Hi Charles,
Great timing on COH, we wrote about it on Friday morning:
- “We like the risk/reward towards COH following its 22% correction into our target zone, but the Moderna implications are enough to keep us on the sidelines.”
With regard to the Emerging Companies Portfolio, we are an open book, and we too are always learning and looking to improve, and we fully acknowledge that recent performance in the EC portfolio lends itself to improvement!
A few lessens since the portfolio launched just before Covid in 2020;
- An area we’ve continued to focus on within our investment team across all portfolios, is recognizing when we’ve made a mistake, and taking action. Mistakes around an investment thesis, a macro view, or a sector tilt will always happen, the ability to recocigise is key, but also take action more quickly. There are a few mistakes in this portfolio, where the thesis changed, and action was not taken soon enough when that happened.
- We run high conviction portfolios at MM, however in small caps, we should be mildly broader in terms of numbers of positions, and therefore position sizes – with our target for this portfolio now 25 positions, up from 20.
- A blend of market caps will reduce volatility. Being too heavily exposed in the small areas of the market <$1bn mkt cap, creates greater risk and variability in returns. We are positioning the portfolio with greater diversification from a size perspective, to have a greater degree of stability while still being exposed to exciting growth opportunities.
Overall, the portfolio is ~2% ahead of BM since inception to yesterday, noting that the website portfolio commenced before MM Invest, however, we do agree Charles that more recent performance has been underwhelming, but we’re confident in our process, and always looking to get better right across the suite of MM portfolios, and be transparent, open and honest about it along the way.
