July portfolio update

	August 3, 2017	July 31, 2018	Since Inception	Annualised
G&W Portfolio	1.0000	1.0661	6.61%	6.66%
Benchmark (SPAX2F0)	61,250.80	70,970.71	15.87%	16.00%

In July, the G&W portfolio rose by 0.17% compared to the benchmark's 2.78% gain.

In two days, it will be a year since the inception of the portfolio. When compared to the benchmark, my performance since last August has been disappointing. One year, however, is not an appropriate time frame to measure investment performance. As I mentioned when I first set up the portfolio, my aim is to outperform the index over a three-to-five year period. If the G&W portfolio is still trailing the benchmark at July 31, 2020, I will have to seriously reflect on my abilities as a money manager; if I am still behind as of July 31, 2022, I will, to use Buffett's parlance, "hand in my suit" (providing I haven't done so already).

With that said, I am very comfortable with the portfolio's holdings. I own three stocks that trade on the NSX, and two that trade in low-volume markets. These five stocks make up more than half of the portfolio. (The largest accounts for about a quarter of my assets.) In the last year, the five stocks paid gross dividends in excess of 13 per cent. Most of these dividends will be paid later in the year, which will bolster my second half performance. Many of these stock trade a few times a year or less. In rising markets, such as that experienced in the last year, these stocks, with their static prices, are laggards. As I'm still accumulating these stocks, their lack of price appreciation is a benefit rather a curse. The more I can acquire at current prices, the better.

I have one major "workout" position, Mitula, which was mentioned in the June update. There are three other positions at present: Spicers (ASX:SRS), Capral (ASX:CAA) and Kangaroo Island Plantation Timbers (ASX:KPT). Both Spicers and Capral are capitalised at less than their current assets minus total liabilities, and both have businesses with some earning power. KPT, which accounts for less than 4% of the portfolio, has timber assets that were recently valued at $108 million, slightly more than the company's current market cap. There is a margin of safety in all three of these businesses at current prices.

During the month, I added to one of my existing positions. In August, I expect to purchase an additional stock, which, barring any sales, will be the portfolio's 10th.