Responsible Investor Portfolio Weekly Update, January 30th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $GRUB $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $DVA $CMG $OCDGF $AVGO $ABNB $VIAV $MSFT $TRYG.CO $ADBE

The Big Picture

While hundreds of earnings were published this week reporting better than expected earnings, the narrative was dominated by the retail-driven short squeeze of a number of heavily shorted stocks. The volatility that ensued resulted in two steep declines on Wednesday and Friday which sent the US stock markets more than 3% down. Some labelled this as a battle between generations or ‘classes’ of investors: to be honest it seems more like irresponsible investing and a failure of the stock market regulators to me.

Despite this decline, however, the bullish sentiment seems intact and supported by the ‘tripod’ consisting of positive earnings, vaccine optimism and the forthcoming stimulus bill. There were several positive vaccine news this week: $NVAX reported 89% efficacy in the UK trials and 60% in South Africa, the EMA approved the $AZN vaccine in Europe and $JNJ stated that their vaccine is 66% effective. This latter news initially underwhelmed but it is actually more positive than one would think at first look especially given the fact that it only requires a single shot.

Market Performance

All US indices were markedly down this week: in the US the Nasdaq led with a 3.5% decline, followed by the S&P500 and the Dow which both lost 3.3% of their value. The Stoxx fell 3.1% and the Italian index contained the loss to 2.3% as the political crisis sees a mildly positive optimism. The Danish OMX20 dropped 4.3%. The US Dollar gained 0.3% on the Euro. Crude oil was softer and $Gold finished 0.5% lower. $BTC-USD gained 3.3% after two consecutive weeks of sharp declines.

Earnings

Three of our stocks reported Q4 earnings this week. $MC.PA rose 1.3% on Wednesday after beating expectations with sales rising 18% year-on-year on a comparable basis.

$UMC missed on revenue despite an 8.2% yoy growth, while EPS rose to 0.16$ from 0.13$ in Q3. Their foundries are now at 99% capacity and the company guided in line. The stock sell off and underperformed relative to the Nasdaq this week: it is still up 59.4% since we initiated our position, however.

$SYF crushed earnings on Friday with Q4 EPS of 1.24$ vs consensus estimate of 0.85$ and improved from 0.52$ of Q3. Despite gaining in pre-market, the stock sell-off with the rest of the market that day which could provide an opportunity for accumulation in the near future.

Other notable earnings included $AAPL who beat expectations, and $MSFT whose cloud revenues grew 34% year on year. In the physical world, $CAT beat earnings despite a revenue fall.

Next week $DANSKE.CO will present its 2020 annual report.

Dividends

$BK went ex-dividend this week, the quarterly dividend is payable on February 12th. Most Danish companies go ex-dividend in March, while Italian stocks traditionally pay a dividend in late May and US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio fell 4.2% whereas the weighted average of the relevant market indices finished 3.1% lower.

Our Responsible Investor portfolio is now up 14.5% (15.5% including dividends) in 35 weeks. We are about 56% in stocks & ETFs and 44% in cash. On my watchlist this week I have $DVA, $CMG, $VIAV, $MSFT, $TRYG.CO and $OCDO.L.

The table below summarises the portfolio performance since inception.

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