The first couple of weeks of 2021 have not been easy. The persistent harsher lockdown rumours, tennis elbow flaring up, and the inevitable return of the ravaging Kommetjie baboon troop (which, naturally, coincided with a bumper harvest in our meticulously tended veggie patch).
I have also found myself increasingly tinkering about in cryptocurrencies, where I still harbour hopes of restoring a lost fortune if I can time most of the wild rips and dips in prices.
At the time of writing, I sensed a mild euphoria seeping into the equity market, and missives from my regular correspondents betray a sense of optimism for a year of markedly improved returns. That’s encouraging. But reading our 2020 Hot Stocks cover story reminded me of just how wrong investors can be at the start of the year, and just how much risk we simply can’t quantify at any particular point.
If I assess my own strategy over the past six months, I would say there has been a distinct shift towards exchange traded funds (ETFs) and exchange traded notes (ETNs) — especially with an offshore bias. My major holdings (relatively speaking) are the Charles Schwab Dividend Equity ETF, KBW Premium Yield Equity Reit, the Satrix Divi Plus ETF, Realty Income Corp, Corteva Agriscience, Coca-Cola, Altria, Global X Lithium & Battery Tech, Sygnia 4IR and the Satrix Resi and Nasdaq ETFs. Am I doubting my stock-picking "skills"? I’d say so — with some justification. Last year was a fairly good year, in patches. I managed to make some ground buying bombed-out shares for recovery. These were companies I knew fairly well, and I was certain that they would not, even in the direst of circumstances, flounder. The problem, as always, comes with when to take profit. For example, I left a heap of money on the table at Hosken Consolidated Investments (HCI) and will also no doubt rue selling out of fintech business Capital Appreciation and technology group PBT. I also convinced my wife last week to exit her Montauk shares after a stellar run. That decision has already caused some tossing and turning at 3am. It seems I have far more staying power in ETFs and ETNs, especially when these funds are housed in a tax-free savings account and when most are faring well. That theory might well be tested in the next few weeks as I also hold two shorts — one leveraged ETN on the Nasdaq and another on the S&P 500. Both have been beaten into simpering submission, but I do need a small insurance policy against inevitable market ructions.
Of course, I can’t stay completely away from the JSE — not with a good number of intriguing bargains. I don’t think I’ve ever been this light on local equities, and our main portfolio comprises only Reinet Investments, Remgro, Irongate, MiX Telematics and Dis-Chem.
But I have a few special situation holdings, where I am banking on corporate action. These include investment trust companies RECM & Calibre (a play on gaming business Goldrush and a fledgling specialist retail niche), Sabvest (short-term opportunities in Metrofile and Net1 UEPS) and African Equity Empowerment Investments (I can’t believe it won’t be delisted). I hold two more investment companies — Brimstone and Trematon — where I take considerable comfort in the underlying assets in fishing and private education respectively. As regards "operating companies" I am limited to Libstar and communications technology business Alaris. Libstar has a decent portfolio of food products, which I see scattered liberally around our kitchen. I have a sneaking suspicion that Libstar might be taken private again. Alaris is (ahem) not exactly on the radar of big investors in SA, but wider interest could be garnered if the company opts for a growth-boosting Nasdaq listing.
While I am holding thumbs for the market to sustain this upbeat mood, there is also a selfish desire for further ructions. I’d dearly like to get back into HCI, Capital Appreciation and a few others.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.