This post forms part of my regular series of monthly updates, and consists of two parts: (1) Portfolio review, showing the performance of the portfolio that I manage; and (2) Research review, updating the performance of recommendations published, including any changes to previous views.
I. Portfolio Review
Introduction: Blue Sky Capital is a long-only strategy that invests in global equities. The investment style is fundamentals-oriented, concentrated and long-term. The portfolio consists of 15-25 high-quality companies in the U.S. and Europe, usually held for multiple years. The portfolio has been in existence since late 2008, and is the main vehicle for my personal net worth.
Portfolio Performance: The portfolio gained 3.2% in GBP during November, vs. MSCI World's 2.8%. This brings the portfolio's performance to +30.7% year-to-date, vs. MSCI World's +22.0%; year-to-date performance was partly reduced by new funds deposited, which increased the denominator in performance calculations. Cash was at 10% of the portfolio at month end and was a small headwind to performance.
Performance of the portfolio since its inception in late 2008 is shown below:
The portfolio has historically maintained a high cash balance, which has dampened returns. Since inception, the portfolio has outperformed the MSCI World Index by an average of more than 300 bps a year, with the outperformance widening in recent years.
Performance Attribution: The top 5 contributors and top 5 detractors during the month, and for year-to-date, are as follows:
Portfolio Changes: There were no new positions or outright exits in the portfolio during November. Cash was 10% of the portfolio at the end of the month, rising by 160 bps, primarily due to net sales of shares.
Top 10 Holdings: The top 10 holdings at the end of the month, compared to the top 10 holdings at the start of the year, were as follows:
The top 10 holdings represented 64% of the portfolio's value (including cash).
II. Research Review
A list of the current research recommendations I have published on Seeking Alpha, and the stocks' performance so far, is shown in the table below:
Recommendations which have been now closed are shown separately:
(Note: Zoetis figures are amended to use the correct starting price of $113.05, instead of $114.95 as in the last few months).
My published research has focused mainly on long ideas. Among the 17 long ideas published so far this year:
- 4 have already returned more than 20% - JPMorgan (JPM), Ansys (ANSS), Schroders (OTCPK:SHNWF) and Mastercard (MA)
- 3 have returned 10-20% - Facebook (FB), Visa (V) and Bank of America (BAC)
- Only 1 has lost more than 10% - ABN Amro (OTCPK:ABNRY)
On the short side, among the 4 ideas published, 2 returned more than 10%, specifically Barclays (BCS) and Altria (MO) (both since exited, and both having rebounded by double-digits since being upgraded to Neutral). However, DaVita (DVA) is currently showing a loss of 22.3%, after a 22.5% rebound in its share price in November.
Disclosure: I am/we are long nearly all the stocks mentioned.