Things from my Newsblur: Jan-14 Edition

It’s traditional that as the calendar turns over to start a new year, folks make some resolutions.  Well, Our Man’s are to keep you a little better informed about what he’s doing and thinking in 2014 than he did in 2013.  Like all New Year’s resolutions, it’s likely that this will probably be long given up on by the time the second quarter rolls around, but in the interim…what better way to start us off than some of the things that Our Man rather enjoyed reading over the holiday period. 

- An Oral History of Trading Places

Our Man was lucky enough to get to watch Trading Places on a cross-country flight over Christmas – I say lucky, because it’s both the best Christmas movie and the best Finance movie ever made.  Here’s some timely history behind how it was made, and the way it helped launch (or relaunch) the careers of a lot of those involved.  (Rob Wile, Business Insider)

- T-Rex Calories

If a T-Rex was released in NYC, how many humans per day would it need to consume to get its needed calorie intake.  Don’t worry folks, the answer may surprise you…you don’t need to be able to run that fast!   (What if?)

- The Beatles Succeeded Through Talent, Ambition and a Lot of Arrogance

Our Man’s mentioned his skepticism for the whole 10,000hours argument (popularized by Malcolm Gladwell, amongst others); here’s a take on some other reasons why the Beatles became successful.

(Andrew Romano, Daily Beast)

- “I do not trust Politicians”

The calendar might only have just turned to 2014, but folks are already jockeying for position for the Presidential primaries of 2016.  Brian Schweitzer, the former Governor of Montana, is the media’s current favourite to challenge Hillary Clinton in the Democratic primary.  He’s also Our Man’s favourite candidate in either party.  (David Weigel, Slate)

- The Snowden Leaks and the Public

The Guardian has had a good run on the investigative journalism front, leading the charge with the Murdoch phone-hacking, the Wikileaks documents and now the Edward Snowden/NSA stories.  Alan Rushbridger, the editor of the Guardian, talks about the Snowden case, the impacts and the future.

(Alan Rushbridger, The New York Review of Books)

- The World Economy’s Shifting Challenges

You don’t have to agree with George Soros’ politics to recognize that he’s made his (vast) fortune but understanding the global economy and its impact on markets than just about anyone in recent history.  As such, when he’s offering his views on the world’s economies it’s certainly worth listening (or reading) to them even if you don’t agree with them.  Spoiler Alert: If you’re interested in, or worried about, China then it’s definitely worth you reading!  (George Soros, Project Syndicate)

- The Rise and Fall of Blackberry

Oral histories seem to be the rage at the moment and Blackberry was the thing, some 7-10years or so ago.  Thus why not combine them, and see a little about how Blackberry became the thing and then squanders it all away, to become nothing…all while seeming not to recognize and then mocking the things that replaced it.  (Felix Gillette, Diane Brady and Caroline Winter, Bloomberg Business Week)

December 2013 Review

Portfolio Update 

- Puts/Hedges:  Our Man increase his position Short Brazil, through a further purchase of out of the money Jan-15 put options on iShares Brazil Index (EWZ).  The position reflects a multitude of factors including Our Man’s negative view on China (Brazil being a large supplier of raw materials to China), the weak technical picture, the positive view on the US Dollar (the implicit short of the Brazilian real in the trade) and the potential issues surrounding and arising from (the continued) credit growth in Brazil.

Performance Review 

For the month, the portfolio was down 50bps which also left the portfolio broadly flat (+0.83%) for all of 2013.  This year saw the second broadly flat year, in a generous equity tape, and together with some new things that Our Man has been working on is likely to see some (small rather than radical) changes to the portfolio going forwards; more on that later.

The portfolio suffered from as the Absolute Return/Bond Funds (-13bps), Value Equities (-34bps) and Puts/Hedges (-47bps) moved against it.  The key drivers of these losses were the continued rise in longer-term rates & weak precious metals prices (for the Absolute Return/Bond Funds) and the rise in the equity markets (for the Puts/Hedges).  These losses were partially offset by the US Dollar showing some reasonable strength during the month, especially against the Japanese Yen and the Australian Dollar, which helped the Currencies (+12bps) and China Thesis (+18bps) books.  While this strength was not seen versus the Euro, the strong performance of European equity markets helped the Other Equities book (+17bps).  The NCAV (-1bps) and Energy Efficiency (-1bps) books are very small at this point and had limited impact on the portfolio.

Portfolio (as at 12/31 - all delta and leverage adjusted, as appropriate)  

17.7% - Other Equities (GREK, EWP and EWI) 
13.3% - Bond/Absolute Return Funds (DLTNX and HSTRX) 
7.6% - Value Idea Equities (THRX, and DRWI)
1.0% - NCAV Equities
0.2% - Energy Efficiency (AXPW, and XIDE)

-3.5% - Hedges/Put Options (premium of 68bps in EWZ Jan-15 puts, 11bps in EWJ Jan-15 puts, and less than 1bps in XLP Jan-14 puts, in XLB Jan-14 puts and in EWG Jan-14 puts respectively)

-13.1% - China-Related Thesis (CROC – Short Australian Dollar, partially offset by CAF – Long Chinese A-Shares) 

-50.0% - Currencies (EUO – Short Euro, YCS – Short Japanese Yen)

22.8% - 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.

November 2013 Review

Portfolio Update 

- Puts/Hedges:  Our Man opened a position Short Brazil, through purchasing out of the money Jan-15 put options on iShares Brazil Index (EWZ).  The position reflects a multitude of factors including Our Man’s negative view on China (Brazil being a large supplier of raw materials to China), the weak technical picture, the positive view on the US Dollar (the implicit short of the Brazilian real in the trade) and the potential issues surrounding and arising from (the continued) credit growth in Brazil.

Performance Review 

November proved a decent month for the portfolio, which gained 1.1% putting the performance at +1.3% YTD.

The performance was driven by the portfolio’s Asian exposure, through the Currencies (+37bps) and China Thesis (+84bps) books.  In the Currencies book, the short position in the Japanese Yen drove performance more than offsetting the Euro’s strength against the dollar.  In the China-Thesis book, the fund benefited from its short position in the Australian dollar but especially its exposure to Chinese A-Shares.

Elsewhere, the portfolio suffered small but persistent losses with the Absolute/Bond Funds (-8bps), Other Equities (-2bps), NCAV (-2bps), Puts/Hedges (-9bps) and Energy Efficiency (-8bps) all costing small amounts of money.

Portfolio (as at 11/30 - all delta and leverage adjusted, as appropriate) 

17.6% - Other Equities (GREK, EWP and EWI)
13.4% - Bond/Absolute Return Funds (DLTNX and HSTRX) 
7.9% - Value Idea Equities (THRX, and DRWI) 
1.0% - NCAV Equities 
0.2% - Energy Efficiency (AXPW, and XIDE) 

-2.4% - Hedges/Put Options (premium of 44bps in EWZ Jan-15 puts, 24bps in EWJ Jan-15 puts, and less than 1bps in XLP Jan-14 puts, in XLB Jan-14 puts and in EWG Jan-14 puts respectively) 

-12.4% - China-Related Thesis (CROC – Short Australian Dollar, partially offset by CAF – Long Chinese A-Shares) 

-38.7% - Currencies (EUO – Short Euro, YCS – Short Japanese Yen)

28.5% - 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.

October 2013 Review

Portfolio Update 

- Puts/Hedges:  The sole addition to the portfolio was acquiring some well out-of-the-money Jan-15 puts on EWJ, the iShares Japan ETF.  While QE is now a global phenomenon, it’s pretty widely accepted that Japan is in the worst spot and the new(ish) Abe government and the BoJ are the most aggressive in terms of its QE usage.   Japanese Equity and currency markets have reflected this, with the equity markets soaring (Nikkei: +70%+ over the last 12mos) and the Yen falling heavily against all major currencies.  Owning puts on the EWJ essentially gives Our Man exposure to falling Japanese equity markets and a falling yen (as the ETF doesn’t hedge the currency, which is why it’s up *only* 35%+ over the last 12mos).  In essence, a type of bet on the ineffectiveness of QE!

Performance Review   

October was a positive month for the portfolio (+0.54%), which flipped the YTD performance from a slight negative to slight positive at 0.3%.

The main positive driver of the book was the long exposure to the European peripherary in the Other Equities book (+214bps).  While there remains significant economic weakness in Greece (GREK) and Spain (EWP), the equity markets in these countries continue to perform exceptionally strongly, with much of the bad news already priced into stocks, and Our Man may move to trim these two positions back slightly.  However, the gains here were largely offset by the Value Equities book (-107bps) – most of the losses came from the position Theravance (THRX), which continues to be volatile (both positively and negatively) and has been a healthy contributor this year (stock is up 50%+).

The Currencies book (-14bps) and China Thesis (-22bps) largely suffered from a weaker US Dollar, as the Fed decided not to taper though the dollar rebounded some towards month-end.  The decision not to taper also bolstered equity markets, which negatively impacted the Puts/Hedge book (-28bps).  The Absolute Funds (+14bps), NCAV (-3bps) and Energy Efficiency (+0bps) had no great impact on the portfolio.

Portfolio (as at 10/31 - all delta and leverage adjusted, as appropriate)   

17.8% - Other Equities (GREK, EWP and EWI) 

13.6% - Bond/Absolute Return Funds (DLTNX and HSTRX) 

7.8% - Value Idea Equities (THRX, and DRWI) 

1.0% - NCAV Equities 

0.3% - Energy Efficiency (AXPW, and XIDE) 

-1.9% - Hedges/Put Options (premium of 26bps in EWJ Jan-15puts, and less than 1bps in XLP Jan-14 puts, in XLB Jan-14 puts and in EWG Jan-14 puts respectively) 

-12.1% - China-Related Thesis (CROC – Short Australian Dollar, partially offset by CAF – Long Chinese A-Shares) 

-38.5% - Currencies (EUO – Short Euro, YCS – Short Japanese Yen) 

29.4% - 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.

Things from my Newsblur (was Google Reader, with a stop at Old Reader): Oct-12 Edition

Welcome to part 2 of this “Things from my…”, though you’ll notice that I cunningly waited till the calendar rolled over to October so that I didn’t have to mess around with the title! 

- The Erstwhile Hedge Fund King of Akron…
Seriously, how do people like this end up running someone’s money, what possesses people to entrust them with their hard-earned money, etc. (Roddy Boyd, Southern Investigative Reporting Foundation)

 - How Brazil’s Richest Man lost $34.5bn 
The fascinating tale (so far, at least) of the rise and fall of Eike Batista who built the OGX group of companies and whose personal wealth at $34.5bn made him one of the top 10 richest people in the world at the start of 2012…and who, as 2013 comes towards its close, is potentially on the verge of losing it all. (Juan Pablo Spinetto, Peter Millard, and Ken Wells, Businessweek)

 - Mayor Bloomberg’s Geek Squad 
With Mayor Bloomberg departing his role this year, this article helps shine a little light on one of his big successes – the Office of Policy and Strategic Planning.  It’s where Bloomberg most obviously used his business background with its focus on collecting/analyzing/using data, to…err well get the City to collect, analyze and use data to be more efficient!  (Alan Feur, New York Times)

 - 5 Statistical Problems That Will Change the Way You See the World 
Humans are instinctively bad at understanding statistics and probability; take a look at these (relatively simple) problems and see how bad…and how data can be misleading, especially if viewed on a surface level.  (Walter Hickey, The Atlantic)

The What If? Section  

This blog/site is so special it gets its own section – after all, haven’t you always wanted answers to the questions you’ve long pondered but never been smart enough to figure out?  Well, Randall Monroe, a friendly former NASA physicist takes the time to use physics to answer one of these questions each Tuesday.  Here are 5 (just 5, I know) of my favourites – though please note, it’s entirely possible that (i) a lot of small children submit questions, or (ii) Our Man thinks like a small child! 

- Yoda: How much force power can Yoda output?   

Sure, he’s small and green and uses the force…but how strong is the force – like, could he get it to power a car or a house or a city or a planet or what? 

- Machine Gun jetpack: is it possible to build a jetpack using downward firing machine guns? 

It’s fine if you’re in NZ where the Civil Aviation Authority has given out a permit for a jetpack but what about the rest of us…we need a plan B! 

- Leap Seconds: Every now and then we have to insert a leap second because the Earth’s rotation is slowing down. Could we speed up Earth’s rotation, so that we do not need Leap Seconds?

 As a bonus, you’ll also discover why your smartphone and desk phone have different times! 

-  Droppings: If you went outside and lay down on your back with your mouth open, how long would you have to wait until a bird pooped in it? 

I mean, who hasn’t wondered that! 

- Sunset on the British Empire: When did the sun finally set on the British Empire? 

SPOILER Alert - it still hasn’t, so deal with it people!

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.

Things from my Newsblur (was Google Reader, with a stop at Old Reader): Sep-12 Edition

With Google now closed down, and Old Reader initially struggling under the weight of those looking to move over to something with a similar feel, Our Man ended up using Newsblur.  Unlike Google Reader (and Old Reader) it comes with a small fee, but has proven to be great so far...and the hunt for a new RSS feed aggregator is over. 

It’s been a while since I’ve last shared some interesting reading material so expect a bumper edition (or perhaps a two-parter!).

- Food Truck Economics

While it may not be true where you live, the food-truck culture has taken off in New York City!  Gone are the days when food trucks meant some questionable street meat or salty pretzels, now there’s high quality food for any taste.  Obviously, this got Our Man thinking about whether food trucks are profitable and the economics of their business – thankfully, this little story answers those questions. (The team at Priceonomics)

PS. Here are some of Our Man’s favourite NYC food trucks – Wafels & Dinges, Korilla Korean BBQ, and Gorilla Cheese. If you’re passing by, try them – your stomach won’t be sad…

- Rejection, tragedy and billions of dollars – The story of FIFA

In his younger days, Our Man rather liked playing video games…especially against his flatmate – one of the staples of these often titanic duels, was FIFA Football/Soccer.  Here’s the story of how, despite parent company EA Sports’ lack of interest, a small team managed to get one of the biggest video game franchises off the ground.  (Christopher Dring, MCV)

- How Should a Suit Fit?

Suits seem to be going out of fashion in the professional world (or perhaps it’s just Our Man’s field), which is a terrible shame.  It also means that when Our Man meets the occasional undergraduate or post-graduate for coffee to talk about the working world, he’s somewhat shocked by their sartorial choices.  (Antonio, Art of Manliness)

- How Athletes Get Great

Malcolm Gladwell popularized the argument that it only takes 10,000hours of practice…but unsurprisingly, that’s not entirely true.  As always, the actual truth is somewhat more nuanced and complex as this interview with David Epstein suggests.  (Jeff Repanich, Outside Online)

- AFC Wimbledon Ready to go back to Plough Lane

Being a long-time AFC Wimbledon fan, the news that the club could return to Wimbledon and across the street from their old ground is one that makes Our Man smile!  (Jim White, Daily Telegraph)

- Pop Art

As a sports fan, the San Antonio Spurs fascinate Our Man and earlier this year, they were in the midst of a fascinating 7-game NBA Finals series against the Miami Heat (who eventually won, just).  Their coach, Greg Popovich, is mostly known for not suffering fools (or reporters) much and being…well rather good at his job!  This story sheds a little more light on one of the most successful coaches around.  (Jack McCallum, CNN Sports Illustrated)

- How the NFL Fleeces Taxpayers

For all the political gnashing in the US about wanting to avoid European-style socialism, in sports it’s the opposite with European football (or soccer) being utterly capitalistic (and hence the clubs barely very limited profits) and US sports taking a far more socialist-type approach (and hence the clubs making bazillions).  The NFL, the biggest sport in the US, is of course the master of this!  (Gregg Easterbrook, The Atlantic)