Global StockPicker Q1 2018 commentary

Instruments traded
Single stock CFDs
Asset classesGlobal equities
Investment styleFundamental analysis, dynamic risk allocation
Quarterly return–4.73% (gross of service and performance fees but net of trading costs)
Q1 2018 daily return volatility2.7%
 

Market overview

Equity markets, as measured by the MSCI World ex EM index, lost 4% in the first quarter of 2018. In January the overall equity markets initially rose, primarily fuelled by expectations of positive effects from the US tax reform. However, in February economic indicators showed a surprisingly strong growth in wages, which led to fears of accelerating inflation and as a result set off a correction in the equity markets. The markets recovered a big part of the February loss as economic indicators calmed, but fell in March due to market fears of a trade war between China and the US. 

 

Portfolio performance

January +7.7%
February–3.7%
March–8.2%

The Global StockPicker CFD portfolio had a return of -4.73 % for the first quarter after cost, underperforming the benchmark by 0.73 percentage points. 

  • The average leverage ratio during the first quarter was x2.56 commitment
  • CFD costs detracted approximately 2.01%

Best performing positions

  • Petroleum Geo-Services is a Norwegian supplier of seismic data to the oil industry. Due to a competitor deciding to exit the industry, the stock gained 49.3% in the first quarter, which will likely tighten supply and result in higher prices. A rise in the oil price and strong quarterly earnings also contributed to the performance
  • Electronic Arts is a video game developer. The stock gained 15.4 % during the quarter after the company reported stronger than expected revenue from digital sales, which was mainly due to growth in micro transactions and digital downloads 
  • Autodesk is a software developer, which develops software aimed at design, construction and architecture industries. The stock gained 19.8% after fourth quarter earnings showed a stronger than expected increase in the annualised recurring revenue from customers. This led to a positive reaction in the stock
     

Worst performing positions

  • Tractor Supply Company is a US retail chain catering to leisure farmers and the rural life style. The stock lost 15.7% after the company reported earnings which were in line with expectations but included a guidance that disappointed the markets due to implied weak margins. This caused the market to fear a downward margin development going forward
  • Incyte Corporation is an American biopharmaceutical company, with a pipeline of potential cancer drugs. The stock lost 12% during the first quarter, with no material news on any of the company’s trials
  • Ally Financial is an American financial service company, with a focus on automotive financing. The stock lost 6.86% during the quarter. Along with other consumer finance stocks it underperformed the market, partly due to fear of rising charge offs

Performance summary

Q1 20183 year Inception
 –4.73%+48%  +192% (26.03.2012)

Outlook 

For the second quarter of 2018, the strategy manager for Global Stockpicker expects markets to correct further from current levels given fundamentally healthy market conditions. However, it is likely that volatility will increase if the current trade war tension rises or if inflation levels surprises on the upside. 

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