Key Gainers & Losers
After last month’s great performance from equally great earnings, March turned out to be pretty tame by comparison as the portfolio turned out pretty even after accounting for currency. Shopify (SHOP) continued added another month of double digit gain and Apple (AAPL)‘s 5% gain was enhanced to 15% by the options we hold. Otherwise, those two made up for a slew of tiny losses across the board. Little known small-cap CRH Medical (CRH) also went up double digits on no news but at 1% of our portfolio, it’s not large enough to make a significant gain or loss yet but every little bit helps.
Saying Hi & Bye
Hi: Proto Labs Inc. (PRLB) – I’ve owned this contract prototype / manufacturer in the past with literally very even results (i.e. no gain or loss whatsoever). The stock has jumped around but pretty much remains at the same level it was four years ago. I’ve been keeping my eye on 3D Printing and while I don’t think it’s quick worth re-investing in core 3D printing companies like 3D Systems (DDD) and Stratasys (SSYS) yet, Proto Labs promotes 3D printing as one of its 3 main services. We’ll write a post eventually, but we’re looking to Gartner’s Hype Cycle on the timing of when to really get behind the core companies, but for now, if the technology gains any traction, my guess is Proto Labs will experience it first.
Bye: Short Tesla Inc. (TSLA) – This is one short term gamble that paid off but could have easily gone bad. We got in and out in the nick of time for a tidy profit just before Tesla quickly ran up to $280 and beyond – becoming America’s largest car manufacturer by market capitalization. More later on as to why I stay on the sidelines with Tesla as an investor, but don’t mind a gamble here and there. Since this update is a month late, I can already say we’ve re-opened the same gamble at a higher strike price.
Some Key Decisions
In updating my current holdings for February and this month, I noticed some eyebrow-raising numbers when calculating portfolio performance in the 70/30 SPY/XIU split comparison. In the 6 month time frame, the return of the 70/30 split is greater than the return of the individual indices themselves. This technically wouldn’t be possible if just parking money at the beginning of the time period. However, given that we’re trying to be smart (maybe too smart for my own good) and re-balancing the portfolio every time money leaves or enters my personal portfolio, and accounting for dividends, there could be a lucky timing issue where between fluctuations in both indices or currency, you might re-balance enough to eke out a higher gain. To be investigated….I suspect something is still wrong (although other time periods look fine) but it’s why the current holdings for March are taking longer than expected.
As I’ve mentioned multiple times, we’ve made a sizable bet on Canadian rate reset preferred shares. While the Claymore/iShares Canadian Preferred Share ETF is our largest holding in this space (@ ~1/3 of all our preferred shares), we hold multiple individual preferred shares. The Fairfax Financial Holdings Preferred Series K is the first of the individual prefs to reset. Holdings of Series K had the option to continue holding, with the rate reset to 4.671% or to convert to a floating rate series offering a rate at the 3-month Government of Canada T-Bill + 3.51% (which would adjust every quarter). With the 3-month T-Bill rate at 0.50, it was a decision between getting 4.01% now and hoping Canada raises rates within the next 5 years to make up the .67% difference, or just taking the higher yield. In the end, I decided to stick with the rate reset, although I suspect the floating rate might end up being the better option in the end. We had a little luck on our side too as the 5-Year Bank of Canada rate rose from 0.6% to 1.16% since the Trump election – which helped prop up the share price – and coincidentally landed right in the $22.55-$23.80 range I had predicted if the BOC rate fell between 1.00 and 1.25% (The new yield of 4.671% would indicate the 5-Year BOC posted rate was 1.161%)