Portfolio Update
There were numerous changes to the portfolio during April, which are recapped here.
Performance Review
April
was a relatively volatile month for the portfolio, though it ended up positive
(+0.27%) but still remains negative year-to-date (-2.1%).
The
major drivers of performance were the Value Equities (+223bps), Energy
Efficiency (-112bps) and Currencies (-66bps) books. The USD weakened against the Euro during the
month, which drove the loss in the Currencies book but Our Man believes that
this is a counter-trend rally in what will be a longer downtrend. The Energy Efficiency book’s losses came
almost entirely from the position in XIDE, which cost over 100bps in
April. The stock fell heavily on 2 major
negative pieces of news; the stock fell heavily on news it had hired Lazard to look into a restructuring plan
and then fell further when the firm had to close its Vernon recycling plant after it failed to meet health-risk standards. These losses were more than offset by the
sharp rise in THRX, which accounted for almost the entire gain in the Value
Equities bucket. The stock rallied after
an FDA Advisory Committee recommended the approval of one of its core drugs. The rally continued after the company announced plans to split itself into 2, a patent/royalty management company and a drug discovery company; with
GlaxoSmithKline being a key partner, and large stakeholder, in THRX this helped
reignite speculation that GlaxoSmithKline may be a bidder for the royalty
management company.
Elsewhere,
the portfolio saw much smaller winners and losers. The Absolute Return Funds (-13bps) were a
negative contributor, as was the NCAV book (-9bps) despite the rising
market. The sharp rise in the market
during the second half of April also negatively impacted the Puts/Hedges book
(-20bps) and though the Precious Metals book (-18bps) cost money in the first
few days of the month, the decision to exit Gold proved to be one that
prevented larger losses. The other good
decision in the portfolio update was to size-up the position in Greece (GREK),
which rallied strongly late in the month and helped the Other Equities book
(+41bps) contribute strongly.
Portfolio (as at 4/30 - all delta and leverage adjusted, as
appropriate)
18.2% - Bond/Absolute Return Funds (DLTNX and HSTRX)
7.7%
- Value Idea Equities (THRX, and DRWI)
6.7%
- Other Equities (GREK, and EWI)
1.0%
- NCAV Equities
0.7%
- Energy Efficiency (AXPW, and XIDE)
-0.0%
- China-Related Thesis (no positions)
-2.1%
- Hedges/Put Options (premium of 5bps in XLP Jan-14 puts, 36bps in XLB Jan-14
puts and 10bps in EWG Jan-14 puts)
-23.3%
- Currencies (EUO – Short Euro)
53.6%
- 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.