, a -20% stress ~50 bps. Beta 0.26 — this is rate-complex ADV risk, not index risk. Bounded, and I'll wear it.

One watch, not a block: Financials goes to V+SPGI+CME ~10% active here, still inside the sector-vs-SPY band against the index's own ~17% financials weight. The binding constraint from here is beta drift — three low-vol active legs (0.78/1.10/0.26) cluster us toward the 0.90 floor as SPY's ~1.0 funds out. That stays my mid-week trigger, not the single-name gate.

VOTE: approve

cme 2.5pct = ~$25k = ~91 shares at 273.54 (2026-05-29 bar)
name ran -8.5pct over 10 sessions, ~2.5mm adv, vol spike to 6.4mm on 29-may
$25k clip is dust vs that adv — spread/skew negligible, no execution risk
funded by trimming the spy block, same as v/spgi/xom
post-cme book: financials stacks v+spgi+cme ~7.5pct active — that band is the watch, not the gate
still no working style ratified. asked. waiting on chair before i lift it. ops doesn't vote

FILLED — BOUGHT 95 CME @ $263.19 (now ~2.60% of NAV), funded by trimming the SPY block. Book: 5 names, SPY ~89.9%, cash $-51. This name is set — no need to re-table it.

Closing #43. Frame holds: late-cycle, real-rate-led bear-steepener, credit complacent — quality and cash-flow yield over long-duration growth while reals >2% and 10yr >4.30%, modest low-vol tilt. Today: CME 2.5% open carried unanimously (filled 95 sh @ $263.19, ~2.60% NAV), funded from the SPY block — migration, not concentration. That follows V (filled, ~3.06%) earlier. Nothing vetoed. Book now 5 names, SPY ~90%, cash flat ($-51) — Ops, true up the sweep into SGOV. Open item: Financials is now full at ~8% active vs SPY — next legs come from other sectors, not more toll booths. No risk flag on the table. Hand to Lena for the minutes.