Let's all go to the lobby;
Let's all go to the lobby;
Let's all go to the lobby
To get ourselves a treat.

Delicious things to eat;
The popcorn can't be beat.
The sparkling drinks are just dandy;
The chocolate bars and nut candy.
So let's all go to the lobby
To get ourselves a treat.
Let's all go to the lobby
To get ourselves a treat.

- Technicolor Refreshment Trailor No. 1, Filmack1

Despite another interest rate hike in June by the Federal Reserve that raised the target federal funds range to 1.75-2.00%, along with plenty of increased tariff talk and (some) implementation by the Trump administration, the investment world was relatively calm in the second quarter of 2018. Three of the four primary asset classes were up for the period: stocks, long-term Treasury bonds, and commodities were all up, while gold was down. As a side note, the decrease in gold offers an interesting counter to the fear of accelerating inflation from wages and what some say is a capacity-constrained economy.

Fears that seemed to be building in the first quarter plateaued, though did not go away. Credit spreads climbed at a decelerating rate and the percentage of stocks above their 200-day moving average increased from a recent low of 40% back above 50%.

Some of the first quarter’s volatility did persist and created a few opportunities. During the second quarter, we initiated positions in two new individual securities: IMAX Corporation and Zoe’s Kitchen.

IMAX Corporation (IMAX)

We purchased shares in IMAX Corporation (IMAX) on May 1 at just under $22 per share. IMAX provides systems to both movie theaters and studios enabling the development and viewing of very large format, ultra-high-definition films. In an era where consumers focus on the “experience,” IMAX elevates a trip to the theater. An IMAX film is bigger and brighter than the traditional theater and thus, when moviegoers seek to leave home (and Netflix) more are choosing to see a movie on an IMAX screen and are willing to pay up for that experience.