- There were no changes to the
portfolio during August.
Performance Review
The portfolio fell by 36bps during August, putting the year-to-date performance at -1.56%. Substantially all of the losses came from the Value Equities (-71bps) book with both names in the book falling. THRX continues to be relatively volatile, giving back some of its recent gains during August on limited news. DRWI fell after filing a mixed-shelf registration (allowing it to sell equity, warrants and/or convertibles) to raise up to $80mn; it’s unclear whether this is because business is building more slowly (bad), or because the business needs extra working capital to support a growth cycle (good), but investors leant towards the former.
Elsewhere losses were somewhat limited; Bond Funds (-7bps, on higher rates), Other Equities (-8bps, as European equity markets fell) and Puts/Hedges (-4bps, as time decay offset falls in the underlying). The gains were also fairly sporadic with NCAV book (+2bps) and Energy Efficiency (+2bps) contributing a small amount. The strengthening of the US Dollar in the final few days of the month helped the Currencies (+20bps) book turn a profit, after being down most of the month. The China Thesis (+31bps) also benefited from the Dollar’s strength (vs. Aussie Dollar) as well as an improvement in data in China coupled with the belief that the government could be more accommodative if things slow, which helped Chinese Equities rally.
Portfolio (as at 8/31 - all delta and leverage adjusted, as appropriate)
Performance Review
The portfolio fell by 36bps during August, putting the year-to-date performance at -1.56%. Substantially all of the losses came from the Value Equities (-71bps) book with both names in the book falling. THRX continues to be relatively volatile, giving back some of its recent gains during August on limited news. DRWI fell after filing a mixed-shelf registration (allowing it to sell equity, warrants and/or convertibles) to raise up to $80mn; it’s unclear whether this is because business is building more slowly (bad), or because the business needs extra working capital to support a growth cycle (good), but investors leant towards the former.
Elsewhere losses were somewhat limited; Bond Funds (-7bps, on higher rates), Other Equities (-8bps, as European equity markets fell) and Puts/Hedges (-4bps, as time decay offset falls in the underlying). The gains were also fairly sporadic with NCAV book (+2bps) and Energy Efficiency (+2bps) contributing a small amount. The strengthening of the US Dollar in the final few days of the month helped the Currencies (+20bps) book turn a profit, after being down most of the month. The China Thesis (+31bps) also benefited from the Dollar’s strength (vs. Aussie Dollar) as well as an improvement in data in China coupled with the belief that the government could be more accommodative if things slow, which helped Chinese Equities rally.
Portfolio (as at 8/31 - all delta and leverage adjusted, as appropriate)
14.0%
- Other Equities (GREK, EWP and EWI)
13.6%
- Bond/Absolute Return Funds (DLTNX and HSTRX)
8.4%
- Value Idea Equities (THRX, and DRWI)
1.0%
- NCAV Equities
0.2%
- Energy Efficiency (AXPW, and XIDE)
-0.3%
- Hedges/Put Options (premium of 1bps in XLP Jan-14 puts, 12bps in XLB Jan-14
puts and 4bps in EWG Jan-14 puts)
-14.4%
- China-Related Thesis (CROC – Short Australian Dollar, partially offset by CAF
– Long Chinese A-Shares)
-30.7%
- Currencies (EUO – Short Euro)
35.5%
- 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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