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The aim of the
Luxury Mega-Caps Fund is to invest in some of the most well-known luxury
brands in the world. The strategy depends on the fact that rising incomes and
wealth in the Far East is providing a great growth opportunity for the luxury
firms. The Luxury Mega-Caps is also expected to be the fund that is
relatively the most independent of the markets in US. For example the
heavyweights LVMH and Christian Dior are based in France; Prada is trading in
the Hong Kong market while more accessible brands and luxury department
stores like Nordstrom, Saks and Coach trade in the US markets. It is a known
fact that the trading multiples of most of these companies are relatively
higher than companies in other sectors. The fund will be managed on the
assumption that the growth in the Chinese and other Asian markets are not
finished and the higher valuation multiples are justified for at least until
2014. The fund can and will analyze the cash-flow and profitability of these
companies and the ones that have moved into overvalued territory too much
will be sold. Also some luxury companies might experience a steep decline in
their stock prices due to external factors. The fund will use these declines
as opportunities to accumulate their shares, if there is a good probability
that the difficulties are likely to pass, or due to the brand value of the
company, it might become a takeover target. The Luxury
Mega-Caps will be one of the more passively managed funds. The fund will try
to accumulate shares at good entrance levels but once the shares are
accumulated there won’t be too much churn. The aim will be to take advantage
of a long-term upwards trend rather than exploiting short term moves with the
exception of extreme moves in specific stocks. |
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Since Inception
Relative Performance Graph vs DJIA and 7 -10 Year
Bond Index Latest Trades
Comments June 18th’
12 14:12 Finally I have started to trade this Fund.
KORS had my attention for about three months but I was uncertain about what
kind of trade to do with it. While it is a very richly valued stock and could
be a short trade, it is also a growth stock so shorting it was risky. What I
have done is I have paired it with Phillips Van Heusen as a P/E arbitrage.
PVH is not a stock that I would particularly go long but it had the best
positive price trend among luxury stocks. KORS has
established a downward price trend starting in late March 2012 when market
was strong. Therefore I am quite confident in this short KORS trade. Details
of the reasoning can be found in this SeekingAlpha article
that I have posted. Dec 8th, 11
14:47 As was noted on the General Comments page I
have initiated long term Treasury positions in the Fund to take advantage of
an expected decrease in bond yields. The positions should remain open until
the Fund starts to trade based on its core strategy or the expectations for the
bond yields change significantly. Until then the long term bond funds should
provide a steady pace of capital gains and some income. Dec 3rd, 11
10:53 The
Luxury Mega Cap Fund probably has the most exposure to overseas markets and
currency exchange rates. Due to that reason it would probably not be wise to
start trading this Fund before the situation in Europe sorts itself out.
Until then there would probably be short term trading opportunities but this
will be a more passively managed Fund, so the aim at the beginning will be to
accumulate shares at low levels. Once the Fund starts to accumulate shares
there will probably be a note on the General Comments page so check that out. |
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Since Inception Performance Chart vs Equity and Bond Benchmarks
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