Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
To the MM team, You have three stocks in your Growth portfolio showing large paper losses of around 20-40% - JHX, RMD and AMC. I would appreciate your view on the three shares and more specifically, would / are you considering selling any of them to raise cash for other investments or to increase your cash position. As always, thanks for the great service. Charles
Hi Charles,
A very good question, especially considering MM are firm believers in “look after your losers, and the winners will look after themselves”. These three positions are weighing on the performance of our Active Growth Portfolio, although it does continue to outperform on most timeframes. Note, we also hold AMC in our Active Income Portfolio.
Importantly, we look at each position on it’s own merits, then as part of the portfolio as a whole, with consideration given to sector exposures and index weights. In the case of each stock covered today, we have actively considered alternatives, noting we are very prepared to take losses, its an important discipline in successful investing.
The 3 positions tell a very different tale:
Amcor Plc (AMC) – continues to look cheap, with potential upside from the Berry integration, but its facing a challenging mix of volume headwinds and currency pressure in a weakening consumer environment. A similar story to a few companies at present.
James Hardie Plc (JHX) – MM like many investors were “caught out” by JHX’s extremely disappointing $US8.4bn takeover of AZEK, and in hindsight our “first loss would have been our best loss.” However, from the $30 area we believe the next ~20% is more likely on the upside with the integration and cost improvements from its AZEK acquisition ahead of schedule.
ResMed Inc (RMD) – we liked last weeks result discussed Here although the market didn’t agree on Friday. We remain underweight the struggling healthcare sector and don’t plan to increase this stance in the near future.
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