CV Capital

CV Capital – 16 Feb 18 update

To my fellow shareholders,

Our one month milestone has passed. Although the market (ASX 200 index) fell by 3.5% from 6,121 (close at Friday, 2 Feb 2018) to 5,904 (close at Tuesday, 6 Feb 2018), individual stocks which I have been monitoring did not fall to levels which I felt gave us a big enough margin of safety. Nonetheless, I continue to look for investments “off the beaten track”. We have the advantage of having small sums of capital to invest and I want to fully exploit this advantage by investing in places where the market is less efficient. Every good angler knows that to catch fish, you have to fish where the fish are. The same applies in investing.

In general, I expect our portfolio to fare worse than the market during a bull market but fare much better than the market during a downturn. In other words, our portfolio should rise less than the market during a bull market and fall less than the market in a bearish market.

Our benchmark (STW) closed on 2 Feb 2018 at 57.1 and on 16 Feb 2018 at 55.25; representing a 3.2% fall for this period. Over the same period our portfolio (excluding cash) increased by 2.5% and including cash increased by 1.6%. I don’t expect our portfolio to have a negative correlation with the market, I do however expect it to fall less than the market during a downturn. At the moment, our portfolio has a thinly traded security which has contributed to this unexpected result. A few small parcels of this stock were traded on Friday which has pushed up its value.

The result of our portfolio since inception to 16 February is (0.03%). This compares with the benchmark’s return of (2.56%).

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