Tag Archives: portfolio

New TCW Gargoyle Fund Aims To Outperform BXM Buy-Write Strategy

By DailyAlts Staff For investors looking for long-term results superior to the S&P 500 but with reduced risk, TCW and the Gargoyle Group may have a new solution: The TCW/Gargoyle Dynamic 500 Fund (MUTF: TFDIX ), which launched on December 1. The is the second alternative mutual fund to be launched by the two groups in combination with each other (the first was a reorganization of an existing fund ). The new fund seeks to outperform U.S. equities with less risk by selling covered calls against a long position in the S&P 500, with a target net-long market exposure of 50%. The strategy is similar to the well-known BXM Index Buy-Write strategy, but with a “crucial difference” that, according to Gargoyle, can give investors a significant edge. Dynamic Exposure Management The big difference? Unlike the BXM Index, which has a static options position that is re-written each month, Gargoyle dynamically adjusts its options hedge to maintain consistent market exposure between 35% and 65% net long. These adjustments can result in greater downside protection and increased upside participation relative to static buy-write strategies, according to Gargoyle. According to Gargoyle’s website , the investment strategy (not the fund) significantly outperformed the BXM Index since being calculated as the D500 Client Portfolio in August 2012. Through February 2015, the ending period shown on the website, the portfolio returned 29.54% through February 2015, compared to BXM’s 20.33%. The D500’s standard deviation of 4.61% was lower than BXM’s 5.66%, resulting in a Sharpe ratio advantage of 2.19 to 1.29, and a Sortino Ratio edge of 5.26 to 2.72. Fund Details The fund is officially advised by TCW Investment Management, and sub-advised by Gargoyle. Joshua B. Parker and Alan L. Salzbank, both Managing Members at Gargoyle, are the fund’s portfolio managers. Shares of the new fund are available in I (TFDIX) and N (MUTF: TFDNX ) classes, with respective initial minimum investments of $100,000 and $5,000. The investment management fee for both share classes is 0.80%, while the net-expense ratios run 1.00% and 1.25%, respectively, after fee waivers. Past performance does not necessarily predict future results.

The V20 Portfolio Week #9: A Great Week, But Potential Chop Ahead

Summary The V20 Portfolio rallied by 5%, beating the S&P 500, which ended the week flat. Investor sentiment has shifted for Spirit Airlines. Perion Network made a significant acquisition. Conn’s will report earnings on Monday. The V20 portfolio is an actively managed portfolio that seeks to achieve annualized return of 20% over the long term. If you are a long-term investor, then this portfolio may be for you. You can read more about how the portfolio works and the associated risks here . Always do your own research before making an investment. Read last week’s update here ! The S&P 500 (NYSEARCA: SPY ) was salvaged on Friday, jumping 2% and ended the week flat. The V20 Portfolio completely smashed the index and started December with a bang, rising 5% for the week. Year to date, the portfolio is now up by 98%. Portfolio Update There were two major contributors to this week’s performance: Spirit Airlines (NASDAQ: SAVE ) and Perion Network (NASDAQ: PERI ), which appreciated 23% and 19%, respectively. There were no material news coming from Spirit Airlines, so it would appear that the market sentiment has shifted. About three weeks ago, hedge fund manager Whitney Tilson pitched the stock , perhaps investors are finally recognizing the company’s value after a figurehead on value investing speaks out. Another possible factor contributing to the recent rally is falling crude prices. Perhaps you’ve heard that oil has recently dipped below $40 and OPEC decided to hold production quota constant. These negative events are great news for the airline industry overall, as airline companies will continue to benefit from cheap fuel in the near term. However, I believe that this was only a minor contributor to Spirit Airlines’ rise. In the graph above we can see that the stock has greatly surpassed the performance of the airline index, whose performance is driven mostly by macro movements such as oil. As for Perion Network, the company recently got an investment from JP Morgan , significantly boosting investor confidence. In addition, the company also acquired an adtech company for $180 million. The management has a history of making acquisitions, so I’m not too surprised. The management also disclosed that undertone was profitable (15-17% EBITDA) and has a good growth trajectory. While I would’ve preferred a large share repurchase program since that way the return would’ve been more certain, this acquisition could work out in the long run. About Conn’s Our largest holding, Conn’s (NASDAQ: CONN ), actually fell this week, declining 5% from $27.02 to $25.64. With earnings on Monday, clearly the market is still uncertain. Couple weeks ago I mentioned that the share repurchase program instituted by the management will buoy the stock in the near term. Thus far, this prediction rings true. We can observe the price movement since the $100 million buyback program was announced in the chart below. Of course, now that the company is reporting earnings, this effect will be nullified on Monday. Outlook Since next week our biggest position will report earnings, expect significantly higher volatility. In the past, Conn’s has achieved 15% swings in a week without batting an eye. Of course, as I’ve outlined in the introduction of the V20 Portfolio, volatility is a necessary part of our concentrated style of investing, and we should accept it as opportunity instead of shying away from it. In any case, we should continue to focus on the fundamentals regardless of where the stock ends up on Monday .

IVA Funds Annual Report

The IVA International and Worldwide Fund have had great returns. Both fund hold high amounts of cash. The holdings are very diversified. The IVA International Fund (MUTF: IVIQX ) and the IVA Worldwide Fund (MUTF: IVWIX ) have come out with an Annual Report, which can be found here . Charles de Vaulx and Chuck de Lardamelle are two very well known value managers who run diversified portfolios with some stocks that you won’t see anywhere else. The Worldwide has averaged 9.03% (Institutional Class) since October 1, 2008, versus 6.03% for the MSCI All Country World Index. The International (Institutional Class) has averaged 9.00% over that time frame. Both very good returns. The Worldwide Fund has a broad portfolio including: 4.6% in gold, 3.5% in Berkshire Hathaway (NYSE: BRK.A ), and 3.3% in Astellas Pharmaceuticals ( OTCPK:ALPMY ). What is interesting is that the fund holds 35.2% in short term investments and 3.2% in sovereign bonds. So almost 40% in cash and over 5% in gold and gold mining. Looks to me like they’re pretty bearish on things. 22.9% of the portfolio is in the U.S., 6% France, and 7% Japan. According to the Annual Report: Our currency hedges helped to offset losses from the strong U.S. dollar, contributing 1.5% to return. At the end of the period, our currency hedges were 51% Japanese yen, 39% Australian dollar, 29% South Korean won, and 30% euro. What I love about these funds is that you just can’t find these stocks any place else. Who else owns Hong Kong & Shanghai Hotels ( OTCPK:HKSHY )? It’s a 50 cent dollar. It’s probably trading at half of net asset value. Who owns bonds in French conglomerate Wendel ( OTCPK:WNDLF )? Their holdings are off the wall and I love it! I don’t need active management to buy Coca-Cola (NYSE: KO ) and GE (NYSE: GE ). Why pay a high fee for glorified index funds. The International Fund has a similar make up to the Worldwide Fund. 35.2% are short term investments, 8.5% in fixed income, and 4.6% in gold. These are not your run of the mill mutual funds. These managers are allowed to invest as they feel. Some of the larger holdings are the same as noted above plus Nestle ( OTCPK:NSRGY ), Newscorp (NASDAQ: NWS ), and Samsung ( OTC:SSNLF ). International hedged its currencies as well which helped to mitigate the strong dollar. Barron’s wrote an article on the two funds. The article suggests that independent fund companies like IVA have lower fees and less conflicts of interest than funds owned by Wall Street banks. I tend to agree. Are these two managers going to jump ship for higher pay? Probably not as they most certainly have ownership in the firm. I suggest you go to the link and look at the Annual Report. There are so many names that you are probably not familiar with that you are bound to learn something. The Institutional Class’s expense ratio is 1% for each fund. I find that to be quite reasonable. de Vaulx and de Lardamelle have done a good job managing these funds. Putting together a portfolio like this is very difficult for the average person. You may be able to buy American blue chips but can you buy foreign bonds and then hedge the currencies? Probably not. Though the funds are closed to new investors, perhaps they will open again in the future. They are a good addition to a portfolio. Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.