Why we dumped Porsche and Marchex from our model

The early part of 2013 has proven to be a relatively poor period in terms of the Absolute Returns model performance, with the portfolio substantially under-performing the market as a whole. A number of positions were exited during this period.

The position in Porsche (POAHF) was sold following significant price appreciation subsequent to an extraordinary event – a favorable court ruling at the end of December, and an improved outlook. The position in Marchex (MCHX) was also exited at a loss during this period.

Two Harbours Investment Corp. (TWO), a real estate investment trust that focuses on mortgage-backed securities, completed its planned spin off of Silver Bay, the single family rental REIT. Two Harbour’s retained holding in Silver Bay may yet be distributed to existing shareholders following the current lock up period.

The model’s holding of BP Plc (BP) suffered further legal setbacks, having reported mixed progress in its restructuring plan.

The model’s holding of Genworth Financial (GNW) announced its latest attempt to restructure by way of separating the mortgage insurance business from the Genworth parent.

The model added a position in the preferred stock of MPG Office Trust (MPG), which has suspended dividends and trades at a significant discount to par plus accrued dividends.

The model currently holds a significant amount of cash and continues to seek opportunities to deploy capital however the availability of attractive opportunities and the present market conditions suggest that low expectations are warranted for the period ahead.

Photo Credit: Damian Morys Photography

The investments discussed are held in client accounts as of January 31, 2013. These investments may or may not be currently held in client accounts. The reader should not assume that any investments identified were or will be profitable or that any investment recommendations or investment decisions we make in the future will be profitable.

Author profile

Brian Skally
Brian Skally
I am employed full time in the private shipping sector, having previously worked as a private consultant in the maritime industry and in hedge fund administration.