June 2014 Review

Portfolio Update

- None

Performance Review
June proved the first month in a while that the portfolio significantly outperformed the market, rising +5.11%, which puts the YTD performance at +4.3%. 

The entirety of the portfolio’s performance came from the Equity Book (+519bps), with winners being broad spread across the book.  As noted in recent months, THRX (Theravance) spun-off TBPH (Theravance BioPharma) – while the stock(s) had fallen into the spin-off (on limited news), they rallied strongly during June after it was completed (on limited news), more than recouping their losses and contributing 183bps and 91bps respectively to the portfolio.  The Internet-related names, which were added to the portfolio during the Mar-Apr pullback, added a combined 178bps as the sector continued to rally strongly, with TWTR (+88bps) leading the way.   Finally, the position in DRWI contributed 33bps, after the stock rallied after the company won a contract and raised guidance – perhaps, after a long period of disappointment, the company might finally be poised to take advantage of its technology.

Elsewhere, the portfolio largely broke-even – with markets rising, the Technical Book (+40bps) helped performance, and there were marginal contributions from the Absolute/Bond Funds (+3bps), Energy Efficiency (+2bps) and China Thesis (<+1bp).  Offsetting these were the International/Country book (-14bps, poor performance in the European periphery), Currencies (-26bps, weaker dollar) and the Puts/Hedges book (-12bps, rising markets and low volatility).

Portfolio (as at 6/30 - all delta and leverage adjusted, as appropriate) 

31.7% - Equities (THRX, PNQI, TWTR, TTM, RDY, VIPS, QIWI, P & DRWI) 

21.5% - Technical (DDM, SSO and QLD)

20.5% - International/Country (GREK, EWP, EWI & GVAL)

5.7% - Bond/Absolute Return Funds (DLTNX and HSTRX)
0.2% - Energy Efficiency (AXPW, and XIDE)

-1.3% - Hedges/Put Options (premium of 25bps in EWZ Jan-15 puts, and 4bps in EWJ Jan-15 puts)

1.5% - China-Related Thesis (CROC – Short Australian Dollar, more than offset by CAF – Long Chinese A-Shares) 

-48.8% - Currencies (EUO – Short Euro, YCS – Short Japanese Yen)

3.5% - 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.