- China Thesis: With data out of China continuing to be tepid and signs that the US is at the beginning of the end of its monetary easing policy, OM scaled back up his Short Australian Dollar position (CROC) in the middle part of the month.
Performance Review
Aided by buoyant Equity markets, and a strengthening US Dollar, August proved a very healthy month for the portfolio which rose 4.0%, putting the year-to-date performance at 6.3%.
As noted, the strong equity markets were very beneficial to the portfolio. The Equities (+249bps) was the largest contributor to performance, with strong contributions from RDY and THRX (both Healthcare-related names), TTM (Jaguar/Land Rover sales continue to go well) and a number of the Internet names (especially TWTR). Our Man is nearer exiting some of the positions in this book, mainly some of the Internet-related ones which were added after the large fall in the space in April/May. The Technical book, through its leveraged index positions, added 89bps to performance.
The main economic event of the month was the annual conclave of Central Banker types at Jackson Hole, from where folks got the continued sense that the US is coming (albeit slowly and reluctantly) towards the end of its easing cycle, but where Mario Draghi (President of the European Central Bank) opened the door to further easing in Europe. Coupled with further mediocre news on the Japanese economy, the result of all of this, was a bunch of Euro and Yen weakness and some Dollar-strength. The Currencies book (+76bps) was a grateful beneficiary.
Elsewhere, much ado about nothing. Absolute Return/Bond Funds (+4bps) and the International/Country book (+9bps) helped performance, while the Puts/Hedges (-13bps, markets kept going up), Energy Efficiency (-2bps) and China Thesis (-13bps, mainly from the weakness in Chinese A-Shares) hurt.
Portfolio (as at 8/31 - all delta and leverage adjusted, as appropriate)
32.7% - Equities (THRX, TBPH, PNQI, TWTR, TTM, RDY, VIPS, QIWI, P & DRWI)
22.1% -
Technical (DDM, SSO and QLD)
10.1% - International/Country (GREK & GVAL)
4.1% - Bond/Absolute Return Funds (DLTNX and HSTRX)
0.2% - Energy Efficiency (AXPW, and XIDE)
-0.2% - Hedges/Put Options (premium of 3bps in EWZ Jan-15 puts, and 2bps in EWJ Jan-15 puts)
-12.4% - China-Related Thesis (CROC – Short Australian Dollar, more than offset by CAF – Long Chinese A-Shares)
-48.5% - Currencies (EUO – Short Euro, YCS – Short Japanese Yen)
6.5% - Cash
Disclaimer: For added clarity, Our Man is invested in all of the securities mentioned. He also holds some cash and a few other securities (of negligible value). You should not buy any of these securities because Our Man has mentioned them, but should do your own work and decide what’s best for you
10.1% - International/Country (GREK & GVAL)
4.1% - Bond/Absolute Return Funds (DLTNX and HSTRX)
0.2% - Energy Efficiency (AXPW, and XIDE)
-0.2% - Hedges/Put Options (premium of 3bps in EWZ Jan-15 puts, and 2bps in EWJ Jan-15 puts)
-12.4% - China-Related Thesis (CROC – Short Australian Dollar, more than offset by CAF – Long Chinese A-Shares)
-48.5% - Currencies (EUO – Short Euro, YCS – Short Japanese Yen)
6.5% - Cash
Disclaimer: For added clarity, Our Man is invested in all of the securities mentioned. He also holds some cash and a few other securities (of negligible value). You should not buy any of these securities because Our Man has mentioned them, but should do your own work and decide what’s best for you
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