Tuesday, 26 June 2012

Portfolio Update June 2012

Another update to talk my own book on my current personal positions and the why I hold them. I have dropped my shorts principally due to miserable ETF tracking errors and am now wholly long some select stocks.

SCOP: Finally Copper sold off somewhat to around $3.30 and given my dim view of the appalling tracking error on these ETFs I sold my positions around the $3.30-3.40 mark for a net of commissions return of 12%. Not a bad show but it should have been more like 20% if I could actually own the futures or even just short the long Copper ETF “COPA.” But alas. Interestingly being short a commodity can never be a long term position since unlike a bad or fraudulent stock the price is highly unlikely to ever reach remotely zero. So clearly I would have done myself favors selling this back in October during the initial selloff but at least I got out with a pleasant gain.

SAP3: I also closed this one up just 2% net of commissions again tracking error killed the trade as the raw position should have returned around 12% looking at the currency spot rates. Still a lesson learned there.

SBRY: I topped up some SBRY this month as the performance continues to be pretty weak and the dividend continues to look attractive. Sainsburys is way ahead of Tesco in terms of store quality and home delivery and I expect home delivery to be the future for the industry the key is making it profitable something that Ocado despite their great service and platform have failed to achieve.

Pandora A/S: I am still holding onto the remaining shares to see how the business pans out longer term. I think 10% dividend yield looks good although the stock has come off the boil since January and now trades around the 60Dkk mark.

RSA: I topped up some more RSA lately due to the healthy dividend and low exposure to European sovereign debt. This stock just looks cheap to me as it’s a good franchise, internationally diversified and it throws off cash. Risks for this are obvious; it is a european financial so could get blown around by further chatter regarding the glacial unfolding of the euro area collapse. It is also a global insurer so all kinds of catastrophes pose a risk to medium term underwriting results.

BBd/B: I purchased a position in Bombardier principally on valuation grounds; its cheap and its been underperfoming. 9x forward P/E seems cheap compared to GE and Siemens although the company has about half its earnings coming from Europe. Bombardier seems like a solid business operationally with a relatively low financial leverage. Clearly the European slowdown will effect sales for public transport but if they get a major airline order for the C series jets this could be a catalyst to unlock some value much as news of the Netjets order for smaller jets did over the past month. Some international diversification into CAD is also welcome.

Caveat: Clearly I have a financial interest in these investments and this post relates solely to my personal investment positions. It is in no way a solicitation to buy or sell these investments nor does it constitute advice to do so.

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