The first time I shared a portfolio update on Twitter, I actually thought it was pretty scary as I felt that I had to defend all my investment decisions. Right now I see the positive side of this process as it incentivizes me to really think about my investment decisions. So here we go for the first time on this blog: a portfolio update for the month of July 2020.
My overall performance for the month was 1.15% compared to -0.27% for the benchmark MSCI World Index, to come at a return for the first half year of 2020 of 19.29%. My return is mostly driven by my asset allocation, with large parts allocated to Gold and Silver. While some individual stocks performed well, other individual stocks showed negative performance.
Let’s dive in and look at the details!
My asset allocation stands at about 36% Gold, just over 2% Silver, and the other 62% in individual stocks. My target allocation to the MSCI World index is actually about 20%. However, I don’t put any money into index funds right now as I believe these will not necessarily perform better in times of economic decline. As soon as the economy recovers I will allocate money to index funds again.
In July I sold a small part of my Silver holdings. I am well aware of my exposure to precious metals and as Gold and Silver continue to rise, I will slowly sell some of my holdings to increase my allocation to individual stocks. Silver prices rose by 29.63% in July as compared to 6.55% for Gold, and given Silver’s volatility I thought it was wise to take some profits.
My individual stock allocation changed quite a lot in July. I sold my positions in Netflix ($NFLX) just before they announced earnings and because I did not feel comfortable holding such a negative cash flow company at this moment. I also sold my position in Koninklijke BAM Groep ($BAMNB.AS) because recent strategic developments resulted in my investment case no longer being valid.
On the other hand I added The Publicis Groupe ($PUB.PA), JC Decaux ($DEC.PA) and Hello Fresh ($HFG.DE) to the portfolio, and I bought more shares in Nikon ($NKN.F) and Veolia ($VIE.PA). I plan to add more detailed investment cases for all of these stocks and some of my other holdings to this blog, so stay tuned!
Special Feature: Flow Traders’ Heavy Swings
The volatility in my portfolio was very high, with Flow Traders ($FLOW.AS) ironically being the prime example (for those who don’t know, Flow Traders is a liquidity provider in Exchange Traded Products, earning money in times of high volatility).
Flow Traders’ price increased to almost €35 intramonth (an increase of almost 10%) but suddenly fell back again to around €31 when the cboe announced new plans to curb the advantages of volatility and high frequency traders. Yet the impact of this plan is uncertain (it is still a plan, after all) and Flow Traders still has to announce earnings over Q2 including a probable announcement of a historically high dividend.
Volatility is still much higher than the levels in 2019 as there is still a lot of uncertainty ahead. As long as this uncertainty remains, I will hold on to Flow Traders as the largest position in my portfolio.
Earnings Announcements, Part 1
A lot of companies in the portfolio announced their quarterly results in July:
Given that we just had one of the worst quarters in recorded economic history it is good to see that some of these companies did well, or at least not as bad as investors expected.
Signify and Unilever reported earnings that were very well received by the market. Signify’s earnings were so good that it made me wonder why they actually cut their dividend.
Publicis, Hello Fresh, Suez and Veolia reported results that were received with a mixed response. Personally, I thought the results of Publicis and Hello Fresh were very good and those of Suez and Veolia were a little disappointing. The market seems to partially disagree with me and rewarded Hello Fresh with a negative monthly return, and Suez with a positive monthly return.
Then there is only one stock left. JC Decaux reported a loss over the second quarter and is the company that so far has been hit the hardest in the portfolio. As I bought it somewhere by the end of the month I luckily avoided the largest pains. I will cover this stock later in more depth to decide the way forward with this stock. Again, stay tuned!
Earnings Announcements, Part 2
The following portfolio companies will announce their quarterly results in August, which may once again shake up the portfolio quite a bit:
- Ahold Delhaize ($AD.AS): August 5th
- Nikon ($NKN.F): August 6th
- Ebara ($EAR.F): August 11th
- Flow Traders ($FLOW.AS): August 14th
- Koninklijke Boskalis Westminster ($BOKA.AS): August 20th
For the first time in a few months I plan to add some money to my stock market account again instead of my savings account now that most of the financial impact of covid becomes public. Who knows what I will research next, and what might become the next BeursWolf investment case.