Cutting losses in the Emerging Portfolio

Hi Ray,

Welcome aboard. We continually assess a stocks future prospects at their current price and against their influence on the overall portfolio. We do not employ an arbitrary stop loss mechanism, and we try our best to ignore open P&L, although we appreciate this does not ‘look good’ in the portfolio when there are a few stocks held down by significant margins.

Clearly, we should have sold these earlier, but we must remember to look forward. A portfolio is a collective of positions that combine to generate performance. This portfolio has had what we would describe as a ‘solid’ start since launch a few weeks before COVID took hold in 2020, overall, it has beaten it’s benchmark by 3.32% pa since inception. 3 of the 4 stocks no longer have an active tab next to them, so we are not suggesting buying these at current levels, which prompts the question, why hold them?

When a stock goes against us, weightings of those positions decline and so too does their influence on overall portfolio performance. The 4 positions combined now make up ~6% of the total portfolio. We are holding them because we think there will be better levels to exit, however, this needs to be considered against their overall portfolio influence.

Please note, smaller companies are a lot more volatile and the chances of bigger moves in either direction are higher. The specific stocks being discussed here are: Bowen Coking Coal (BCB), Calix (CXL), EML Payments (EML) & Global Lithium (GL1)