Portfolio Update
-
International/Country: As the Greece
negotiations reached their conclusion, OM re-entered the positions in Italy
(EWI) and Spain (EWP) at lower prices than those he exited at during the second
half of last year. Both markets remain ‘cheap’
on a long-term (CAPE) view, and should benefit from European QE and some
reduction in the fears surrounding Greece/Europe.
- China Thesis: Following the exceptionally strong run-up in
Chinese A-shares, which has seen CAF rise ~30%+ since the start of 2014, OM
exited his position there.
Performance Review
The portfolio
performed exceptionally strongly during February, rising 7.51%, following the positive
January, leaving it in a healthy state for 2015 (+8.2%).
February was one of
those exceptionally rare months where everything in the portfolio worked well
in unison. Stocks markets globally were
up strongly, as the (at least temporary) resolving of the situation between
Greece and its European partners, combined with widespread Central Bank easing
across the globe, helped whet risk appetites and drive stocks higher. This broad spread increase helped all of the
equity books, especially the Technical book (+144bps).
The biggest driver of
performance was the Equity book (+368bps).
Over half the gains from the Theravance positions (THRX and TBPH) after
GSK’s (its partner on its main drug) and then Theravance’s own quarterly
results helped solidify the confidence in sales and provide a more detailed
outlook going forwards (and with regards to the dividend). The Energy names (GPOR and EOX) both rallied
with the stabilization/bounce in crude and the Internet names (TWTR and VIPS)
contributed well after both reported positive quarters.
The
International/Country book (+199bps) was aided by the agreement in Greece which
contributed just under half the returns, as well as Argentina (also just under ½
the returns) where there are elections later this year. Last month OM told you he was not too
disheartened by January’s performance and this month, he’s not overly excited
by the strong contribution. Both Greece
and Argentina are hopefully going to be major contributors to the portfolio
over the next couple of years, but it will come with volatility.
The Currencies book
(+55bps) was again a good contributor, as the global CB easing continues and with
the discussion in the US remaining on when (not if) the Fed might raise rates,
the US Dollar continues to benefit rising against both the Euro and Yen during
the month.
There were limited contributions
from the Energy Efficiency (-4bps), Precious Metals (-16bps) and China Thesis
(+6bps) books.
Portfolio (as at 2/28 - all delta and leverage adjusted, as
appropriate)
23.5% - Technical Book
(DDM, QLD and SSO)
22.1% - Equities (EOX,
GPOR, RDY, TBPH, THRX, TTM, TWTR & VIPS)
17.1% -
International/Country (EWI/EWP/GREK in Europe, GVAL, and Argentinian names)
3.2% - Precious Metals
(GDX)
0.0% - Energy Efficiency
(AXPW, and XIDE)
-20.0% - China-Related Thesis (CROC – Short Australian Dollar)
-42.9% - Currencies
(EUO – Short Euro, YCS – Short Japanese Yen)
14.4% - 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.