Copy of the 2nd Qtr. Newsletter

The following is a copy of the 2025 2nd quarter letter sent to clients. It reviews the markets and the client account’s activity and performance for the 2nd quarter of 2025.

August 8, 2025

The financial markets, like most of us, prefer calm over chaos.  However, the economy and markets are ever changing and rarely tranquil.  The markets normally adjust to these dynamics and have a way of sorting out the winners and non-winners.  Nevertheless, economic change and disruption can cause market turmoil.

While 2025 is full of monumental change, the best example of the markets reacting to a new and different landscape is the turbulent trading action surrounding the announcement of tariffs by the Trump administration.  Obviously, tariffs would alter international trade, but they were only a part of a lengthy equation of unsettling events in 2025.

Here are some of the other noteworthy developments of 2025 - passage of the Big Beautiful Bill, the Russia/Ukraine conflict, Israel/Hamas, the Trump/Powell disagreement, surge in crypto currencies, and rush to invest in AI themes.

As a review, U.S. stocks climbed to all-time highs in February.  As the new administration settled in and tariffs were introduced, the stock market started to fall.  The decline continued through mid-April, and the major indexes plunged over 20%.

No one knew what the international economy would look like when its biggest player was unilaterally enacting new rules.  Truly the stock market didn’t like this change and doomsday predictions of a depression that included suffocating inflation were everywhere.  But in mid-April, the markets stopped going down.

As the stock market stabilized, investors began to understand that fears of an economic implosion were exaggerated.  Worries quickly subsided and the markets began a historic rally.  Over the next 3 months, the major indexes rallied 30%.

Welcome to the capital markets of 2025.  Wall Street became nervous over the uncertainty of the incoming Trump administration especially the tariffs.  This triggered a two-month decline.  But when traders realize the world isn’t ending, a recovery begins.

And once a rally starts there are numerous factors to flame the rally.  Algorithms and computerized trading seize on the momentum.  Passive investing strategies, which invest no matter the conditions, contribute to the move.  FOMO investors and under-performing institutions who are trying to keep up push the trend further.

It became clear throughout 2025’s 2nd quarter that the U.S. economy would be ok and inflation was not blasting higher.  The markets ignored the bombing of Iran’s nuclear facilities, the back and forth of the various trade deals, interest rate debates, and a greatly divided country.  Evidently, there are only certain kinds of uncertainty the bothers Wall Street.

The major indexes recovered the 1st quarter losses and ended the quarter with solid gains.  Here are the averages for 2025’s 2nd quarter and year-to-date through June.

Using a size weighted average, here is how the average Kildare Asset Management – Kerr Financial Group client’s account performed. This is calculated after all fees and expenses.

Several holdings assisted with the second quarter’s performance.  Denison Mine Corporation (DNN) and Cameco Corporation (CCJ) are uranium miners.  CCJ is the second largest uranium miner in the world and owns 49% of Westinghouse which is a leading designer, builder and maintainer of nuclear facilities.  Uranium and nuclear power have become growth areas as the energy demand forecasts have increased exponentially.  CCJ moved from $41 in April to over $70 at the end of June.

DNN is a uranium miner and processor.  After years of planning and regulatory work, their mine is starting operations.  There is a lot of excitement about Denison’s potential.  The projections for their revenues and profits show very strong growth.  DNN’s stock price jumped over 35% in the quarter.

Hallador Energy is a power producer in the Midwest.  HNRG has a coal fired power plant together with a coal mine.  They are currently selling their production into the power grid but are having talks with many organizations about a long-term contract to supply power to data centers.  The Hallador position was added during the sell-off in March and April.  It moved up over 30% in May and June.

Pure Cycle Technologies is a transformational company that recycles plastic.  Their process is superior to alternatives in both quality and quantity.  PCT have been engaged with customers in a testing relationship.  Results have been positive, and sales are starting.  PCT is positioned for strong growth and has planned additional plants to keep up with increasing demand.  Their stock doubled in the 2nd quarter.

It has been a remarkable year on many levels.  The financial markets have had a volatile year as they have faced fast paced and dramatic changes.  The markets have adopted new and different strategies to navigate these market gyrations.  For example, relying purely on economic narratives has put investors a step behind market trends.  Including such things as institutional and dealer flows, algorithmic and computerized trading and momentum signals have been critical to keep up.

The second half of 2025 will continue to present challenges to investors.  A changing economy and landscape will impact the markets and create opportunities.  We will look to take advantage of these situations.

Please contact me with any questions.  I am happy to explain the situation in detail.  As always, thank you for your support and confidence in Kerr Financial Group.

Sincerely,

Jeffrey J. Kerr, CFA

President