Cayside Review: 2025 Q1
This newsletter includes our 2025 First Quarter review, global market update and outlook, key numbers, and announcements.
"The stock market is a device to transfer money from the ‘impatient’ to the ‘patient’.”
-Warren Buffett
As we wrap up the first quarter of 2025, we find ourselves navigating a market shaped by shifts in public policy and investor sentiment, both domestically and abroad. In the U.S., fiscal and trade policy restructuring may bring short-term volatility but has the potential to deliver long-term benefits to businesses and investors. Globally, we remain hopeful for peace and ceasefire agreements amid ongoing conflicts in Ukraine and the Middle East. Over the past five years, the global power landscape has evolved significantly. While we monitor these dynamics closely, our primary goal remains steadfast: aligning client portfolios with high-quality investments and resilient portfolio construction to endure long-term market cycles across both public and private markets.
Global Market Update & Outlook
The first quarter of 2025 delivered mixed performance across asset classes, with volatility returning to equity and credit markets as macro policies recalibrated.
Following strong returns for the S&P 500 (SPY) in 2023 (+26.2%) and 2024 (+24.9%), U.S. equity markets retreated in Q1 2025: the S&P 500 (SPY) declined -4.3%, Nasdaq (QQQ) fell -7.6%, and the Dow Jones Industrial Average was down -4.0%. Internationally, markets benefited from increased government spending and capital outflows from U.S. equities. The MSCI EAFE rose +8.1%, while the MSCI Emerging Markets Index (EEM) gained +4.5%.
A notable rotation occurred from "growth" to "value" stocks, with renewed interest in sectors and geographies previously out of favor. We explore the implications of these shifts and where investors may find opportunities moving forward.
Precious metals continued their upward trajectory, with gold and silver reaching new highs. In contrast, digital assets such as Bitcoin declined -11.4%.
Source: Yahoo Finance, cumulative total returns shown. Data as of 3/31/2025
Source: The Wall Street Journal, Federal Reserve, Bankrate, Bureau of Labor Statistics, Yahoo Finance. Data as of 3/31/2025. 2025 data as of 3/31/2025.
Themes & Outlook
Creative Destruction: Public & Private
The Public Sector is undergoing significant change as oversight and scrutiny around federal spending have led to department closures and public sector layoffs. As the government seeks to become more efficient and cost-effective, many public employees and contractors will have to adapt, evolve and/or transition into private-sector roles. Though these changes could temporarily weigh on consumers, local economies and increase market volatility, these changes may ultimately result in a more effective public system, benefiting U.S. taxpayers and businesses alike.
At the same time, Businesses are and will likely be the beneficiary of technological advancement that can change the status quo on communications, operations, research & development, sales and administration, among others. As Artificial Intelligence adoption expands, companies may lower expenses by reducing reliance on software, personnel, and physical infrastructure. This transition is expected to enhance margins and earnings, potentially supporting favorable equity valuations.
Communications is an area that is being redefined as cellular and data towers that transmit laterally are being replaced by satellite-based data transfer through companies like SpaceX’s Starlink. The ability to cheaply communicate in high speed anywhere on the planet is a technological hurdle that will likely have profound implications globally.
Tariffs have been the “boogie-man” in the headlines for 2025, raising concerns about their impact on supply chains and prices. While the long-term effects remain unclear, we view the tariff rhetoric as a strategic negotiation tool to promote domestic production and strengthen U.S. leverage abroad.
While the headlines have shaken U.S. Equity Markets in 2025, many positive catalysts loom on the horizon. Peace and ceasefires in Ukraine and the Middle East could alleviate energy, food and shipping costs bringing down the price of consumer goods and inflation. Decreased inflationary pressure provides breathing room for the Federal Reserve to reduce interest rates which can spur economic activity and consumer spending. Further, savings from federal spending may be passed on in the form of stimulus or tax breaks. We believe that technological innovation will continue to outpace short-term challenges and that long-term opportunities outweigh near-term risks.
Staying the Course
The S&P 500 was down nearly 5% in the 1st Quarter of 2025 after having been up nearly 130% cumulative total return over the past five years. After such a large gain, investors seem to have been panicked by headlines of tariff woes, geopolitical tensions and a slowing consumer. The “on again, off again” sentiment around tariffs has created interim volatility and fear, while the impact of such tariffs remains to be seen. These types of market whims seem like a replay of past fears around European Central Bank Policy, U.S. Interest Rates and the impact of Inflation on U.S. Equities and Technology Companies. While these events often have seemed like cataclysmic changes in the past, they have mostly turned out to be “much ado about nothing” as quality companies continue to innovate and improve shareholder value further buoying equity markets to recent new highs.
Market drawdowns are part of the process. Stocks don't move in a straight line, and they never have. In fact, if you look back over the past century, the best returns often come to those who simply stay the course and take advantage of opportunities when others panic.
A list of rules that we try to focus on when markets show volatility are:
#1. Own High-Quality Companies: Provides confidence and staying power through market cycles
#2. Trouble is Opportunity: Some of the best investors in the world view market drawdowns as the ability to buy great investments at a discount
#3. “When in Doubt, Zoom Out”: There will always be market fears that drive volatility for the fearful and short-sighted. Focusing on a long-term investment time period (10+ years) reduces the “noise” that distracts investors from their investment goals
At Cayside, we diligently evaluate opportunities and risks to help our clients meet their goals. A cornerstone of our philosophy is to develop and execute long-term investment plans with discipline and patience.
Investment Opportunities & Risks
NEW INVESTMENT ACTIVITY: In 1Q 2025, we initiated several new positions across client portfolios, reflecting our continued emphasis on asymmetric opportunities and durable growth stories:
A Hedged-Equity Strategy focused on opportunities in Artificial Intelligence (AI) and the potential creative destruction cycle:
• This strategy is a technology-focused investment strategy that targets the critical hardware and software backbone enabling the AI revolution. The strategy is built around the belief that the next major platform shift—AI—will be driven by advances in silicon and computing infrastructure. Unlike peers that have avoided hard tech, this strategy is focusing on semiconductors, accelerated computing, and networking solutions with scalable value capture potential. We added exposure to this opportunistic hedge fund strategy focused on concentrated, high-conviction investments across technology. We believe the fund’s nimble, data-driven approach will generate alpha in a more dispersed return environment.
A Concentrated Equity Strategy focused on Disruptive Growth, Real/Irreplaceable Assets, and Financials:
• We have begun building a position in this growth equity strategy as part of our broader goal to allocate capital to high-conviction, research-driven investment opportunities. This concentrated fund aligns well with our long-term philosophy, investing in a select group of 20–30 competitively advantaged, growth-oriented businesses that have the potential to compound capital over multiple years. The fund's disciplined, bottom-up process and long-term time horizon stand out in a market driven by short-term narratives right now. The strategy targets companies emphasizing durable competitive advantages, strong free cash flow, and exceptional management teams. The fund offers unique access to private market exposure, including a meaningful position in SpaceX and Starlink—highlighting its differentiated approach in capturing innovation and disruptive growth early.
A consumer-driven brand company with attractive valuations:
• The company presents a compelling long-term opportunity as a premium lifestyle brand with a strong foundation in product innovation, brand loyalty, and expanding addressable markets. The management team and board has recently initiated an aggressive share buyback program, and other strategic decisions to generate shareholder value. After a significant pullback in the stock price in the first quarter, we believe current levels offer an attractive entry point for investors seeking exposure to an industry-leader business with improving fundamentals and product lines.
UNCORRELATED STRATEGIES: To mitigate exposure to crowded passive strategies and overvalued factors, we remain focused on uncorrelated strategies through allocations to active managers. Our recent attention has been on diversified hedge fund strategies, market neutral strategies, macro trading funds, and a long/short equity fund with specialized focuses—including a manager targeting dislocations driven by winners and losers in the artificial intelligence and data communication arms race.
REAL ASSETS: We continue to emphasize real asset exposure through a diversified allocation to gold, silver, Bitcoin, real estate, and REITs. These holdings serve as important hedges against inflation, currency debasement, and geopolitical uncertainty. We believe real assets remain a critical component of a long-term portfolio allocation, particularly as policy uncertainty and global realignment continue to shape investment regimes.
Business Update & Personnel News
NEXT-GEN EDUCATION & FAMILY EMPOWERMENT | We are excited to announce the development of our Cayside Partners Next Generation Education Program, designed to equip each generation with the tools, confidence, and context to steward wealth and purpose over the long term. This includes the launch of educational curriculums and guided workshops focused on investing fundamentals, family governance, financial literacy, and impact/values-based decision making. Our goal is to foster confidence, communication, and continuity within our client families amongst generations.
STRATEGIC LENDING PARTNERSHIPS | We’ve expanded our private client offering through customized lending solutions in partnership with Fidelity and U.S. Bank. These programs provide our clients with access to highly competitive securities-based lending (SBL) and portfolio lines of credit, offering flexible liquidity solutions without disrupting long-term asset allocations. Customized lending solutions is an important focus for advising our clients on both the management of assets and liabilities.
TEAM AND FIRM GROWTH | We are proud to announce that Joseph Mariani, who joined our team earlier this year, has successfully completed his Series 65 licensing and is now a fully registered Investment Adviser. Joe brings operational experience and a client-first mindset to our team, and we are excited for his continued impact. Keep up the great work, Joe!
As of January 31, 2025 and our latest Form ADV filing Cayside Partners now manages or advises on a total of $452,911,311 of client assets.
INDUSTRY RESEARCH | Earlier this year, our team attended the Morgan Stanley Breakers Hedge Fund Conference, engaging with top managers and thought leaders across alternative investments. Palm Beach and South Florida have attracted top investment talent and industry conferences in recent years, and this is a busy time of year for these events. These events help us stay ahead of trends and sharpen our manager selection, security selection, and overall investment research process.
FAMILY OFFICE AND ADVISORY RECOGNITION | We are honored to share that Cayside Partners has been recognized with two industry-leading awards at the Family Wealth Report Awards in New York City this upcoming quarter:
• Top New Entrant in the Multi-Family Office category
• Leader in Client-Driven Innovation
This recognition affirms our commitment to bespoke service, thoughtful strategy, and innovation on behalf of our client families.
PHILANTHROPY & LEGACY PLANNING | As part of our ongoing work in helping our clients with philanthropy and charitable giving, we continue to build out solutions for families interested in impact and legacy. We’ve deepened our relationship with Fidelity Charitable to support donor advised funds (DAFs) and family foundation planning, helping clients build multigenerational giving strategies that align with their values.
We appreciate your support and confidence in our process and are excited to keep adding value for each of our client families.
Disclosures: Cayside Partners, LLC ("Cayside") makes no warranty as to the accuracy or completeness of any data herein. Information presented in this report is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Past performance is not indicative of future results. This report is intended for the recipient(s) only and not for further distribution without written consent. Investment advice offered through Cayside Partners, LLC, a Securities and Exchange Commission registered investment advisor able to provide investment advice in states where it is registered, exempt, or excluded from registration. Content contained herein should not be construed as an offer or solicitation for investment advice or for the purchase or sale of any security, insurance, or other investment product. Investments involve the risk of loss, including possible loss of principal. Please consult with a qualified financial, tax, accounting, or legal professional before implementing any ideas or strategies discussed here. Content provided is obtained from sources believed to be reliable but cannot be guaranteed as to its accuracy or completeness. The AUM figures disclosed herein are as of June 30th, 2024, and may be subject to change. Our firm's AUM figures are reported on a gross U.S. Dollar basis and may include assets managed on a discretionary and non-discretionary basis. Past performance is not indicative of future results, and AUM figures are subject to change. For further information regarding our firm's AUM or to obtain a copy of our most recent Form ADV, please contact us.