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Trading Diary

Trading Dairy – 13 March 2019

During the week we closed two positions, both in the Real Estate sector, and both at marginal profits. We sold both stocks as a result of a deterioration in their respective momentum rankings. We have replaced these positions with companies in the Materials sector, both of which rank highly for Momentum,  Valuation and Growth as well as a number of our other vital measures.

We expect that should the market continue its strong performance there is a potential for further rotation out of many of the lower beta stocks that were able to outperform during the volatility of 2018 back into the market leaders which tend to dominate under more benign conditions.

We have seen some evidence of this already, with the out-performance year to date of the Information Technology and Consumer Discretionary groups.  

Sells

  1. Viva Energy REIT (VVR)
  2. Charter Hall Energy REIT (CQR)

Both stocks performed well during 2018, however now seem to have run out of steam, which has resulted in a deterioration in their respective Momentum rankings

Viva Energy REIT – Running into resistance at current level and stalling as a result.
Charter Hall Retail REIT – Trading in a range since early December 2018.

New Buys

  1. Aurelia Metals (AMI)
  2. Silver Lake Resources (SLR)

Both companies are mid-tier gold producers that rank highly on each of our key metrics, as shown below.

Aurelia Metals (AMI)

Momentum3
Valuation20
Capital Efficiency34
Historical Growth3
Earnings Quality30
Aurelia Metals – Breakout of trading range, followed by a pullback during Feb and early March.

Silver Lake Resources (SLR)

Momentum4
Valuation20
Capital Efficiency6
Historical Growth9
Earnings Quality3
Silver Lake – 10 month trading range breakout followed by pullback in late Feb and early March.

By Danny Sandler

Founder of Ocean Asset Management.