In depth analysis of equity positions.

As we reach the end of the year, let's see how we are approaching 2019 from the point of view of both portfolio allocation and the equity positions in particular. We give priority to value investments and companies with a solid balance sheet and good relative track records in a downturn. A the moment the net equity position is pretty limited to specific value ideas or relative plays (long single name, short broader index).

It is now evident how liquidity is not on the rise and is impacting all asset classes across the board. While we are wondering whether the FED will reverse its path in the coming months (HSBC estimates the FED will decrease rates in Q1 2019), we enter this period maintaining a large reserve of cash and we are keeping bond to expiration. We expect a better entry point between the first and the second quarter. Hopefully, there will be some capitulation among retail investors.

At present we have 17.9% long equity positions. 4.98% of which entered after the downturn of the last few days. (These are La Roche and Nestle whose valuation and dividend are attractive at these levels). The remaining 12.9% are value stock that are performing well relative to indexes although are navigating in the worse case 10% below the purchase price. They are characterised by large cash generation, stable businesses, good dividend and considered top picks even in slowing economies. We take also into consideration that some sectors could see some consolidations, hopefully we will be on the right side. (See today's takeover of Gatwick airport by Vinci. The French companies look very active on this matter).

We have some hedges in place: 8.07% of gold and 5.8% short in the index Eurostoxx 600 (SXXP index). We will probably increase both of them going forward. We have this short is against the UK FTSE 100 and a single name in the luxury good sector Kering Group.

Our relative position in Kering Group has been positive over the last weeks.

As we are experiencing volatile markets, we monitor carefully the long period trends and the behaviour of the single securities vis a vis the rest of the market.


As we are monitoring the market continuously, we will keep you post of further developments.

Simplify is an AIF umbrella fund, is authorised by CSSF in Luxembourg and passported in Italy and Sweden. The fund is managed in London.