June portfolio update

Hello again, it's time for another portfolio update. Again, this one's a little bit late: I haven't had as much time to update the blog lately.

The good news is that my portfolio has done very well since the start of the year. My PA was up about 25.3% for the six months to June 30, while my SMSF was up 12.15%. For the June 2023 financial year, my PA was up 40.76% while my SMSF was up 32.09%. I am happy with the good performance, but it's important to note that my FY22 was poor. Importantly, both my PA and SMSF are now well ahead of my benchmark, the ASX 200, which is how I measure my long-term stock picking performance.

The gains have largely come from stocks recently added to the portfolio. My biggest winner was Cyteir Therapeutics, a biotech company that I purchased below net cash. On June 30, Cyteir announced it would liquidate its assets and return capital to shareholders, which led to a substantial increase in the price of the company's shares. Cyteir was a very large position for me, which was handy, and my investment thesis proved correct. (If only investing was always so easy…) I also made a lot of money on another biotech situation, Jounce Therapeutics, which I mentioned in my previous post. Finally, CEL, a Japanese real estate net-net, also performed well during the first half. I also had a small tailwind from forex movements.

My biggest loser was Aptinyx, another biotech liquidation. I was overly optimistic in my initial assessment of APTX's liquidation value, and I traded it poorly. APTX last traded at 7.22 cents versus an estimated 7-10 cents of proceeds from the liquidation, so I continue to hold the position. There was another instructive lesson from the APTX investment: I didn't consider that the company could face difficulties in getting the liquidation approved by shareholders. In the end, APTX was just able to reach a quorum; if not, who knows what would have happened. It is interesting to me that people could leave money on the table by not voting their shares, but the recent example of Calithera Biosciences shows that this can indeed happen. Another significant loser was Naked Wines, which has been my worst investment by far. I sold all of my Naked Wines position in May.

My focus now is on finding new investment opportunities; I have a lot of cash coming back from the biotech liquidations and other special situations. Unfortunately, the portfolio's discount to intrinsic value has narrowed significantly since the start of the year, and I don't have ideas of the quality of CYT or JNCE at the moment. I am confident that I will find good places to put the money to work in the future. In the meantime, I will be keeping myself busy with shorter term special situations, which I have found to be a good alternative to holding cash.

The benchmark I use for both portfolios is the S&P/ASX 200 Franking Credit Adjusted Annual Total Return Index (Tax-Exempt), which is pre-tax. I do not account for cash in my PA, but I do in my SMSF. Historically, I have nearly always been fully invested in the PA.

	August 3, 2017	June 30, 2023	Since July 1, 2022	Since Inception	Annualised
G&W Portfolio	1.0000	2.2395	40.76%	123.95%	14.61%
Benchmark (SPAX2F0)	61,250.80	104,296.22	16.61%	70.28%	9.42%

N.B. The returns for my SMSF are pre-tax and unaudited.

	August 4, 2021	June 30, 2023	Since July 1, 2022	Since Inception	Annualised
G&W SMSF	1.0000	1.1475	32.09%	14.75%	7.48%
Benchmark (SPAX2F0)	98,123.18	104,296.22	16.61%	6.29%	3.25%