Here are some regulatory notes before we get started. Solimar Fund is a Rule 506(c) of Regulation D fund and only available to verified accredited investors. All fund returns in this newsletter are net of fees and expenses, unaudited, as reported by NAV Fund Services. Individual results may vary. Past performance is not necessarily indicative of future results.

Solimar Fund returned 1.0% in October after fees. The SPY was down -0.9%.

The Fund is up 7.9% thus far in 2026, the SPY is up 10.8%.

The average hedge fund is up 2.5%* in the same period. Though we are trailing the SPY, Solimar is outperforming the industry by more than 3x.

Onwards.

_{*The HRFX Global Hedge Fund Index is up 2.46% YTD as of November 2, 2026.}

An object in motion tends to stay in motion.

Newton was describing physics, but the principle has a useful parallel in financial markets. Assets that have been rising often continue rising, while those that have been falling often continue falling.

This is momentum, one of the most extensively documented return patterns in finance.

In August, we introduced our Market Lenses series with medium-term swing trading. This month, we turn to momentum, a strategy built around a simple observation: price trends have a tendency to persist.

Rather than forecasting where markets should go, momentum strategies seek to identify established directional moves and participate while they continue.

Momentum is generally attributed to a combination of behavioral and structural factors.

Investors often underreact to new information, allowing trends to develop gradually. As those trends become established, performance chasing, institutional flows, and risk-management constraints can reinforce the movement.

These effects have been documented across asset classes and market cycles, although their strength varies considerably over time.

For Solimar, the opportunity lies in systematically identifying persistent price behavior across the indexes and sectors we trade.

Our models evaluate directional strength and weakness, adjusting exposure as signals change. Because we operate both long and short, sustained declines can present opportunities alongside rising markets.

We don't need to predict interest rates, earnings, or macroeconomic developments. We respond to the price behavior those forces ultimately produce.

The objective isn't to identify turning points. It's to capture a meaningful portion of sustained market moves.

Momentum performs best in persistent, directional markets. Its greatest challenges arise when trends repeatedly reverse or market leadership changes abruptly.

Choppy markets can produce successive false signals, commonly called whipsaws, while sharp reversals following extended trends can generate more significant losses.

These risks are inherent to momentum. A strategy that waits for confirmation will generally enter after a move has begun and exit after some reversal has occurred.

No amount of optimization can eliminate that trade-off without introducing other trade offs.

The relevant question isn't whether momentum will experience difficult periods. It will.

The question is how those periods affect the portfolio as a whole.

If momentum were as simple as buying whatever went up yesterday, everyone would be doing it successfully.

The challenge is distinguishing meaningful trends from noise, and recognizing when those trends are coming to an end.

Momentum tends to thrive when markets move persistently in one direction. It can struggle when markets repeatedly change course.

Imagine a market that rallies strongly enough to establish an uptrend, only to reverse sharply. The system adjusts, but then the market rallies again. Repeat that cycle a few times and you have one of the most challenging environments for momentum.

These false starts are known as whipsaws, and they can gradually erode returns even when the broader market ends up going nowhere.

There's another, potentially more dramatic challenge.

Some of the strongest market reversals occur immediately after the most persistent trends. A market that has been falling for months can suddenly rally with extraordinary force, catching momentum strategies positioned for further declines on the wrong side of the move.

These episodes are sometimes called momentum crashes.

Both illustrate an important truth:

Even a well-researched, historically persistent market pattern will have periods when it doesn't work.

Which brings us to why Solimar isn't only a momentum fund.

This brings us back to Solimar's multi-strategy approach.

Momentum seeks to capitalize on persistence. Mean reversion seeks to capitalize on reversals following certain market dislocations or overextensions.

Both behaviors can exist within the same market, particularly across different timeframes. A market exhibiting strong intermediate-term momentum may simultaneously present short-term mean-reversion opportunities.

Neither strategy works in every environment, and their returns won't always offset one another.

Our objective is to combine strategies with different return drivers and risk characteristics, reducing dependence on any single market behavior.

We don't need every strategy to work every month. We need them to work together over time.

At Solimar, these strategies operate entirely through quantitative algorithms.

Every signal, position, and exposure adjustment is determined by predefined rules. There are no discretionary trades, forecasts, or portfolio manager overrides.

Our models continuously evaluate market conditions and adjust positioning accordingly, using a process informed by decades of historical research and testing.

Momentum is one component of that process. Its value is not simply its standalone return potential, but how it contributes to the broader portfolio.

Next in The Market Lenses: Mean Reversion, and why markets sometimes snap back.

Whatever the coming months bring, our approach remains unchanged.

We don't need every strategy to work every month. We need a collection of strategies that can complement one another across different market environments.

Some months momentum will lead. Other months a different lens may identify the better opportunities.

And through it all, our algorithms will continue doing exactly what they were designed to do: evaluate market conditions, follow their rules, and adjust exposure accordingly.

We're not trying to be right about the next market move. We're building a system designed to navigate thousands of them, to protect and grow your investment.

Enjoy the ride.
Geoffrey & Tyler

_{2by2 Capital LLC | [email protected] | www.2by2Capital.com}