Portfolio Update
- International/Country: Our Man exited his positions in both Italy (EWI)
and Spain (EWP) during the second half of the month. Both had been good performers for the
portfolio in the 12-18months that we held them (especially EWP, which returned
50%+), so why sell? It’s a combination
of a couple of things; from those OM speaks to, opinion on Europe seems rather
uniformly positive with too many folks claiming this is the start of a new bull
market (sadly, bull markets rarely ever start when everyone proclaims them to
be starting, see 2009) – this combined, with the deteriorating technical of
markets across Europe (not just Spain/Italy, but France and Germany too amongst
others), still mixed/mediocre macro and company news, and the increased
nervousness OM has over the various larger issues in the world, made it seem
like a good time to step away.
- Absolute Return/Bond
Funds: Our Man closed out the small position in HSTRX.
Performance Review
The portfolio fell 2.02%, leaving it at +2.2% for the year.
However, despite the
magnitude of the loss it was actually a quiet month for the book. The Equities book (-235bps) represented the
key detractor from performance, and within that book it was the position in
THRX (which cost c205bps) that drove performance. THRX gave back much of recent gains on a
mixture of negative press regarding uncertainty as to the speed of take-up and
potential market size of its drugs which could impact the ability of the
company to maintain (and increase) the dividend, and investors exiting the name
following the recent spin-off. The rest
of the Equities book was largely flat, though DRWI (-25bps) continued to
struggle following the recent fundraise, while the Internet-related names added
this year posted a marginal positive contribution.
As noted, the majority of
the books had limited impact on the portfolio.
The Absolute Return/Bond Funds (-1bps), Puts/Hedges (-9bps), Technical (-11bps)
and Energy Efficiency (-3bps) all posted small losses, which were offset by the
gain in China Thesis book (+35bps, on the back of strong Chinese A-share
performance). The International/Country
book (-67bps) was a noticeable detractor as European markets weakened
significantly, though the exiting of the positions in Spain/Italy during the
middle of the month helped constrain the impact. The weakness in Europe also saw the Euro
weaken, which drove the positive performance in the Currencies book (+89bps).
Portfolio (as at 7/31 - all
delta and leverage adjusted, as appropriate)
31.6% - Equities (THRX, TBPH, PNQI,
TWTR, TTM, RDY, VIPS, QIWI, P & DRWI)
21.2% - Technical (DDM, SSO and
QLD)
10.4% - International/Country (GREK
& GVAL)
4.3%
- Bond/Absolute Return Funds (DLTNX and HSTRX)
0.2% - Energy Efficiency (AXPW, and XIDE)
-0.4% - Hedges/Put Options (premium of 17bps in EWZ Jan-15 puts, and 2bps in
EWJ Jan-15 puts)
2.0% - China-Related Thesis (CROC – Short Australian Dollar, more than offset
by CAF – Long Chinese A-Shares)
-48.9% - Currencies (EUO – Short
Euro, YCS – Short Japanese Yen)
14.2% - 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.