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Trading Diary

Trading Diary – 7 Mar 2019

This week we sold three losing positions, including Inghams (ING), National Storage (NSR) and Evolution Mining (EVN). The losses on each position were 7.8%, 7.4% and 10.5% respectively. We held each of these three stocks for 21 days.

We have also added a number of new positions, which we’ll discuss below.

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Trading Diary

Trading Diary – 14 Feb 2019

This week, we finally resumed our investment program. The index has recovered strongly following the drawdown experienced in October, November and December of last year and our trend signals have now given us the green light. We made our retreat from the market in October and November and missed out on a large portion of the downside last year. However this year we have some catching up to do since the index is already up 7.5% for the year to date.

We’re unable to tell in advance how long or severe any one drawdown is going to become, in which case we treat them all the same, and while in this case, we might have missed a portion of the market recovery, our strategy is not designed to outperform in v-shaped turnarounds.

Not surprisingly, we have heavily weighted our portfolio to the Real Estate sector, given our aversion to the highest priced stocks and the fact that this has been the leading sector over the last 12-months to date. The sector weathered the drawdown in 2018 to finish the year with a positive performance. The only group to put in a positive showing last year.

We’re comfortable with this defensive posture out the gate. Yield is likely to be important in this environment with growth stalling across the globe and interest rate hikes becoming less likely.

We are also starting the year with significant exposures to both the Materials and Communications Services sectors. Our allocation to Materials is primarily to gold-related names, including, Evolution Mining, Regis Resources and Newcrest, who have seen the price of gold significantly outperform since August 2018.

Communications Services exposures include Vocus, whose fortunes are beginning to turn around after close to 3 years with lagging performance, as well as the two large New Zealand telecommunications companies, Spark and Corus. Both stocks are beginning to emerge from long trading ranges that started in mid-2016.  

Real Estate

Our exposure to Real Estate comprises 8 individual holdings, including BWP Trust (BWP), Charter Hall Group (CHC), Goodman Group (GMG), Charter Hall Retail REIT (CQR), GPT Group (GPT), Dexus (DXS), National Storage REIT (NSR) and Viva Energy REIT (VVR).

BWP Trust (BWP)

  • Market Cap: $2.4b
  • Trailing 12-Month Price Appreciation: +35%
  • Momentum decile: 1
  • Value decile: 8
  • Earnings quality decile: 3
  • Financial strength decile: 2
  • Operating momentum decile: 6

Charter Hall Group (CHC)

  • Market Cap: $3.6b
  • Trailing 12-Month Price Appreciation: +62%
  • Momentum decile: 1
  • Value decile: 6
  • Earnings quality decile: 6
  • Financial strength decile: 2
  • Operating momentum decile: 5

Goodman Group (GMG)

  • Market Cap: $21.8b
  • Trailing 12-Month Price Appreciation: +61%
  • Momentum decile: 1
  • Value decile: 8
  • Earnings quality decile: 5
  • Financial strength decile: 2
  • Operating momentum decile: 8

Charter Hall Retail REIT (CQR)

  • Market Cap: $1.9b
  • Trailing 12-Month Price Appreciation: +32%
  • Momentum decile: 1
  • Value decile: 4
  • Earnings quality decile: 2
  • Financial strength decile: 5
  • Operating momentum decile: 5

GPT Group (GPT)

  • Market Cap: $10.8b
  • Trailing 12-Month Price Appreciation: +29%
  • Momentum decile: 1
  • Value decile: 6
  • Earnings quality decile: 8
  • Financial strength decile: 8
  • Operating momentum decile: 8

Dexus (DXS)

  • Market Cap: $12.2b
  • Trailing 12-Month Price Appreciation: +38%
  • Momentum decile: 2
  • Value decile: 4
  • Earnings quality decile: 6
  • Financial strength decile: 3
  • Operating momentum decile: 4

National Storage REIT (NSR)

  • Market Cap: $1.3b
  • Trailing 12-Month Price Appreciation: +37%
  • Momentum decile: 2
  • Value decile: 8
  • Earnings quality decile: 8
  • Financial strength decile: 9
  • Operating momentum decile: 7

Viva Energy REIT (VVR)

  • Market Cap: $1.7b
  • Trailing 12-Month Price Appreciation: +29%
  • Momentum decile: 2
  • Value decile: 5
  • Earnings quality decile: 4
  • Financial strength decile: 6
  • Operating momentum decile: 5

Materials

Our Materials exposure comprises gold producers Evolution Mining (EVN), Regis Resources (RRL) and Newcrest Mining (NCM).

Evolution Mining (EVN)

  • Market Cap: $6.5b
  • Trailing 12-Month Price Appreciation: +45%
  • Momentum decile: 1
  • Value decile: 6
  • Earnings quality decile: 2
  • Financial strength decile: 1
  • Operating momentum decile: 3

Regis Resources (RRL)

  • Market Cap: $2.6b
  • Trailing 12-Month Price Appreciation: +39%
  • Momentum decile: 1
  • Value decile: 4
  • Earnings quality decile: 4
  • Financial strength decile: 1
  • Operating momentum decile: 3

Newcrest Mining (NCM)

  • Market Cap: $19.2b
  • Trailing 12-Month Price Appreciation: +16%
  • Momentum decile: 1
  • Value decile: 7
  • Earnings quality decile: 3
  • Financial strength decile: 3
  • Operating momentum decile: 3

Communication Services

Vocus Group (VOC), Spark New Zealand (SPK) and Corus Group (CNU) comprise our exposure to the Communications Services sector

Vocus Group (VOC)

  • Market Cap: $2.2b
  • Trailing 12-Month Price Appreciation: +23%
  • Momentum decile: 1
  • Value decile: 7
  • Earnings quality decile: 4
  • Financial strength decile: 5
  • Operating momentum decile: 3

Spark New Zealand (SPK)

  • Market Cap: $7.4b
  • Trailing 12-Month Price Appreciation: +31%
  • Momentum decile: 1
  • Value decile: 5
  • Earnings quality decile: 5
  • Financial strength decile: 6
  • Operating momentum decile: 3

Corus Group (CNU)

  • Market Cap: $2.2b
  • Trailing 12-Month Price Appreciation: +50%
  • Momentum decile: 1
  • Value decile: 5
  • Earnings quality decile: 5
  • Financial strength decile: 9
  • Operating momentum decile: 5

Energy

Our Energy exposure comprises Washington H. Soul Pattinson (SOL) and New Hope Corporation (NHC).

Washington H. Soul Pattinson (SOL)

  • Market Cap: $7.5b
  • Trailing 12-Month Price Appreciation: +72%
  • Momentum decile: 1
  • Value decile: 5
  • Earnings quality decile: 6
  • Financial strength decile: 2
  • Operating momentum decile: 5

New Hope Corporation (NHC)

  • Market Cap: $3.4b
  • Trailing 12-Month Price Appreciation: +79%
  • Momentum decile: 1
  • Value decile: 2
  • Earnings quality decile: 5
  • Financial strength decile: 1
  • Operating momentum decile: 1

Information Technology

Bravura Solutions

  • Market Cap: $1b
  • Trailing 12-Month Price Appreciation: +148%
  • Momentum decile: 1
  • Value decile: 8
  • Earnings quality decile: 2
  • Financial strength decile: 2
  • Operating momentum decile: 1

Consumer Discretionary

G8 Education

  • Market Cap: $1.6b
  • Trailing 12-Month Price Appreciation: +15%
  • Momentum decile: 1
  • Value decile: 5
  • Earnings quality decile: 7
  • Financial strength decile: 4
  • Operating momentum decile: 9

Consumer Staples

Inghams Group (ING)

  • Market Cap: $1.7b
  • Trailing 12-Month Price Appreciation: +55%
  • Momentum decile: 1
  • Value decile: 2
  • Earnings quality decile: 4
  • Financial strength decile: 5
  • Operating momentum decile: 6

Industrials

IPH (IPH)

  • Market Cap: $1.2b
  • Trailing 12-Month Price Appreciation: +24%
  • Momentum decile: 1
  • Value decile: 7
  • Earnings quality decile: 5
  • Financial strength decile: 5
  • Operating momentum decile: 5