September 2013 Review

Portfolio Update 

- Currencies:  A position in YCS, which is Short the Japanese Yen vs. the US Dollar, was added to the portfolio near the end of the month.

Performance Review  

The portfolio rose by 134bps during August, which brought the YTD performance to -0.25%.  

Naturally, after Our Man talked about his bullishness on the US Dollar, it was the currency related positions that were the biggest detractors from performance.  The Dollar weakened against the Euro, Yen and Australian Dollar during the month, especially after the Fed decided not to taper, which led to the Currencies book (-80bps) and the China Thesis (-73bps, the L Chinese A-shares position helped reduce the loss within this book) posting sizable negative returns.  However, the strength of the Euro coupled with the rising markets meant these losses were more than offset by the Other Equities book (+201bps), where the exposure to Greece (+111bps) and Spain (+75bps) drove performance.  The rising equity markets, and continued good newsflow, helped the position in THRX appreciate during the month ensuring the Value Equities book (+71bps) was a strong contributor.  Elsewhere, the performance was fairly marginal; Absolute/Bond Funds (+14bps, helped by falling interest rates), NCAV (+1bps), Puts/Hedges (-9bps) and Energy Efficiency (+9bps).

Portfolio (as at 9/30 - all delta and leverage adjusted, as appropriate) 

15.8% - Other Equities (GREK, EWP and EWI)  

13.5% - Bond/Absolute Return Funds (DLTNX and HSTRX) 

9.0% - Value Idea Equities (THRX, and DRWI) 

1.0% - NCAV Equities 

0.3% - Energy Efficiency (AXPW, and XIDE) 

-0.2% - Hedges/Put Options (premium of 1bps in XLP Jan-14 puts, 5bps in XLB Jan-14 puts and less than 1bp in EWG Jan-14puts)

-12.3% - China-Related Thesis (CROC – Short Australian Dollar, partially offset by CAF – Long Chinese A-Shares) 

-38.9% - Currencies (EUO – Short Euro, YCS – Short Japanese Yen)

30.0% - 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.