November 2014 Review

Portfolio Update  
- Technical:  Much to OM’s chagrin, the moves in the indices in early November confirmed that that the late-September/early-October signal had indeed been a false ‘sell’ signal.  As such, OM is watching the market and looking for the right entry point to get back into the Technical book’s positions.

Performance Review  
October proved a volatile month for the market, though somewhat less so for OM’s book, which ended +209bps for the month, putting the YTD performance at +6.0%.

The driver of performance was OM’s currency exposure, specifically the portfolio’s large Long US Dollar exposure.  The Currencies book (+158bps) was up strongly on the month, driven by the position in YCS (Short Yen/Long USD) which contributed 140bps, most of which came very late in the month after the Japanese Central Bank announced plans to further increase their QE.  The China Thesis (+90bps) saw contributions both from CROC (+55bps) as the Australian Dollar weakened, and from CAF (+35bps) as Chinese A-Shares strengthened.

Though the equity markets rose during October, OM’s equity proved unprofitable costing the portfolio around 64bps.  The losses were caused by the Theravance positions (THRX/THBP, -41bps combined) as fears continued that the take-up of the products is below expecations, and the position in EOX (-52bps) which continued to fall together with the ever declining oil price.  The Internation/Country book (+28bps) posted a healthy gain, while the Absolute/Bond Fund (+4bps), Puts/Hedges (0bps) and Energy Efficiency (-6bps) had limited impact on performance.

Portfolio (as at 11/30 - all delta and leverage adjusted, as appropriate) 
18.7% - Equities (EOX, RDY, TBPH, THRX, TTM, TWTR & VIPS) 
8.0% - International/Country (GREK & GVAL)
4.2% - Bond/Absolute Return Funds (DLTNX)
0.1% - Energy Efficiency (AXPW, and XIDE)

 -0.0% - Hedges/Put Options (premium of less than 5bps EWZ and EWJ Jan-15 puts) 

-14.8% - China-Related Thesis (CROC – Short Australian Dollar, partially offset by CAF – Long Chinese A-Shares) 
-57.6% - Currencies (EUO – Short Euro, YCS – Short Japanese Yen)

27.9% - 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.