Welcome to the Enhanced Value Fund (EVF) newsletter! With Charts of the Month, we’ll be providing you with occasional updates on EVF and sharing interesting charts that have caught our attention in recent weeks.
If the newsletter is truncated in an email, you can click on "View entire message" and you'll be able to view the entire post in their email app.
We would like to start with a quick poll:
EVF Updates
We had positive developments in the EVF portfolio in the past couple of months, three companies had some good news:
IDT Corp share price popped on the favorable outcome of the straight path lawsuit
Textainer got acquired by Stonepeak, as shortly after we discussed the investment thesis with Interactive Brokers podcast. You can find an excerpt here.
EVF has been on the road in November and December, we met with investors in Dubai and Europe, while we did a couple of educational workshop in Milan and Genoa where we “gave back” by sharing some investment perspectives. Thanks to the team for the help in organizing!
Now, to the market insights
Let’s start with commodities: The 2024 winner is…
Bitcoin crushed it in 2023 (year not in the books yet, but c’mon..):
I am no Technical Analysis fan, but Gold is looking like it’s attempting a breakout as well.
Copper got a number of production cut news after the below chart was published, deficit in the commodity looks big and growing, and you cannot print copper (we are bullish).
We spoke about Extra Virgin Oil in the past, but let us shed some light on another one for a second: Concentrated Orange Juice for a second.
If we move to the macro indicators, some good news have arrived: the interest rate raising cycle seems to have peaked with a big contraction in Money Supply (M2) and now it seems we might get some stabilization, or even rate cuts.
It was about time because nor the US government (first graph, interest expenses on public debt) nor the US consumer (second graph, mortgage rates) look in a great shape.
Also the ISM manufacturing index can do with some easing help.
Remember there is always a good reason to sell.
But equity markets have historically done just fine.
And according to our friend Freddy at Musigny Capital “Currently, the S&P 500 has an economic z-score of +1.2, indicating that it is not cheap. But it is not overly rich either. As the z-score has not yet peaked, the current rally in US stocks has further potential before reaching a level of concern.”
Also the BofA Bull and Bear indicator looks quite balanced.
If you’re in doubt, GMO suggest to look for quality in a recently published paper.
As discussed during our events at Fondazione dude in Milan and Talent Garden in Genoa, you can be right on the trend (in this case dating online)…
… but it doesn’t mean you’ll make easy money in the stock market (MTCH is the owner of Tinder).
Look at the past key investment theme of each decade:
What is your view on the theme of the current decade?
We think in terms of equity returns, commodities will have a chance, see oil&gas equities here as an example:
Finally, a couple of thoughts we care about and shared on LinkedIn:
Having >90k people flying to save the world from climate change seems to us a bit crazy
Also crazy to ship Using Cooking Oil from one side of the World to another, just because we can…
Thank you for making it so far, and see you in 2024!
The Enhanced Value Fund (EVF) Team
Disclaimer
This document is for informational purposes only and shall not be construed as an offer or solicitation to subscribe in the fund or any products referred herewith.
This document does not constitute investment advice or counsel or solicitation for investment in any fund. Any offer or solicitation will be made only upon execution of a completed Private Placement Memorandum, subscription agreement and relevant documentation, all of which must be read in their entirety. No offer to subscribe in shares will be made or accepted prior to receipt by the offeree of these documents and the completion of all appropriate documentation.
Any projections or forward looking statements are not necessarily indicative of future or likely performance. The information provided here has been obtained from or is based upon sources which are believed to be reliable but is not guaranteed as to its accuracy or completeness. Any persons acting upon this information do so entirely at their own risk. The information shown may contain technical inaccuracies or typographical errors. All information contained herein is subject to change without notice.
The author disclaims any and all responsibility for any direct, indirect, special or other consequential loss or damage of any kind arising directly or indirectly from the use of any information contained herein. This information is not intended to be made available to any person in any jurisdiction where doing so would contravene any laws or regulations.
By accessing this document you confirm that you are aware of the laws in your own jurisdiction relating to the provision and sale of securities, financial/investment services and products. You represent that you will not utilize the information contained in this website in a manner that could contravene such laws by ourselves or any other person.