Performance:
July was a strong months for equities. The Benchmark (50% Eurostoxx, 30% Dax, 20% MDAX) increased by +5.0%, resulting in a YTD performance of 12.5%. The portfolio in comparison gained “only” 3.1%, YTD it is up 21.4%.
The underperformance in July is to be expected. 25% of the portfolio is now in cash, a further 7% in bonds. Most of the stocks have betas significantly below 1. So underperformance in a strong market should be expected.
Best performers were some of the French stocks, G. Perrier +18.6%, April +16.0%, plus Dart Group at a whopping +25.2%. Losers were AS Creation -8.7% and EGIS -4.6%.
The only 2 transactions in July were the complete sale of Drat Group, with a gain of total +226 and my add ons to the Hornbach position. Due to low trading volume, I only got up to 4% from 3.7%, so I will continue to buy in August.
Portfolio as of July 31st 2013
| Name |
Weight |
Perf. Incl. Div |
| Hornbach Baumarkt |
4.0% |
6.1% |
| AS Creation Tapeten |
3.6% |
27.7% |
| Tonnellerie Frere Paris |
6.1% |
96.8% |
| Vetropack |
3.9% |
5.8% |
| Installux |
2.6% |
14.2% |
| Poujoulat |
0.9% |
11.4% |
| Cranswick |
5.3% |
33.4% |
| April SA |
3.9% |
30.5% |
| SOL Spa |
2.7% |
35.3% |
| Gronlandsbanken |
1.9% |
12.3% |
| G. Perrier |
3.6% |
40.2% |
| IGE & XAO |
2.0% |
7.6% |
| EGIS |
2.5% |
1.3% |
| Thermador |
2.6% |
3.9% |
| |
|
|
| KAS Bank NV |
4.7% |
31.9% |
| SIAS |
4.9% |
43.0% |
| Drägerwerk Genüsse D |
8.9% |
181.3% |
| DEPFA LT2 2015 |
2.6% |
63.5% |
| HT1 Funding |
4.2% |
49.4% |
| EMAK SPA |
4.8% |
54.5% |
| Rhoen Klinikum |
2.3% |
21.4% |
| |
|
|
| |
|
|
| |
|
|
| Short: Prada |
-0.9% |
-15.8% |
| |
|
|
| Short Lyxor Cac40 |
-1.1% |
-14.2% |
| Short Ishares FTSE MIB |
-1.9% |
-10.4% |
| |
|
|
| Terminverkauf CHF EUR |
0.2% |
7.1% |
| |
|
|
| Cash |
25.5% |
|
| |
|
|
| |
|
|
| |
|
|
| Value |
45.7% |
|
| Opportunity |
32.5% |
|
| Short+ Hedges |
-3.8% |
|
| Cash |
25.5% |
|
| |
100.0% |
|
Comment: “Did you see the Gorilla ?”
There is a classic psychological experiment being done in many seminars which goes the following way:
A video is shown with two 3 person basketball teams, one with white shirts and one with black shirts. Both teams in a somehow chaotic fashion pass the ball to each other. The viewer gets the task to count the passes between the white shirt players over a time period of around 90 seconds.
You can try this yourself for instance here:
http://www.theinvisiblegorilla.com/gorilla_experiment.html
Participants get then asked how many passes were played. Most participants get the number right. The second question then is unexpected: Did you see the gorilla ?
I have to admit that when I did this experiment the first time in a seminar, I didn’t see the gorilla. I had the exact amount of passes, but no, I didn’t really see that a guy in a gorilla costume was walking slowly through the picture.
In my opinion, the current situation in the financial markets is very similar. Everyone (and his grandmother) is looking at Ben Benanke. Every single speech gets analysed down to the last word and market react violently on any interpreted change etc. Every speech, minutes etc. get analyzed over and over. For me, watching every word of Bernake is like counting the passes of the white shirt basketball team.
Yes, the FED does impact certain things but real business activity depends on a lot of other things. If you are a Bavarian “Mittleständler”, you do not build a new production hall because Ben Bernanke is saying this or that. You expand if you expect more orders from China, Brazil, Australia etc.
And this is in my opinion the big gorilla dancing in front of our noses: The slow down of the BRIC (and associated) economies. Despite any faked official numbers it is clear, that the high time of BRIC/EM growth is over. I watch closely many companies which are active in China and all of them are reporting problems. Interestingly, very few people seem concerned about this. One can now read many articles which talk about “soft landing” in China or “decoupling” of the US. Yes, both of those things could happen, but my experience tells me whenever you here “soft landing” and “decoupling” you should actually prepare for the worst case.
So what does that mean for the portfolio and investment strategy ?
For me, it doesn’t mean to get out of the stock market right now. Market timing is an art I do not understand. Nevertheless I will follow (further) some general guidelines:
– be extra careful with companies with EM market exposure
– rather err on the conservative side when analyzing companies. Take less risk, not more.
– focus more on special situations
– do not rely on stock momentum for existing position. Sell when too expensive
– be patient, don’t invest just because cash is piling up
– expect and prepare for significant underperformance in the next few months
– Don’t count the passes, but focus on the Gorilla …..
value and opportunity 