$LVMUY $LRLCY $BK $SYF $GILD $GRUB $SQQQ $SCO $PCG | Responsible Investor Portfolio Update, June 20th, 2020

The global markets were consistently positive this past week, with Italy’s #FTSEMIB leading with a 3.9% gain. Our RI Portfolio lagged behind due to the hedges I had put in place. I had increased our hedges as I felt the markets were “tired” of going up but the week was largely positive in the end. Well, we are still showing a positive total return and we are only 3 weeks in since inception ! Also, I’d rather always loose on my hedges than on my core positions..

We have initiated 4 new positions this week, all in the European markets: two consumer French large caps, Luis Vuitton and L’Oreal and two Italian stocks, one in the media sector and the other one in the technology sector. We have also accumulated on Pacific Gas and Electric Company. With reduce and accumulate alerts the relative weight of the open positions change of course.

This week’s winners in our RI Portfolio were Italy-based Terna (+8,4% gain) and Grubhub (+6,2% gain).

The USD lost some ground compared to the EUR (0.9%) while there was no impact of the Danish krona. This means that in a portfolio in USD, the European stocks will have lost some of their value.

We now have 14 open positions, 2 of which are leveraged hedges (inverse ETFs). We are almost half way through along the path to achieve a complete portfolio. The table below summarises the portfolio performance since inception and now includes the investment strategy for each position.

200619 RIP

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$PCG rising from the ashes

You will remember the wild fires which severely hit Northern California back in 2018. As a result of this natural disaster, PG&E Corporation (ticker: $PCG ), a large utility company operating in Northern California with electricity and gas, had to file for bankruptcy and the stock price tanked. Well, this bankruptcy is different than your average one and $PCG is now seeing the light at the end of the tunnel. Time will tell if their plan will pan out but for investors this may be a profitable trade.

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I sent a Buy Alert on May 27th and the stock has shot up 9.37% since then: nice start ! In that alert I have indicated a Stop Loss (SL) of 9.5$ (corresponding to a 14% loss from my buy price of 10.88$) and a Target Price (TP) of 15.5$ (corresponding to a 43 % gain). These are my SL and TP values, based on my risk profile: you should assess what your own risk profile is and determine how tight a leash you want to keep.

I also warned that this is a trade, implying an opportunity based on technical analysis and/or momentum, not an investment. A lot will depend on the decision of the bankruptcy judge which is inherently affected by a certain degree of unpredictability. Utility companies do not tend to be cyclical as people always need to buy electricity and gas, also in times of crisis or a pandemic (though large companies will have reduced their consumption, albeit temporarily), which means that cash continues to pour in. But these large companies tend to be under the radar of politicians: if the wind blows in their favour, the future will look brighter for $PCG ; conversely, if regulators get in their way, further moves to the downside may be experienced by the stock.

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I currently own another utility, Italian-headquartered $ENEL.MI . My portfolio also has spicier stocks, like $RACE and $VIAV . If you wish to see the long and short positions in my eToro portfolio, please follow this link.

Enjoy the weekend and invest responsibly !