Portfolio Strategy: October update

So a quick portfolio update as I have made a few changes in the past month increasing some positions:

Amiable Minotaur Portfolio

Performance

I will call this my Second Quarter review as the portfolio began on the 19th of April. How has performance been? Including all fees and costs I have returned 1.7% in GBP since inception and relative to FTSE AW which gained 2.82% in GBP. I have under performed by 4.38% in the period. 

This is a substantial improvement from the first quarter due to several stock picks having strong performance and now whilst I am lagging the benchmark I do have a positive absolute return.

I expect to continue to under perform for as long as the wider market and especially the S&P grinds higher. The stronger GBP also has a negative impact on performance in absolute but not relative terms due to around 40% of the portfolio being in FX (mostly USD) and another 18.3% in Gold which acts as a proxy currency.

Stocks: The Worst and Best

My worst positions have been in Acacia Mining, Short NASDAQ and Bed Bath & Beyond.

Acacia has continued to suffer with no positive news flow on resolving their dispute with the Tanzanian government. Given cash flow constraints they are going to have to suspend production at 2 of their 3 mines if no resolution is reached. Barrick Gold executives are currently negotiating with the government. I feel captive here because either this stock takes another major hit from more bad news (already I have lost 31%) - or it rallies very strongly on a resolution. I think it is worth north of £3 a share even discounting this debacle, assuming a resolution.

Shorting the NASDAQ is obviously not working as central bank flows keep this market grinding higher - however despite the all time highs momentum is broken and I foresee at least a modest pullback of 10% or so before renewed propping up of the market. This is a valuation call lacking an immediate catalyst.

BBBY results were soft again this month and further declines followed. It feels like a value trap for a while but ultimately it will turn, and fast - when results stop declining. Just like we have seen in Next PLC. It's a hold for now.


The best positions have been in Next and Kirkland Lake Gold

Next has started to deliver results which are less bad - and the stock has popped up 20%. This is my biggest position so that pop had a major impact on the portfolio. A much welcomed development. I reduced the position 25% following the Q end just to take some gains as it approached my fair value of around £60 a share. I may add again after it has been faded.

Kirkland Lake Gold has had interstellar performance from its top quality assets and results. The stock rose 60%+ but I sold out following those gains at the end of August. I may add again on a pullback - perhaps switching for Goldcorp as on reflection this junior miner has more fundamental upside to run.


Developments

CMMC - I bought this stock as a highly leveraged play on improved copper prices. The fundamentals stack up and the risk / reward is compelling. It's really a micro cap stock rather than a small cap - high risk but simple to understand and analyse.

It is also noteworth that Diamond Offshore and Tullow Oil may have bottomed here as an inflationary impulse in the commodities space looks likely. I may look to add to these in future on a pullback.

I bought some large cap Pharma in the case of AstraZeneca which sold off strongly following a failed drug trial. Since buying that dip the stock is up 15% which is a nice move. I screened the fundamentals and history but didn't do a deep dive on this one as it required a quick and timely move to buy.

Amiable Minotaur Portfolio

Gold Stocks

I continue to like Gold Mining stocks and have added to my position in Klondex Mines which has started to move upward as we move away from the GDXJ rebalancing debacle. 

Weights are:
ACA        2.2%
KLDX    6.2%
GG          2.2%


Position Sizes

My biggest positions in terms of sectors are Gold Miners, Retail and Energy. 

Amiable Minotaur Portfolio

My biggest single stock position is Next plc at 12% which I added to on recent weakness. I continue to love this stock but have reduced slightly following a strong pop.

Conclusion

Unchanged from last quarter! 

I remain bearish overall as regards the wider market. Volatility is very low, equity prices are very high, central bank liquidity is very high, interest rates are very low. Not exactly fertile conditions for findings assets at attractive prices. I remain long term bullish commodities and associated stocks and gold due to under valuation vs financial assets. 

I am looking for cyclical value plays in retail, energy, base metals and all other markets in general.

Disclaimer: I have an interest in all the securities mentioned in this article at present but i may change these in the future. These are opinions only, not investment advice. Construct your own portfolios with due care and attention.  If in doubt read my disclaimer.