For the three months to June 30, 2024, my PA was up 5.02% while my SMSF was up 2.59%. Over the same period, the S&P/ASX 200 Franking Credit Adjusted Annual Total Return Index (Tax-Exempt) fell 1.05%.
The biggest contributor was Arca Biopharma (NASDAQ:ABIO). Arca was another biopharma company that had wound down operations and was seeking strategic alternatives. The process took an extraordinarily long time to complete, but the end result was fantastic. I purchase my ABIO shares in January for $1.57 (after buying and selling shares in the company previously). There was a decent discount to cash, and indications that the process was winding up. ABIO announced a reverse merger with Oruka Therapeutics in April, which sent the stock soaring. I sold my position between $3.35 and $3.90 immediately after the announcement. I never expected this result, but it feels akin to winning the lottery. I was lucky rather than exhibiting any great skill, but I am happy to take the win and move on.
In April, I also received a $3.16 liquidation distribution from Cyteir Therapeutics. This was a decent result, but I was hoping for a little bit more. Luckily, I was able to buy more shares before the distribution at just over $3. Cyteir has indicated that there could be further liquidations distributions in future, which is good news, but I imagine they would be minimal (if we do see any at all).
Otherwise, I put some small amounts of money to work in some odd-lot tenders. One didn't work out (MNST, as I was overly optimistic and bought over the bottom of the limit) while one did (TLNE). I have a couple of other of these situations in the portfolio currently, but they are so small as to be almost irrelevant in terms of overall returns. I also did a little bit of selling of some of my HK stocks before the end of the financial year to generate some losses to offset my short-term gains. I'm hoping to buy these stocks back at some point, as they remain very cheap.
I added two new positions to the portfolio, Task Group (ASX:TSK) and MACOMPTA.FR (EPA:MLMCA). Task Group is being acquired by PAR Technologies, which is listed in the US, and there was a very attractive spread to the shares + cash consideration option. I bought a lot of TSK (it's now the largest position in my PA) and hedged the PAR that I will receive. As of today, it turns out I would have been better off without the hedge, but I wasn't prepared to take the risk of PAR stock falling. Overall, the situation has worked out very well. The deal has closed as expected and I will receive the takeover consideration shortly.
MACOMPTA is a tiny French software business. I bought it after reading a write-up by Tristan/@hurdle_rate on Twitter. Tristan's write up lays out the key information. In short, MACOMPTA is a business that earns very high returns on capital, is growing very fast (+30% CAGR over recent years) and is trading at a reasonable multiple. On top of that, there are some reasons to believe why the business should continue to grow quickly. The company is very illiquid though, so I have factored that into my position sizing.
Overall, I remain pessimistic about the portfolio. Many of the stocks I bought over the last two years seem to be close to fair value. Meanwhile, I'm finding it harder to find good new ideas for the portfolio. I continue to believe Japan remains an attractive place to find value, so I will be focusing my research there for the time being. I have found one company already that I have added to the portfolio since the end of June; it seems cheap, but I still have some outstanding questions. If the business performs well, I have the option to buy more over time, so I won't be writing it up anytime soon. As of June 12, my PA had 33.93% in cash (not including proceeds from the TSK takeover which I should receive in the next week or so); my SMSF had 14.02% in cash.
The benchmark I use for both portfolios is the S&P/ASX 200 Franking Credit Adjusted Annual Total Return Index (Tax-Exempt). As mentioned in my previous update, I've started including my cash balance in my PA results starting January 1, 2024. Previously, I did not include any cash balances in my PA results, but I was always nearly fully invested.
August 3, 2017 | June 30, 2024 | Since July 1, 2023 | Since Inception | Annualised | |
G&W Portfolio | 1.0000 | 3.4898 | 55.83% | 248.98% | 19.82% |
Benchmark (SPAX2F0) | 61,250.80 | 118,759.03 | 13.87% | 93.89% | 10.05% |
N.B. The returns for my SMSF are unaudited and are calculated net of all expenses and realised taxes (but not unrealised taxes).
August 4, 2021 | June 30, 2024 | Since July 1, 2023 | Since Inception | Annualised | |
G&W SMSF | 1.0000 | 1.7381 | 51.46% | 73.81% | 20.94% |
Benchmark (SPAX2F0) | 98,123.18 | 118,759.03 | 13.87% | 21.03% | 7.88% |
