Another assist today from Market Folly as they review an agricultural fund [James Cunningham and Ejnar Knudsen's Agriculture Fund] from Passport Capital. In the report that Market Folly published, Passport disclosed being up 10.3% in the period reported versus 66.6% for Market Vectors Agribusiness ETF (MOO). I recently added this ETF to client accounts.With these sorts of things you can only find out what they are willing to tell you, so only a few of the holdings were disclosed. Those holdings were Imperial Sugar (IPSU), 12% of the fund; CF Industries (CF), 10% of the fund; Pilgrim's Pride (PPC), 5%; and Makhteshim-Agan Industries (MAIXY), which is an Israeli company, at 5%.
Also disclosed were the sub-industry allocations, which were: Ag processors (sugar, corn, ethanol, and oilseed processors) 21% long exposure; protein processing and production (poultry, beef, and dairy) 21% long exposure; and ag inputs (ag equipment, fertilizer, seed and crop protection) 23% long exposure. I've worded it as it was in the report. The fund can go short, but I am not sure what portion of the fund is in cash or in short positions - there was mention in the commentary that attributed some (maybe all?) of the lag to the expectation of a big market correction in 2009 that never came (the fund was implemented on March 1, 2009).
There are all sorts of things to learn here. I may be wrong, but it seems like the lag was a market call that was wrong, not poor stock selection within the theme. Indeed, although we don't know when things were bought and sold in the fund, the holdings disclosed ranged in performance from just fine (relatively) to outstanding (yes, there could be window dressing, but I am giving them the benefit of the doubt).
