Portfolio performance in the month -7.8%
Portfolio for the year -4.2%
Portfolio performance since I started counting (31/03/16) +130%
I do think we are currently in the “fear” section of a market. As such good company results get swept away from the share price as any bounce is seen by many more as a selling opportunity than a development of the business.
This will be exacerbated by the rout of the beginner/redditt trading community who have only ever lived with rising prices and will both get confused, margin called and find whole sections of the digital community disappearing over the hill.
On top of this we will see the move to passive lead to bigger movements as people withdraw money and the fund managers just sell down the whole portfolio to keep it matched to the market, regardless of which companies are good or bad.
All of that being said the reality is that if the world is not coming to an end in a future period the market will be worth more and the primary drivers of that will be companies now undervalued.
As my timescales are usually in years, Walter Schloss recommended being prepared to take 4 years for a thesis to prove itself, I am relatively unworried by the short term market movement. I would prefer up, and I am looking more than normal at my dividend payers. But I have a cash position, so do not expect to be a forced seller, and think most of my companies are well set to benefit from the next few years. As an example APPL is not known for making large acquisitions. But does make a lot of small ones. Many of which are probably cheaper today than they were in January.
New Holdings:
Molten Ventures GROW 0.3% of portfolio.
Moderna MRNA 0.66% of the portfolio after a strong 24% rise after purchase, just in June.
Both of these look to be value plays. GROW is an investment company and trades at 50% of declared valuation. Some of it is probably bogus, but even in troubled times there looks to be a margin of safety
Moderna is a profitable drug maker. Certainly in part this is down to its Coronavirus vaccine. But there is still significant demand for this and other drugs and at the moment MRNA seems to be valued as though it was stopping all sales tomorrow.
Sales:
Games Workshop GAW. Took a bath on this lost 27%. Lots of things too like and on previous falls I added. But latest information from the company did not give me any more confidence so faced with another add or quit level I quit.
Adds
Added to PILS. Goldman Sachs put out a report that says Lithium is not only not going into undersupply, but will in fact be in surplus soon. The market tanked. I think either GS doesn't know what it is talking about, or does and is just trying to drive down the price short term so it can get a bigger share for less.
Added to SQZ. The governments response to the energy crisis and in particular UK energy miners led to one of SQZ’s competitors describe Sunak as a Moron. SQZ’s Chairman in his AGM address was a bit politer, but not much. However the reality is that energy companies are sitting under a waterfall of cash and even if the government keeps stealing their bucket they have a decent chance of getting rich.
Added to TGA. Here the issue is less the stupidity of government and more so the issues with South African Railways stopping product getting to port. This will take time to sort, but so will the whole energy crisis and whilst it does TGA’s coal will continue to deliver strong returns. Also TGA has said that if it cannot sell product it will not dig it up and so will need less capex in the near term. Making the large dividends potentially larger. And TGA shareholders rejected plans for buy backs. Which as management admitted rather forces them down the bigger dividend route.
Bought some more gold. I do not mark my gold to the spot value but the buy price.
Big Fallers
AEO The panic over everything is perhaps a little more acute in advertising than some markets. So AEO has really suffered.
APPL Relatively big holding, relatively big fall.
CAPD. The falls here have been so bad that the company put out a partial TU saying how the operating businesses continue to grow. It did however skip mentioning the Investment portfolio which has presumably done poorly in this market.
GLEN Who could have guessed, being fined millions in the US, UK and europe for bribes doesn’t help the share price
JSE. Opaque information and heavy promotion don't sit well when there is a problem and JSE had a problem. Relatively minor operating issue, but given the heavy hype and the strange numbers the company puts out that seem to exclude even more costs than an EBITDA calculation the price reacted.
META. The steady anti Meta drip of analysis continues and the share price keeps on falling as we wait to better understand what is really happening. To be fair when Meta reduces recruitment that may not presage the diminution of the company, but may reflect better cost control. Either may prove to be correct, but the mood music is around the end of the world.
MPAC On no real news this share is getting hosed. I do not know why and remain a holder.
PPHE A slight fall back on the peak last month. Big holding so a relatively big move.
TEK I think this is getting silly. The company has broadly 4 holdings. ! of which is worth half the valuation. One of the others may be worthless. But I think the other two are much more valuable than the half of company attributed to them. Thinking of adding.
TET I think as much as anything this month's movement is just a reaction to the market as a whole. TET was overvalued, but corrected last month and is getting too below fair value territory.
VTU Again a share that gets hit along with the market. On no real news itself its comparators seem to be doing nicely so I expect is VTU.
Big Rises
AV. I guess that clearing out its share buy back clarified the situation and financial firms tend to do better with higher interest rates.
BPM Decent year end results but nothing very exciting.