Performance statistics for September 2014

Performance statistics for September 2014 

(For historic performance information and descriptions of what I am trying to achieve with each portfolio please see the 'performance' tab.  As with everything on this site, these are my views only.  Please read the disclaimer to your right and always do your own research. A final disclosure, these portfolio are real and are reported to the best of my accounting ability how they actually performed) 

Hedge fund portfolio -4.0%
Net position 7% long, gross book c. 50% utilised (at month end)

Well they say that all good things come to an end.  After over a year of posting monthly gains September was not so great.  Whilst I could talk about the various falls in global equity markets around the world during September the reality is with the net positioning I am running this portfolio at should provide protection against generalised downward movements in markets.  To this end index shorts in the FTSE-100, DAX, Australian and Dow Industrial Average all contributed positively as did the long volatility and short euro and yen positions (against the US dollar).

The long equity book had a few challenges with the decline in gold hitting my favoured gold equity stocks (Randgold Resources, Polymetal and New Gold) and then - individually the greatest negative contributor to the monthly performance - were the performance of the UK supermarkets especially Tesco where the combination of a profit warning and a negative account impact impacted materially.  Also negative, but lower contributory factors, included poor performances from the strike hit Lufthansa, a de-rating in the Macau gambling names which included SJM and a poor performance from the agricultural sub-sector where exposure included Syngenta, Agco and Deere.

So not a good month at all as a combination of factors led to the poor performance but, more importantly, what to do now?

Well I don't think markets are going to run away to the upside despite Q4 being historically a good period for equities.  I think continued volatility is likely which means that carefully net positioning remains important.  As for individual position selection the upcoming Q3 results season is going to be decisive - disappointment there means that positions have to be moved on from irrespective of value.  I just think looking ahead to 2015 this is the reality.

Looking through the fund I still see material value...and opportunity to still build on the still returns to 34.3% since 1 August 2014.  Given I am aiming for 20% annual returns this fourteen month return is still very pleasing.  

Top 5 long positions at month end: Voya, Symantec, Agco, Barclays, Philip Morris International
Top 5 short positions at month end: FTSE-100, Euro (vs US$), Yen (vs US$), DAX, DJIA


Pension fund portfolio -3.5%
Cash position c. 11% (11% a month ago)

Much of the above 'hedge fund' commentary is applicable to the 'pension fund' book too with the gold stocks and UK supermarket positions (Tesco and Morrison's) hurting performance. As the pension fund book is long-only there were no short euro, short yen or index shorts / volatility gains but one benefit from the falling pound was some translation relief for the US holdings which helped regain some performance.

In terms of trading, additions of note include Smith & Wesson and Oriflame whilst the entire Pearson position was sold at a solid profit.

Again whilst the performance data fell off during the month the since inception (eleven months) performance statistic of 5.8% compares favourably with the approximately flattish (including dividends).  As a medium-term target to beat this is a good one, so despite a disappointing last month it has been a pleasing since inception period.  I will report on the first full year in the next report.

Top 10 positions at month end: Syngenta, Agco, Vodafone, Royal & Sun Alliance, Apache, Standard Chartered, Tesco, Barclays, Randgold, Royal Mail