June portfolio update

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%