Tag: Broadcom

OIL PRODUCTION CUT AND THE SPECTRE OF STAGFLATION | Responsible Investor Weekly Newsletter, April 8th, 2023

Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “Oil production cut and the spectre of stagflation”, and was written on April 8th, 2023.

Weekly summary in a paragraph

The US stock market indices were mixed in a 4-day week of trading which was dominated by the surprise oil production cut by OPEC (more in the weekly pitch). Economic data included the ISM manufacturing PMI on Monday and non-manufacturing PMI on Wednesday which both missed, and the March nonfarm payroll data which came in near expectations on Friday. The European stock market continued to show its strength and so did the Euro. The 2-10y spread finished flat at -52 basis points. In corporate news, Fedex announced a restructuring and General Motors overtook Toyota as the top US automaker last year. Next week the Q1 2023 earnings season kicks off: any significant misses may result in another market leg down.

Asset classes weekly performance

This week the Dow finished +0.7% higher (+1.02% year to date) while the S&P500 lost -0.1% (+6.9% year to date), the Nasdaq gave up -1.1% (+15.5% year to date) and the Russell 2000 tanked -2.5% (-0.39% year to date, we have a 3x inverse position). Gold finished +1.8% higher (+7.8% year to date, we are long) while Silver gained +3.4% (+3.0% year to date, we are long). Oil was +6.5% higher (+4.05% year to date). The 10-y US treasury yield lost -6.1% (-13.3% year to date). The European stock market gained +0.7% (+16.8% year to date). The Euro finished +0.7% higher against the US Dollar (+1.84% year to date).

Weekly pitch

Rumour has it that OPEC decided to cut oil production by 1.6 million barrels as a reaction to Biden’s decision to not refill the Strategic Petroleum Reserve (SPR). For us investors the main consequence is that this is an inflationary move which comes at a rather delicate time: will it delay the Fed’s pivot? The main reason inflation has cooled off lately is that energy prices have come down from the 2022 cycle highs: if oil prices go up, the risk of stagflation will increase and this may contract earnings. Last week we went over the strong link that exists between earnings and stock prices, hence prudence is of the essence. In order to protect themselves on the downside, responsible investors should raise cash, buy hedges (including precious metals and carefully selected corporate bonds) and be well-diversified.

Weekly Portfolio Update

Here are this week’s movements: we took profit on our World Wrestling Entertainment long position (+3.0%). Cash, precious metals and hedges amount to 39.5% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

Ely Lilly & Co. +7.24% (Pharmaceuticals)

ProShares UltraPro Short Russell 2000 +8.11% (3x short the Russell 2000)

Newmont Mining +6.18% (Precious metals mining)

Denbury Resources +5.84% (Oil)

Callon Petroleum +5.80% (Oil)

Portfolio Asset Allocation

US Long stock positions 51.5% (unchanged)

EU Long stock positions 9% (unchanged)

US Short stock position 4% (increased)

Hedges 7.5% (unchanged)

Silver & Gold 5% (unchanged)

Cash 23% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is -1.5% (excl. dividends) vs the S&P500 loss of -8.8%, which corresponds to a +7.3% market beat.

Invest responsibly!!!

Declining earnings alert! | Responsible Investor Weekly Newsletter, April 1st, 2023

Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “Declining earnings alert!”, and was written on April 1st, 2023.

Weekly summary in a paragraph

The US stock market indices rallied this week, enough that they all finished positive for the quarter. The Nasdaq had the best quarter since 2020. The European stock market staged an even stronger gain and has now more than doubled its year to date return compared to the US stock market; in fact, since the mid-October 2022 bottom, the European stock market is up 36% versus a 10% gain by the S&P500. The PCE core inflation data published on Friday was slightly softer than expected, which helped the rally. Next week more economic data are due, including the ISM manufacturing on Monday and the ISM services on Wednesday. The banking sector borrowing continued and so did outflows in deposits, albeit at a slower pace than in recent weeks. The 2-10y spread reversed and reached -58 basis points, corresponding to a 20 basis points drop: these are not small changes. In corporate news, both Electronic Arts and Roku announced cuts of their respective workforce by 6%.

Asset classes weekly performance

This week the Dow finished +3.22% higher (+0.38% year to date) while the S&P500 gained +3.48% (+7.0% year to date), the Nasdaq rose +3.37% (+16.8% year to date) and the Russell 2000 appreciated +3.89% (+2.34% year to date). Gold finished -0.1% lower (+4.9% year to date, we are long) while Silver gained +4.71% (-0.7% year to date). Oil was +3.97% higher (-2.11% year to date). The 10-y US treasury yield lost -0.96% (-7.88% year to date). The European stock market gained +5% (+16.2% year to date). The Euro finished +0.64% higher against the US Dollar (+1.3% year to date).

Weekly pitch

Stock prices follow earnings and earnings expectations. Analysts continuously track earnings forecasts for all S&P500 companies: this enables to determine a bottom-up target price for the index. Over the past 3 months, the 2023 S&P500 target price has declined and is now 221.5$; with a current price of 4040$, the P/E multiple of the S&P500 is just over 18. According to Facset, the cut in the forecasted Q1 2023 earnings per share is the largest recorded in the 5-year, 10-year, 15-year and 20-year average. The earnings decline and the credit crisis are two reasons to stay nimble if you are invested in the stock market. In order to protect yourself on the downside, responsible investors should raise cash, buy hedges (including precious metals and carefully selected corporate bonds) and be well-diversified.

Weekly Portfolio Update

Here are this week’s movements: we initiated a new short position on Dexcom. Cash, precious metals and hedges amount to 39.5% in our portfolio (unchanged compared to last week).

Top 5 Weekly Portfolio Performers

Gap +11.56% (Retail)

Sandvik +9.74% (Construction Machinery)

Denbury Resources +8.57% (Oil)

Freeport McMoRan +7.63% (Non energy minerals)

World Wresting Entertainment +7.43% (Consumer services)

Portfolio Asset Allocation

US Long stock positions 51.5% (unchanged)

EU Long stock positions 9% (unchanged)

US Short stock position 3.5% (increased)

Hedges 7.5% (unchanged)

Silver & Gold 5% (unchanged)

Cash 23.5% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is -2.4% (excl. dividends) vs the S&P500 loss of -9.3%, which corresponds to a +6.9% market beat.

Invest responsibly!!!

From credit crunch to credit crisis: brace for impact! | Responsible Investor Weekly Newsletter, March 25th, 2023

Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “From credit crunch to credit crisis: brace for impact!”, and was written on March 25th, 2023.

Weekly summary in a paragraph

All the US stock market indices finished higher in a week which saw a 0.25% interest rate increase by the Fed and a dovish commentary. Consensus sees a 90% probability for a rate hike pause at the May FOMC meeting. The banking sector continued borrowing at a pace which reduced the systematic quantitative tightening by a third. Europe had a strong week despite concerns of the Credit Suisse contagion spreading to Deutsche Bank. 94% of European Stoxx 600 companies have reported Q4 2022 earnings now, with an 8% growth which is superior compared to the US (-5%). The 10-y yield continued its fall and resulted in the 2-10y spread dropping again this week to reach -38 basis points. Recall that the spread had reached -107 basis points just two weeks ago. In corporate news, Activision sees the concerns of its merger with Microsoft alleviated, and Disney announced the layoff of 7000 staff at its ESPN unit.

Asset classes weekly performance

This week the Dow finished +1.18% higher (-2.7% year to date) while the S&P500 gained +1.39% (+3.4% year to date), the Nasdaq rose +1.66% (+13.0% year to date) and the Russell 2000 appreciated +0.52% (-1.49% year to date, we have a 3x short position). Gold finished +2.06% higher (+6.39% year to date, we are long) while Silver gained +4.19% (-4.27% year to date). Oil was -0.67% weaker (-10.51% year to date). The 10-y US treasury yield tanked -6.27% (-10.89% year to date). The European stock market gained +2,89% (+10.5% year to date). The Euro finished +0.79% lower against the US Dollar (+0.5% year to date).

Weekly pitch

If you have been affected by the great financial crisis of 2007-2008, you will remember the challenge of borrowing money over that period: whether it is retail or commercial loans, this is what happens in a credit crunch. A credit crisis, however, is a much serious economic phenomenon whereby the banks themselves struggle to borrow either from each other or from the central banks. The graph below shows that the amount banks have borrowed at the Fed discount window in 2023 has exceeded the 110 billion USD top from the GFC and is near-vertical. The earnings decline and the credit crisis are two reasons to stay nimble if you are invested in the stock market. In order to protect yourself on the downside, responsible investors should raise cash, buy hedges (including precious metals and carefully selected corporate bonds) and be well-diversified.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Newmont Mining (+8.1%) and ACI Worldwide (+6.3%) long positions; we initiated new long positions on Halliburton, EOG Resources and MP Materials. Sell stops were triggered on our Adobe and Lennar shorts and on our US Banks ETF. Cash, precious metals and hedges amount to 39.5% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Sanofi +8.44% (Pharmaceuticals)

Sonoco Products +7.95% (Process Industries)

Meta +5.32% (Technology)

Electronic Arts +5.01% (Gaming)

Denbury Resources +4.63% (Oil)

Portfolio Asset Allocation

US Long stock positions 51.5% (increased)

EU Long stock positions 9% (unchanged)

US Short stock position 3% (reduced)

Hedges 7.5% (increased)

Silver & Gold 5% (unchanged)

Cash 24% (increased)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is -4.4% (excl. dividends) vs the S&P500 loss of -12.2%, which corresponds to a +7.8% market beat.

Invest responsibly!!!

Has the Nasdaq just saved the stock market? | Responsible Investor Weekly Newsletter, March 18th, 2023

Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “Has the Nasdaq just saved the stock market?”, and was written on March 18th, 2023.

Weekly summary in a paragraph

The US stock market indices were mixed in a week which was dominated once again by the banking sector being under pressure despite notable interventions on First Republic in the US, and on Credit Suisse in Europe. The Nasdaq was very strong partly due to a golden cross finally forming on Wednesday, and joins all the other major US indices who already achieved the mother-of-all technical signals weeks or months ago. Europe experienced the second week of decline as the ECB raised interest rates by 0.5%, with more hikes seen ahead due to inflation still being high: this move may help the Fed justify at least a 0.25% hike at next Wednesday’s FOMC meeting. The 10-y yield staged a sharp reversal to the point that the 2-10y spread dropped to -42 basis points. In corporate news, Adobe and Fedex beat Q4 2022 estimates while Dollar General reported in-line.

Asset classes weekly performance

This week the Dow finished -0.15% lower (-3.9% year to date) while the S&P500 gained +1.43% (+2.0% year to date), the Nasdaq shot up +4.41% (+11.12% year to date) and the Russell 2000 lost -2.64% (-2.01% year to date, we have a 3x short position). Gold finished +4.33% higher (+7.07% year to date, we are long) while Silver gained +3.22% (-6.8% year to date). Oil tanked -7.0% (-14.15% year to date). The 10-y US treasury yield finished a whopping -6.68% lower (-10.49% year to date). The European stock market gave up -2.5% (+7.4% year to date). The Euro finished -0.12% lower against the US Dollar (-0.36% year to date).

Weekly pitch

I am fundamentally a value investor but like using technical analysis to guide entry/exit points in my positions from time to time. According to technical analysis a ‘golden cross’ occurs when the 50-day moving average crosses above the 200-day moving average. Many algorithms use this event as a prompt to buy an asset. Conversely, a ‘death cross’, ie when 50-day moving average crosses below the 200-day moving average, is seen as a bearish sign. As mentioned in the weekly summary, the Nasdaq finally saw a golden cross form this week, and is the last of the major US stock indices to do so after the Dow (mid December 2022), the Russell 2000 (late January 2023), and the S&P500 (early February 2023). The flows in equities were stable this week, and it is possible that had the Nasdaq not experience a golden cross the markets may have had another sharp decline.

Weekly Portfolio Update

Here are this week’s movements: we took profits on our Williams-Sonoma short position (+6.5%); we initiated new short positions on Adobe, Pinterest, Snapchat and Five Below. Cash, precious metals and hedges amount to 40% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Newmont Mining Corp +14.26% (Precious metals)

ACI Worldwide +13.38% (Technology)

Google +12.58% (Technology)

Microsoft +12.41% (Technology)

Silver +9.38% (Precious metals)

Portfolio Asset Allocation

US Long stock positions 51% (increased)

EU Long stock positions 9% (unchanged)

US Short stock position 4.5% (increased)

Hedges 7.5% (increased)

Silver & Gold 5% (unchanged)

Cash 23% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last 12 months is -3.5% (excl. dividends) vs the S&P500 loss of -11.2%, which corresponds to a +7.7% market beat.

…in case you missed it…

Check out our first 2023 weekly newsletter to read the 5 things I got right in 2022…and the 5 I got wrong.

Invest responsibly!!!

Is Silicon Valley Bank the new Lehman Brothers? | Responsible Investor Weekly Newsletter, March 11th, 2023

Responsible Investor is a weekly newsletter and an Apple/Spotify podcast for those who are interested in investing responsibly. Go to responsibleinvestor.dk for more information and to read our disclaimer. This week’s newsletter is titled “Is Silicon Valley Bank the new Lehman Brothers?” and was written on March 11th, 2023.

Weekly summary in a paragraph

Last week’s rally already seems like a distant memory as US stock market indices tanked 4% or more this past week. Europe was no different as were most indices around the globe. The bank sector was hit the most as the Silicon Valley Bank seizure constitutes the first major bank failure since the Great Financial Crisis in 2008 and spreads contagion fears. To make things worse, the jobs report published on Friday came in hotter than expected with the only glimmer of hope consisting in a slightly softer average hourly cost. Money is flowing from the stock market to bonds and this is sending yields lower. The news of Xi’s re-election in China did not provide anything incremental. In Europe the ECB confirmed its resolve to ramp up Quantitative Tightening this summer with the terminal rate now expected at 3.75%.

Asset classes weekly performance

This week the Dow finished -4.4% lower (-3.7% year to date) and the S&P500 lost -4.55% (+0.6% year to date), the Nasdaq gave up -4.7% (+6.4% year to date) and the Russell 2000 tanked -8.1% (+0.7% year to date). Gold finished higher +0.98% (+0.57% year to date) while Silver lost -2.51% (-15.6% year to date). Oil was -4.7% weaker (0.8% year to date). The 10-y US treasury yield finished -7.23% lower (-2.58% year to date). The European stock market gave up -3.1% (+10.1% year to date). The Euro finished +0.15% higher against the US Dollar (-0.64% year to date).

Weekly pitch

Investors were spooked by the concerns over a classic run on the bank at retail investor-darling SVB Financial Group. Its size is too small to be compared to the Lehman Brothers, however, perhaps a more appropriate comparison would be with Bear Sterns whose fall was the notable predecessor of the GFC. It is too early to assess how far the impact of this failure will affect the sector. Useful signs may come from the US regional banks who are smaller in size compared to the likes of Goldman Sachs and JP Morgan. Certainly the mismatch between bank assets and liabilities in terms of duration is a key concern. Should the contagion spread, the Fed would have no choice but to lower interest rates to relieve the pressure on the credit market. Next week the all-important CPI and PPI reports are due which will provide a further update on the direction of inflation. We beat the market by 2% this week thanks to our hedges and are now 9.4% ahead of the S&P500 over the last 12 months.

Weekly Portfolio Update

Here are this week’s movements: we took profits on Alcoa (+9.3%) and Old Republic International (+12.6%) as well as on our short position in Johnson & Johnson (+5.8%); we initiated new long positions on an Healthcare ETF and a US Banks ETF (we always start with 0.5% of our portfolio and then add to it if the stock goes up); sell stops were triggered on our Snap short position and on Thor Industries. Cash, precious metals and hedges amount to 42% in our portfolio (increased compared to last week).

Top 5 Weekly Portfolio Performers

Proshares UltraPro Short Russell 2000 ETF +27.39% (3 times inverse the Russell 2000)

iPath Series B S&P500 VIX ETF +21.40% (Volatility ETF)

Proshares UltraPro Short Nasdaq ETF +11.84% (3 times inverse the Nasdaq)

Proshares Short S&P500 ETF +4.77% (1 time inverse the S&P500)

Proshares Short Nasdaq ETF +3.81% (1 time inverse the Nasdaq)

Portfolio Asset Allocation

US Long stock positions 49% (reduced)

EU Long stock positions 9% (increased)

Short stock position 2.5% (unchanged)

Hedges 6.5% (unchanged)

Silver & Gold 5% (increased)

Cash 28% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last year (12 months) is +0.1% (excl. dividends) vs the S&P500 loss of -9.3%, which corresponds to a +9.4% market beat.

…in case you missed it…

Check out our first 2023 weekly newsletter to read the 5 things I got right in 2022…and the 5 I got wrong.

Invest responsibly!!!

Is this week’s rebound short-lived? | Responsible Investor Weekly Newsletter, March 4th, 2023

Weekly summary in a paragraph

After three weeks of decline the US stock markets finally changed direction despite it being a relatively uneventful week. The terminal rate is now seen at 5.50% and two Fed members effectively cancelled each other out by speaking in favour of and against a higher that 0.25% increase at the late March FOMC meeting. Notable companies reporting earnings last week included Macy’s and Broadcoam who beat estimates and Lowe’s which missed. The Tesla investor day underwhelmed despite sparking some interest in the sharp cost reduction programme for one if its models. Renewed optimism on China reopening pushed oil and copper higher. The European stock market finished also higher and continues to outperform the US stock market since last October.

Asset classes weekly performance

This week the Dow finished +1.75% higher (+0.7% year to date) and the S&P500 rose +1.9% (+5.4% year to date), the Nasdaq gained +2.6% (+11.7% year to date) and the Russell 2000 appreciated +2.0% (+9.5% year to date). Gold finished higher +2.08% (+0.04% year to date) as did Silver which rose +2.05% (-13.1% year to date). Oil was strong and gained +5.51% (+3.34% year to date). The 10-y US treasury yield finished +1.07% higher (+4.51% year to date). The European stock market gained +3.2% (+9.6% year to date). The Euro finished +0.76% higher against the US Dollar (-0.70% year to date).

Weekly pitch

Investors should always be cautious when markets trade higher on a “slow news” week as this may just be retail investors taking over while institutional investors wait for a reason to sell or buy. Next week is a lot more economic data heavy and sometimes the best strategy is to be passive, at least in the short term. That is why you will see later in the newsletter that this week’s portfolio movements are minor. In other words we remain reasonably cautious thanks to our cash and hedges and are not prepared to go all in. In fact, we would always retain some cash in our portfolio, in order to take advantage of buying opportunities that may present themselves, as well as hedges, which protect you in rainy days. Hedges are the reason we did not beat the market this past week but they are also the reason we have been beating the market over the past year, check out our portfolio allocation and performance further below.

Weekly Portfolio Update

Here are this week’s movements: we initiated new long positions on Range Resources and Sanofi; sell stops were triggered on our Dexcom short positions. Cash, precious metals and hedges amount to 41% in our portfolio (reduced compared to last week).

Top 5 Weekly Portfolio Performers

Callum Petroleum +10.37% (Oil)

Freeport McMoRan +9.63% (Copper)

Meta +8.72% (Internet and content information)

Denbury Resources +6.24% (Oil & Gas)

Google +5.23% (Internet and content information)

Portfolio Asset Allocation

US Long stock positions 49.5% (increased)

EU Long stock positions 7% (reduced)

Short stock position 2.5% (increased)

Hedges 6.5% (reduced)

Silver & Gold 4.5% (unchanged)

Cash 30% (reduced)

1-year Portfolio Performance

Our portfolio performance over the last year (12 months) is +0.4% (excl. dividends) vs the S&P500 loss of -7.3%, which corresponds to a +7.7% market beat.

…in case you missed it…

Check out our first 2023 weekly newsletter to read the 5 things I got right in 2022…and the 5 I got wrong.

Podcasts

You can now listen to this newsletter on Apple Podcasts and Spotify.

Invest responsibly!!!

Responsible Investor Portfolio Weekly Update, May 8th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $ORSTED.CO $NIO $CMG $RH $RBLX $COIN $VIAV $MSFT $TRYG.CO $LOW

The Big Picture

Our weekly blog returns after a week of gains for most stock markets with the notable exception of the Nasdaq which finished 1.5% lower and has now lost ground for the third consecutive week: if you are still holding on to the stocks which made great gains in 2020, chances are that you are in the red so far in 2021. There appear to be greater opportunities for capital appreciation in value stocks which also feature good momentum.

The jobs report unexpectedly disappointed and this fuelled a rally on Friday as retail investors pumped more money in the stock market on the assumption that heavy borrowing and low interest rates will continue indefinitely. Despite some of the indices hitting all time highs the risk for a correction is still there which is why it is important not to be fully invested at this time. Scroll below to see what percentage of our portfolio is in cash.

88% of the S&P500 stocks have reported their Q1 earnings so far: the numbers are impressive such that there are several analysts discussing the possibility of this past quarter coinciding with the peak in earnings which would suggest an impending bearish cycle.

Market Performance

Most of the stock market indices recovered this week following last week’s decline: in the US the Dow was the best performer with a 2.7% gain, followed by the S&P500 which finished 1.2% higher whereas the Nasdaq which finished markedly lower (-1.5%). In Europe, the Stoxx gained 1.8% while the Italian stock market was even stronger and finished 2.0% higher. The Danish OMX20 is on a bullish 9-week streak and was 1.0% higher this week. The US Dollar lost 1.1% on the Euro. Crude $oil gained 2.8% and $Gold showed great strength by appreciating 3.6%. $BTC-USD swung within a 10% range and finished 2.1% higher.

Earnings

Eight of our stocks reported Q1 earnings the week before last:

  • DSV beat on earnings and revenue
  • DANSKE beat on net profit
  • ORSTED missed on revenue
  • SYF beat on earnings and revenue
  • UFC beat on earnings and missed on revenue
  • NEM missed on both the top and the bottom line but the
  • PCG missed on earnings but beat on revenue and reaffirmed guidance
  • BRK-B beat on earnings.

$GMAB announced their Q1 earnings on Wednesday with solid gains compared to the same quarter in 2020. The company reported a five-fold increase in operating results and maintained the guidance for 2021 set out earlier in the year. $ELC.MI reported their earnings on the same day and beat consensus as well as raised their guidance: we have a 4.4€ target price on this stock which is already up 41.4% since we bought it.

Next week $JD and $INW.MI will report their Q1 earnings.

Dividends

$OR.PA and $STLA.MI paid their dividend the week before last: our total dividend yield so far is 1.3%. Next week $WBD.MI goes ex-dividend. Our Danish stocks paid their annual dividends earlier this year. Italian stocks traditionally pay an annual dividend in late May. US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio gained 1.8% this week whereas the weighted average of the relevant market indices finished 1.5% higher, which corresponds to a 0.3% market beat.

This week’s portfolio winners were $STLA.MI which was up 8.1% and mining company $NEM which gained 7.9% (+16.6% since initiation) helped by gold strength.

Our Responsible Investor portfolio is now up 35.1% (36.4% including dividends) in 49 weeks and is beating the market by 3.3% over the same period. We are about 64% in stocks & ETFs and 36% in cash.

The table below summarises the portfolio performance since inception.

If you don’t want to miss my alerts, please subscribe to Responsible Investor or follow me on Twitter. I also run an eToro portfolio which currently has 35+ positions and can be accessed via this link.

Responsible Investor Portfolio Weekly Update, April 24th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $ORSTED.CO $NIO $CMG $RH $RBLX $COIN $VIAV $MSFT $TRYG.CO $LOW

The Big Picture

The month-long rally in US stock markets came to a halt at the end of rather volatile week of trading. While the bullish narrative is still considered intact, there are various headwinds which could affect the markets going forward, including the fear of a third wave, rising inflation, and stretched valuations.

Biden’s announcement of the capital gain tax hike took a toll on the stock markets on Thursday, however analysts and investors started reconsidering its impact as early as on Friday on the basis of the fact that it is actually old news and that it only affects less than 1% of the investors.

Market Performance

Most of the stock market indices were down up this week: in the US the Dow was the worst performer with a 0.5% decline, while the S&P500 was only marginally lower (-0.1%) followed by the Nasdaq which finished 0.2% down. In Europe, the Stoxx lost 0.8% while the Italian finished 1.4% lower. The Danish OMX20 is on a bullish 7-week streak and gained 1.4% this week. The US Dollar retraced relative to the Euro (-1.0%) for the third week in a row. Crude $oil lost 1.0% and $Gold was flat. $BTC-USD had an ugly week and finished 10.5% lower.

Earnings

While none of our stocks reported earnings this week, dozens of Q1 earnings reports were published: notable ones included $NFLX who beat analysts’ expectations, but missed new subscription expectations and $CMG who rallied on record revenue and triple-digit digital sales growth.

Next week many of our stocks will report their Q1 earnings: $DSV.CO, $DANSKE.CO, $ORSTED.CO, $SYF, $NEM, $PCG and $BRK-B.

Dividends

$MC.PA and $STLA.MI went ex-dividend this week: the former has already paid the dividend whereas the latter will do so next week. Our Danish stocks paid their annual dividends earlier this year. Italian stocks traditionally pay an annual dividend in late May. US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio gained 0.7% this week whereas the weighted average of the relevant market indices finished 0.3% lower, which corresponds to a 1.0% market beat: it is great to finish up on a down week!

This week’s portfolio winners were $UMC which was up 12% and Italian consumer cyclical stock $ELC.MI which gained 4.5% (+31.6% since initiation).

Our Responsible Investor portfolio is now up 33.8% (34.8% including dividends) in 47 weeks and is beating the market by 3.2% over the same period. We are about 63% in stocks & ETFs and 37% in cash.

The table below summarises the portfolio performance since inception.

If you don’t want to miss my alerts, please subscribe to Responsible Investor or follow me on Twitter. I also run an eToro portfolio which currently has 35+ positions and can be accessed via this link.

Responsible Investor Portfolio Weekly Update, April 17th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $ORSTED.CO $NIO $CMG $RH $RBLX $COIN $VIAV $MSFT $TRYG.CO $LOW

The Big Picture

The US stock markets delivered the fourth consecutive week of gains with all its indices being up more than 1% this week. The bullish sentiment continues to be driven by positive earnings, the impact of stimulus initiatives and positive vaccine/covid-19 data.

The Q1 2021 earnings season kicked off in earnest this week, with several large banks reporting solid numbers: there is however some concern over these earnings already being priced in the current market valuation which could lead to a short term consolidation phase.

On the vaccine front the freeze on the roll-out of the $JNJ vaccine did not seem to affect the estimate of 200 million doses over the first 100 days of vaccinations.

Market Performance

The stock market indices were all up this week: in the US the Dow had a 1.2% gain, while the S&P500 was the strongest index (+1.4%) followed by the Nasdaq which finished 1.1% higher. In Europe, the Stoxx gained 1.2% while the Italian finished 1.3% higher. The Danish OMX20 continued its bullish ride and gained 1.2% this week. The US Dollar retraced relative to the Euro (-0.6%) for the second week in a row. Crude $oil gained 5.7% and $Gold was 2% firmer. $BTC-USD gained 3.4%.

Earnings

Our luxury company stock $MC.PA reported Q1 earnings on Wednesday which grossly exceeded analysts expectations: revenue was up 30% from the same period in 2019. While sales in Europe continue to lag due to partial lockdowns in French and Italy, revenue figures were boosted by the Asian region.

$BK announced better than expected Q1 earnings on Friday but traded 4.4% lower possibly due to many of the other banks stocks showing stronger recovery data. The New York bank’s revenue is still 5% down from last year and the EPS was reported at 0.97$ vs 1.05$ a year ago. Despite this week’s drop, we have gained 23.5% on $BK on the tailwind of a rising interest environment.

In corporate news $MSFT announced the acquisition of $NUAN, its greatest purchase since LinkedIn, which happens just a few weeks after having disclosed being in talks to acquire Discord. $COIN IPO turned out to be a great success.

Dividends

$MC.PA and $STLA.MI go ex-dividend next week. Our Danish stocks paid their annual dividends earlier this year. Italian stocks traditionally pay an annual dividend in late May. US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio gained 0.9% this week whereas the weighted average of the relevant market indices finished 1.3% higher.

This week’s portfolio winners were $MC.PA which was up 7.1% thanks to blow-out earnings and $NEM which gained 6.3% benefitting from the raise in the price of gold.

Our Responsible Investor portfolio is now up 33.1% (34.1% including dividends) in 46 weeks and is beating the market by 2.2% over the same period. We are about 63% in stocks & ETFs and 37% in cash.

The table below summarises the portfolio performance since inception.

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Responsible Investor Portfolio Weekly Update, April 10th, 2021 | $TCEHY $NEM $BK $SYF $CLIX $PCG $LVMUY $LRLCY $STLA $IMPJY $TERRF $DSV.CO $DANSKE.CO $BRK $UMC $JD $ADSK $GMAB $ORSTED.CO $NIO $CMG $RH $RBLX $AA $VIAV $MSFT $TRYG.CO $LOW

The Big Picture

It was another “more of the same” week in the US stock markets with records continuing to be broken and interest rates lacking clear direction. Negotiations on the corporate tax hike are reportedly bringing the two parties to converge on the 25% mark from the initial value of 28%. This increase would see the 2022 earnings shrink by 3%.

Despite the strong employment numbers from the March reports, the fact that the target unemployment rate and the inflation goals are still unmet suggests that the Fed will continue keeping the interest rates unchanged and printing money for the foreseeable future in order to fuel this bull market.

Vaccine roll-out sees increasing volumes in the US, with 3 million daily doses now being the norm and peaks of 4 million achieved for the first time yesterday.

Market Performance

The stock market indices were generally up this week: in the US the Dow had a 2% gain, while the Nasdaq was the strongest index (+3.1%) followed by the S&P500 which finished 2.7% higher. In Europe, the Stoxx gained 1.2% while the Italian index declined 1.2%. The Danish OMX20 had the fifth consecutive week of gains and finished 2% higher. The US Dollar retraced relative to the Euro (-1.2%). Crude $oil declined 2.3% and $Gold gained 0.9%. $BTC-USD was on a rollercoaster this week and finished 0.3% lower.

Earnings

Notable earnings this week included $LEVI which reported a solid beat and positive guidance driven by faster return to pre-pandemic levels expectations and $STZ which traded lower after announcing a revenue and earnings beat as well as a “conservative” guidance: the markets are forward looking and sometimes beating earnings can be offset by weak guidance. Neither of them makes my watchlist due to their high valuations.

The Q1 2021 earnings season will commence next week for our portfolio with $BK scheduled to announce their earnings on Friday together with a number of other major US banks.

Dividends

Our Danish stocks paid their annual dividends earlier this year. Italian stocks traditionally pay an annual dividend in late May. US stocks distribute quarterly dividends.

Portfolio Performance

Our portfolio gained 0.6% this week whereas the weighted average of the relevant market indices finished 1.5% higher.

This week’s portfolio winners were $ADSK and $OR.PA with a 4.8% and a 4.5% gain, respectively. The banks and financial stocks were also strong and outperformed the market. Our two tech Chinese stocks lagged due to pressure exerted by their government.

Our Responsible Investor portfolio is now up 32.2% (33.2% including dividends) in 45 weeks and is beating the market by 2.5% over the same period. We are about 62% in stocks & ETFs and 38% in cash.

The table below summarises the portfolio performance since inception.

If you don’t want to miss my alerts, please subscribe to Responsible Investor or follow me on Twitter. I also run an eToro portfolio which currently has 35+ positions and can be accessed via this link.