BlueOrange Asset Managment June Results
Our weighted average return in June was -0.32%. Since 2015, we have generated a net return of +34.16%.
In terms of investment strategy performance, our weighted average net returns for June were (a) -0.46% for conservative strategies, (b) +0.65% for balanced strategies, and (c) +0.16% for aggressive strategies.
Trump’s trade war tactics took centre stage in June, causing broad weakness in emerging market bonds (-1.49%) and equities (-4.54%), as well as base metals (copper -3.72%; nickel -2.18%; zinc -6.89%). The effect of trade wars is simple: tariffs increase costs to producers, which they then pass on to consumers. Higher prices for consumers lead to lower demand. Guess who wins? No one! Now carry this dynamic over to companies with multi-national supply chains and consider the disruptions tariffs might cause. Fun, right? And so, because markets dislike uncertainty, we saw considerable sell-offs in exporters and raw goods suppliers. No one can say for certain how long Trump’s trade war tactics will endure, but the longer they persist, the greater the chance they will damage economic sentiment.
Despite this unwelcome scenario of a base metals sell off, our top performing position last month was actually Arizona Mining Inc. (+49%) – a mineral exploration company that is being bought out by their strategic investor South32 Ltd. Nothing is ever guaranteed, but this transaction showed that great assets, experienced management and patience can lead to phenomenal investment gains.
In June, we sold most of our exposure to the US technology sector, booking substantial profits. This included our former top equity holding Shopify (SHOP US). This is the second time we have sold our entire position in Shopify, which we had re-purchased below $95 in mid-October of last year and sold for around $170 in mid-June. We also initiated positions in US homebuilders based on favourable valuations and continued strength in demand for new homes in the US. We currently have more cash on-hand than we have had in quite some time and are hard at work looking for new opportunities that present compelling value for our clients.
On behalf of our Client Portfolio Management team, I thank you for your continued trust and support!
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