Mechelany Advisors’ Investment Ideas are available to our DIAMOND Members. We started the service in May 2018 and it is available by subscription for US$ 1’500 fee per annum, a small amount of money when compared to the profits that can be generated from our trading ideas.
Our individual Investment ideas can be individual stocks, bonds, commodities, or even macro- asset allocation calls such as currencies and bonds.
They are all based on our proprietary multi-layered screening and valuation process.
Some of our investment ideas may be included in our Model Portfolio while some may not be included if they do not fit the global risk profile and asset allocation chosen at the time of selection.
You will find below the review of our Investment Ideas universe over the 7 months since May, 1st 2018
In the last 7 months of 2018, we made 74 recommendations and closed 21 of them, leaving us with 53 open positions.
2018 was a terrible year in terms of equity markets, the worst since the 2008 financial crisis and almost every equity index closed the year in negative territory.
December 2018 was particularly harsh, the worst month of December since 2031.
Despite this bleak environment, our portfolio of Investment Ideas generated a positive performance of +3.71 % over an average holding period of 99 days, which translates into a +13.69 % annualized performance.
US & Canadian Equities
In the North American markets, the period form May to September was very favorable, particularly in the small and medium cap space and we had some extremely good calls. GLAUKOS Corp, the ophthalmic research and distribution company rise +98% making it our best call of the year. SUPERVALU Inc. was acquired at a 71 % premium to our acquisition price while VITAMIN SHOPPE delivered 57 %.
Our worst call of the year, although we still hole the stock was MICROBOT MEDICAL, which lost 73 % of its value since we bought it in September 2018.
Despite the carnage of December 2018, our portfolio of long US and Canadian stocks delivered +6.57 % over an average holding period of 100 days, the equivalent of a + 24.03 % annualized performance.
US and Canadian Short Positions
As our readers know, we have been predicting the END OF TECH as early as March 2018 and were the only people to recommend to short Apple Inc. back in March and April 2018, a tad too early indeed.
Nevertheless, our portfolio os US shorts delivered fabulous performance despite our decision to close some of our shorts way too early.
Our of the 8 positions opened and the 2 we closed, the average performance is +24.34 % over an average holding period of 130 days, demonstrating that making money is about the short side as much as the long side.
European equity markets have lost 14 % of their value in 2018 and are amongst the very few that have recorded negative performances over the past five years.
Our European portfolio saw some excellent calls such as Inmarsat, which rose +59 % and Henne& Mauritz that delivered 20% for us.
Many of our recent calls are offering excellent value and we expect them to do really well in the first half of 2019.
The European portfolio delivered +1.41 % over an average holding period of 40 days.
Our Japanese equity portfolio has been a nightmare mainly because we did not take profits in September when we should have done so, and Japan was one of the worst performer in December 2018.
We rightly took our profits in Rakuten Inc. in November, but our portfolio is still down -13.95 % in Japanese Yen terms, which equates to – 7.9 % in US Dollar terms over an average holding period of 132 days.
Chinese equities lost 32 % of their value in 2018 and although we avoided most of the fall, we went back into the market in August and September 2018 in trackers and funds that have done badly and in individual stocks that we find extremely cheap and that have done better than the indexes.
Our decision to enter Chinese technology stocks recently should pay well, and although we lost 35.5 % in Tongda Group, the company is so cheap that we just put another BUY on it in January 2019.
The Chinese portfolio lost _4.17 % over a 100 days holding period, a relatively good performance considering the very negative performance of the Chinese markets in 2018,
We traded commodities relatively quietly in 2018 but had some great timing in our entry points.
We shorted LUMBER at the top of the market in June and closed our short position in October at a 20 % profit.
We shorted Oil at the top in September 2018 and made a killing of + 62 % on our 3x leveraged Oil short ETF that we covered early in November.
And finally our long Gold and Silver positions ended up paying nicely in December with respectively + 17 and + 21 %
The Commodities portfolio delivered + 31.3 % over an average holding period of 112 days.
Currency moves are less volatile than equities and commodities and we do not leverage our positions there, so the returns are to be lesser than in other asset classes.
However, we were amongst the very few to predict the rise of the US dollar in 2018and we rights shorted the EUR at 1.25 and the Japanese Yen at 106.50 back in March and April 2018.
We covered our EUR short and went long at 1.13 in November 2018 for a +10.62 % gain over 209 days.
We could have covered our JPY short at 114 in November as well for a 7 % gain but decided to stay short the JPY.
The December panic in the financial markets took it back to a high of 108, erasing most of our gains.
Nevertheless, our currency portfolio delivered a respectable +4.44 % gain over 188 days in 2018, a respectable performance considering our lack of leverage.