Tag Archives: Materials

OUR AUGUST 2017 RESULTS

Our weighted average return in August was +1.28%, bringing our year-to-date return to +13.29%.

Going into August, we had reduced our positions in the technology sector. We did so because we had managed to make extraordinary profits in the sector this year, and decided to focus our efforts on less crowded trades.

As such, we continued to increase our positions in base metals miners. We find this sector attractive because it is wildly under-owned and has a minute weighting in the S&P 500 index (0.1%). As a new generation of investors dreams of start-up ‘unicorns’ and ‘mining’ virtual currency, we have been taking a decidedly ‘old school’ approach and buying quality mining companies that have emerged from cyclical lows with stronger balance sheets and are poised to benefit from global economic growth.

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Because You Know I’m All About That Base, ‘Bout That Base, Base Metals…

People tend to get preoccupied with things that are shiny. Investors often fall prey to the same instinct – especially those that are obsessed with gold. Such people are often referred to as ‘Gold Bugs’.

This years, Gold Bugs have been excited to point out that gold has outperformed the S&P 500 index year-to-date:

Congratulations! However, there is a far more interesting metals trade going on at the moment: base metals.

After a slow start to the year, base metals such as copper (sometimes referred to as “Dr.Copper”), zinc, and nickel have seen their prices appreciate significantly:

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We Have Been Busy

This has been a fairly active month in terms of portfolio changes.

As mentioned previously, we have been busy selling off technology stocks and positioning ourselves in new companies and sectors that we believe will come to warrant the market’s attention.

We have already acknowledged that our sale of tech stocks might have been too early. However, we were heavily overweight the sector. The rise in tech equity prices, coupled with underperformance in other sectors, has resulted in a reevaluation of opportunity cost, and as such, we have acted accordingly.

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