Performance May 2012 comments & outlook
“Sell in May and go away” is the famous rule which would have been good for many market participants this year.
The benchmark (50% Eurostoxx, 30% Dax, 20% MDAX) lost -6,8% in May, however the portfolio gained +0.8%, making this the best month in relative terms since inception. Performance YTD for the portfolio is now 13.5% against 4.4% of the benchmark, a relative outperformance of +9.1%..
|Bench||Portfolio||Perf BM||Perf. Portf.||Portf-BM|
Also within each month on a day by day basis, the portfolio is very stable with a low amount of volatility. I am really happy that the portfolio really works as I have wanted it to (so far….), despite some significant “PIIGS” bets.
This results in the following portfolio composition as of May 31st:
|Name||Weight||Perf. Incl. Div|
|AS Creation Tapeten||3.8%||-6.14%|
|BUZZI UNICEM SPA-RSP||4.3%||-23.79%|
|Tonnellerie Frere Paris||4.8%||6.41%|
|Drägerwerk Genüsse D||8.7%||43.93%|
|DEPFA LT2 2015||2.9%||21.93%|
|DJE Real Estate||3.3%||-4.58%|
|Short: Kabel Deutschland||-2.1%||-20.17%|
|Short Ishares FTSE MIB||-2.1%||16.63%|
|Terminverkauf CHF EUR||0.2%||4.41%|
With a current quash quota of 16.7%, I am at the upper bound of what I would normally like to have. As the WestLB Genußscheine are actually maturing today, June 1st, cash will increase to 22%. As the build up of Poujoulat and Installux need a lot of time, I will have to come up with some ideas pretty soon.
Outlook and market comment
As expected, we are still in “rough waters” and in my opinion this will persist for many months to come. Despite the head line Euro mess, the BRICs finally start to crumble. Brazil and India show massive slow downs in growth rates, in China despite the official numbers everything points to the end of the real estate and infrastructure boom. If history is any guide, after an epic real estate boom one nromally gets an epic bust.
At the moment, this is one of the strangest investment environments I have ever seen. On the one hand record profites of multinational companies (esp. US), on the other hand large parts of the world economy are in deep sh… ah problems.
Interest rates are so low that it is hard to understand who invests voluntarily into a 0% two year Bund.
For the value investor however this opens up a lot of opportunities. Whole sectors and countries are getting cheaper by the day. Of course this does not mean that a stock is “cheap” just because it has fallen dramatically in value. For many companies, the actual business prospects have worsened significantly. The trick will be to sort out the “good value” companies against the “terminal decliners”.
Many so called “value investors” prefer “stable” companies which perform well at the moment but are realtively expensive. In my opinion, this “trend” will turn not so far in the future, as even the best company cannot compensate a real global donwturn forever. Already in late 2008 and 2009 we have seen, how quickly this can turn, especially for the more cyclical companies.
For the portfolio I will continue to look for interesting special situations as well as “boring” off the map companies which trade at depressed prices. I will try to avoid all “great” companies, this is somthing for people who buy lunch with Warren Buffet for a million Dollars. I will also try to avoid any “hot potatos” however there is always the tmeptation to buy into those.