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Blue Sky Capital Monthly Update - Apr 2019

May 06, 2019 2:39 PM ET
Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Summary

  • My portfolio returned +7.1% in GBP in April, vs. MSCI World's +3.5%. This brings its YTD performance to +21.0%, vs. MSCI World's +13.8%.
  • Since its inception in 2008, my portfolio has generated an annualised return of +15.3%, outperforming MSCI World by nearly 300 bps.
  • Among long ideas published this year, Schroders has returned +23.1%, Rightmove +14.6%, Facebook +12.9% and JP Morgan +11.5%.
  • Facebook and JP Morgan were among the top 5 contributors to my portfolio during April; others were Bank of America, Comcast & Microsoft.
  • My views on recommendations published so far remain unchanged.

This post form 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 returned +7.1% in GBP during April, vs. MSCI World's +3.5%. This brings the portfolio's performance to +21.0% year-to-date, vs. MSCI World's +13.8%. Approx. 10% of the portfolio continues to be in cash, which has been a headwind on performance. Currency had a negligible impact on performance during the month.

Performance of the portfolio since its inception in late 2008 is 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 nearly 300 bps a year, with the outperformance widening in recent years.

Performance Attribution: The top 5 contributors to performance during the month were Bank of America (BAC), Comcast (CMCSA), Facebook (FB), Microsoft (MSFT) and JP Morgan (JPM). The top 5 detractors were Headlam (HEAD LN), Philip Morris (PM), Lloyds (LYG), Rightmove (OTCPK:RTMVF) and Mastercard (MA).

Portfolio Changes: Mastercard was the sole new purchase during the month; there were no other outright purchases or sales. Cash was 11% of the portfolio at the end of the month, up by 70 bps, primarily due to new funds added.

Top 10 Holdings: The top 10 holdings at the end of the month were Comcast, Zoetis (ZTS), Bank of America, Microsoft, Facebook, JP Morgan, Lloyds, United Technologies (UTX), Schroders (OTCPK:SHNWF) and Marriott (MAR). Together they represent 63% of the portfolio's total value (including cash).

II. Research Review

A list of all the research recommendations I have published on Seeking Alpha, and the stocks' subsequent performance, is shown in the table below:

My published research has focused mainly on long ideas. Schroders has been the best performer, returning +23.1% in less than 2 months, not including the +4.0% benefit from a 79p dividend that would be paid in May to shareholders of record on March 29th. Other strong performers so far include Rightmove (+14.6%), Facebook (+12.9%) and JP Morgan (+11.5%).

On the short side, DaVita shares remained -5.9% below the level when we published our research in late February, while Admiral has gained +0.9%.

My views on the stocks listed above remain unchanged at present.

Analyst's Disclosure: I am/we are long nearly all the stocks mentioned.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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