So it's been a fairly active period since April for investing here. We have radically overhauled the portfolio with some major changes as we didn't like how things have been developing in various markets. We are up YTD 11.2% which is broadly in line with the major US indices, the Nasdaq up 13% and S&P500 up 12%. This is a tad frustrating given we feel we have managed risk much tighter and are invested in stories that have a good future potential and we don't feel we're buying the top, which seemingly remains a risk with the US indices.
Anyway, we are now sitting on 30-35% cash which tells you where we feel comfortable right now. Earning 5% on a chunk of the portfolio without much risk sounds good.
Our key other positions are now Noble NE which is our largest single holding around 12% our portfolio, which we have managed to enter in the recent pull back. We also hold reasonable position sizes of ~8-10% in Vale, SFL and GCP.L. Vale has been beaten up recently and we see a slightly improving picture ahead. SFL we have held since 2020 purchasing in the 7s and 8s. It's now in the 14s and has paid $1 a year in dividends, so has done incredibly well for a relatively boring equity. We have just trimmed 1/4 of the position but are happy to continue to hold the rest. GCP is a new entrant for us, trading at a sizeable discount to NAV (~30%). We have felt this story is now a touch better than UK Housebuilders as a rate play, with expectations for higher for longer and with the UK economy finding life tough, so we have effectively rotated out of housebuilders into this, taking our 40% gain there.
We have entered the met coal space, with 5% positions in AMR and HCC which both have strong support over a multi year horizon, and met coal looks interesting right now. We have been building upon our mix of junior miners, both in gold and outside, now holding reasonable positions in Sitka Gold (SIG), Luca, Banyan (BYN) and Awale Resources. We also own Fireweed Metals (FWZ) and are excited about the changes there and what that may bring to the project, along with Sovereign Metals and Centaurus, the positions of which have been vastly increased in recent months. Prices have run a bit on all of these and if they come back we have plenty of cash to deploy. This leaves a few legacy positions waiting on the right moment to exit from along with some opportunistic trading as and when markets allow.
The big exit for us since we last wrote was the MSTR / BTC pair trade. This was a frustrating trade from the outset, with the volatility in MSTR being hard to stomach. We didn't like how it traded and exited at a small loss when it's premium to underlying NAV broke 80%. It has subsequently risen to a 125% premium, which is starting to get tempting to re-enter the trade on, however with the recent Gamestop / AMC pump we're going to sit on our hands for a while yet, but will keep a close eye on it for the right time to re-enter. Sentiment needs to shift to be more negative after a very position 4 weeks. In the meantime we have another pair trade on currently which is long MOS and short NTR. They correlate historically very tightly and have recently diverged with the increase in fert prices with MOS being left behind. We're not experts on wheat so have taken the pair trade instead of long MOS in case fert prices soften again.
Exiting the MSTR / BTC pair trade. Doesn't look yet like the time to re-enter.
The NTR / MOS pair - no apparent reason for the recent spike.
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