Sunday, December 25, 2011

Update No. 39 – 25/12/11

Full website: www.eternalgrowthpartners.com
Merry Christmas, Feliz Navidad, Glædelig Jul, or whatever the ‘Seasons Greetings’are in your part of the world to readers.  I write from from Fiji, and will be home to Australia in 2 days, in the meantime, the current asset values are as follows. There were a couple of sharp moves against us this week, a week when the market scarcely budged and given our concentrated holdings, this meant we dropped behind the benchmark for only the third week in this period (since 1 July) and leave ourselves only 3 trading days to close the gap, my only comfort is a still handsome lead in the full 9 months of operation – Tony Hansen 25/12/11.
 


April 1st 2011
July 1st 2011
Current Price
Current Period
Since Inception
EGP Fund No. 1
1.00000
1.08396
0.95528
(11.87%)
(4.47%)
35632.05
34200.68
31517.42
(7.85%)
(11.55%)

EGP Fund No. 1 Pty Ltd. Down by 11.87%, lagging the benchmark by 4.02% since July 1st. Since inception, EGP Fund No. 1 Pty Ltd is Down by 4.47%, leading the benchmark by 7.08% all-time (April 1st 2011).

Sunday, December 18, 2011

Update No. 38 – 18/12/11

Full website: www.eternalgrowthpartners.com

I am in New York City this week, what an amazing place.  Update for weekending 16 December below.  – Tony Hansen 18/12/11.


April 1st 2011
July 1st 2011
Current Price
Current Period
Since Inception
EGP Fund No. 1
1.00000
1.08396
1.01107
(-6.72%)
1.11%
35632.05
34200.68
31608.67
(-7.58%)
(-11.29%)

EGP Fund No. 1 Pty Ltd. Down by 6.72%, leading the benchmark by 0.85% since July 1st. Since inception, EGP Fund No. 1 Pty Ltd is Up by 1.11%, leading the benchmark by 12.4% all-time (April 1st 2011).

Sunday, December 4, 2011

Update No. 36 – 04/12/11



The market jumped by 7.62% this week, and unsurprisingly, we failed to keep pace.  As I have been expecting for the last couple of months, the US recovery began to show very real signs of traction as the unemployment rate there fell by half a percentage point in a month.  As for the optimism out of Europe, I will wait before I get too wrapped up in it, regardless of what action is taken there, the recovery will be long and slow.
I found this comment a couple of weeks ago from Roger Montgomery here:
“I’ve always been suspicious of a company that issues a report to the market after the close of trade.”
I’ve said before on my links page, I generally like Montgomery’s methods, though his relentless salesmanship can dull the quality of his message. Nonetheless, he reminds novice investors to focus on the quality of the underlying business, to forget about day to day pricing, market gyrations and focus on business value etc, these are worthy messages.  When it comes to his statement above, however, I must passionately disagree. In fact I wrote a little about it 3 months ago in Update No. 23:
Talking about the flood of reporting that accompanies the last day of reporting season gives me a chance to get on my soap-box over an issue that really irks me.  This is the reporting of price sensitive information during trading hours.”…
Warren Buffett has also commented on the importance of giving holders time to absorb the information as fully as possible before the market opens, from Berkshire Hathaway’s 2010 annual report announcement:
“Berkshire Hathaway Inc.’s 2010 Annual Report to the shareholders will be posted on the Internet on Saturday February 26, 2011… Whenever we can post our report on a Saturday we will continue to do so.”
I absolutely agree with the sentiments Buffett has expressed on this matter.  Wherever possible, the longest amount of time possible should be made available to report users to digest financial information.  Particularly with business updates, to me a Friday night disclosure immediately after market-close is perfect.  The only exception to this is continuous disclosure related matters such as takeover offers and the like, which should be reported ASAP to keep the market informed.  Scheduled business updates, earnings releases and material of this kind should always be released with the maximum practical time allowed for absorption.
So although I appreciate the generally helpful (to inexperienced investors) guidelines Roger Montgomery provides, I have to say, he is dead wrong in this statement.  – Tony Hansen 04/12/11.

P.S.  I leave for about 4 weeks overseas this week, I will be back in the last week of December.  The next 3 posts I make should come from Washington DC, New York City and Fiji.  I am sure there will be no issue with the Washington & NYC posts, though they may be shorter with just the financial info and little else.  As for the Fijian post (scheduled for Christmas Day) – I have never been to Fiji before, but I’m hopeful I will be able to get the internet access required to get the post away on time.  If not, I’m back in Australia on 27 December and will make the final 2011 update post then.


April 1st 2011
July 1st 2011
Current Price
Current Period
Since Inception
EGP Fund No. 1
1.00000
1.08396
1.03266
(-4.73%)
3.27%
35632.05
34200.68
32581.37
(-4.73%)
(-8.56%)
EGP 20
1000.00
883.67
814.36
(-7.84%)
(-18.56%)

EGP Fund No. 1 Pty Ltd. Down by 4.73%, level with the benchmark since July 1st. Since inception, EGP Fund No. 1 Pty Ltd is Up by 3.27%, leading the benchmark by 11.83% all-time (April 1st 2011).

EGP 20.  The EGP20 index is Down by 7.84%, lagging the benchmark by 3.11% since July 1st.  Since inception the EGP20 is Down by 18.56%, lagging the benchmark by 10.00% all-time (since April 1st 2011).

S&PASX200TR  The benchmark index is Down by 4.73% since July 1st. The benchmark is Down 8.56% all-time (since April 1st 2011).

Thursday, December 1, 2011

Update No. 37 – 11/12/11



I’m in Washington DC at the moment, it’s 11pm & I’ve just returned from watching the Washington Capitals defeat the Toronto Maple Leafs 4-2 in a fascinating game of NHL Ice-Hockey.  After a Capital player scored a hat-trick and all the fans around the stadium threw their hats (I suspect retail value of almost US$10,000) onto the ice (presumably to be collected and thrown away), I considered investigating a sports cap manufacturer for an investment… I’ll keep you posted.  In all seriousness though, the funds figures are updated below and for your weekly reading, I can recommend this article which is a transcription of an old speech given by Warren Buffett about the extraordinary variability of the stock-market in relation to some simple underlying fundamentals that should easily guide us as to the appropriateness of the markets valuation at any given time – Tony Hansen 11/12/11.


April 1st 2011
July 1st 2011
Current Price
Current Period
Since Inception
EGP Fund No. 1
1.00000
1.08396
1.01446
(-6.41%)
1.45%
35632.05
34200.68
31940.43
(-6.61%)
(-10.36%)

EGP Fund No. 1 Pty Ltd. Down by 6.41%, leading the benchmark by 0.20% since July 1st. Since inception, EGP Fund No. 1 Pty Ltd is Up by 1.45%, leading the benchmark by 11.81% all-time (April 1st 2011).

Sunday, November 27, 2011

Update No. 35 – 27/11/11



For some reason, despite no particular announcements of note by our holdings, we widened the performance differential between EGP Fund No. 1 Pty Ltd and the benchmark by 5.07% this week (to 13.62% since inception 8 months ago).  I wish I could say this were because of our stellar price performance, unfortunately it has far more to do with the substantial decline in the market this week (the fund assets rose by a fraction under 1%, the rest is explained by the benchmarks fall through week).  In any case, as I have remarked often before, as long as we lead our benchmark we will be pleased, because in the long run, the benchmark will likely provide an adequate return on capital, so if we exceed that then our return should be better than adequate, if we exceed it by enough, our return might even be very good.
I have talked quite a bit over the past few weeks about OWS (Occupy Wall Street) and the operation of the Free Market and its benefits. A variety of topics probably not perfectly related to my key goal with EGP Fund No. 1 Pty Ltd, which is to identify and purchase undervalued equities and make market beating returns – believe me when I say, whatever intellectual diversions I might take, I always return to that ultimate goal!  I will divert once more into a subject which touches on one of my great passions, the Free Market.
My (most recent) excursion into this area started with an article declaring Australia, for the second year in a row the second happiest place in the world to live.  I beg to differ; I believe there is nowhere better.  This article led me to another from the ABC website, which postulates which must exist first, economic freedom and the market economy, or political freedom and human rights? After thinking on that, I found myself wondering about how I would achieve the level of economic prosperity I desired had I been born in a third world country? It appears economic freedom would seem to be the driver via the worlds ‘black market’ economy.  I had my eyes opened to this economy through this article on Foreign Policy magazines website, the industrious and hard-working operating within ‘System D’ certainly seem to be gaining impressive prosperity.
It seems intuitive to me that there must be a fairly substantial black market economy globally, but the article linked above indicates the global black market employs in the order of 1.8 billion workers and generates about $10 trillion, or around 1/6 of global economic output, or about twice the output of China (who have the second highest economic output globally).  This is extraordinary and one clear consequence of this global black market is rising global prosperity as discussed in Update No. 33.  Economics is not a zero-sum game, everyone gains in a world of free-trade; it is important we remember this in periods of global economic weakness such as that currently prevailing. – Tony Hansen 27/11/11.


April 1st 2011
July 1st 2011
Current Price
Current Period
Since Inception
EGP Fund No. 1
1.00000
1.08396
.98579
(-9.06%)
(-1.42%)
35632.05
34200.68
30273.18
(-11.48%)
(-15.04%)
EGP 20
1000.00
883.67
759.74
(-14.02%)
(-24.03%)
EGP Fund No. 1 Pty Ltd. Down by 9.06%, leading the benchmark by 2.42% since July 1st. Since inception, EGP Fund No. 1 Pty Ltd is Down by 1.42%, leading the benchmark by 13.62% all-time (April 1st 2011).

EGP 20.  The EGP20 index is Down by 14.02%, lagging the benchmark by 2.54% since July 1st.  Since inception the EGP20 is Down by 24.03%, lagging the benchmark by 8.99% all-time (since April 1st 2011).

S&PASX200TR  The benchmark index is Down by 11.48% since July 1st. The benchmark is Down 15.04% all-time (since April 1st 2011).

Sunday, November 20, 2011

Update No. 34 – 20/11/11


I talked last week about how globalisation, and in particular free-trade appear to be dragging more and more of our global citizens out of poverty.  The evidence empirically demonstrates that each passing year fewer people in both a proportionate and an absolute sense live in poverty. I have therefore a very strong attachment to the idea of free trade, and it is for this reason I found this article on the Institute of Public Affairs website so agreeable.  I should point out that the IPA are chiefly right-wing cheerleaders, but though they drift in that direction, there is still considerable merit in much of what is published on the site.  I point out the right-wing affiliation/tendency of IPA for much the same reason I denoted the leftist views of the sites I directed readers to in Update No. 31, I never wish to be seen to push a particular belief or set of beliefs.  I read widely on a variety of issues (chiefly related to economics/finance) in order to properly inform my view of the world and how it operates, for as Desiderius Erasmus said “In the land of the blind, the one-eyed man is king”, knowledge is power, I never limit my reading based on the ostensible ideology of the author, a good idea is good regardless of its source.
Back to free trade, and the basis of the IPA article linked above points out that whilst quasi-protectionists/free-trade skeptics such as Paul Howes, Tony Abbott and Barnaby Joyce take understandable umbrage at the effects for example of distortions such as the Chinese Government propping up inefficient/marginal state-owned enterprises with taxpayer funds.  The author rightly points out why we are the ultimate beneficiaries of these actions:
“China is a developing country. Yet it is taxing its citizens in order to prop up businesses, which then go sell their products below the market cost to rich countries. These subsidies are a direct wealth transfer from third-world taxpayers to first-world consumers.”
The obvious concern is that propped up/subsidised for long enough these businesses eventually cause competitors drop out of the marketplace and the subsidies can be removed.  What they probably don’t realise or consider though if this is the true aim, is that in a dynamic capitalist marketplace, if the subsidies were what squashed competitors; their removal will lead to inevitable new entrants.
I have also mentioned before the folly of the Chinese artificially holding down their currency.  This, in the short-term inevitably leads to better terms of trade (your exports are cheaper than they should be & imports correspondingly dearer than they should be), but will also lead to the Chinese government and citizens holding large quantities of foreign bonds/cash, which will at some point be worth less (not necessarily worthless) as you eventually can’t keep the currency suppressed.  The piper must always be paid, eventually – Tony Hansen 20/11/11.


April 1st 2011
July 1st 2011
Current Price
Current Period
Since Inception
EGP Fund No. 1
1.00000
1.08396
0.97611
(-9.95%)
(-2.39%)
35632.05
34200.68
31733.38
(-7.21%)
(-10.94%)
EGP 20
1000.00
883.67
801.18
(-9.33%)
(-19.98%)
EGP Fund No. 1 Pty Ltd. Down by 9.95%, lagging the benchmark by 2.74% since July 1st. Since inception, EGP Fund No. 1 Pty Ltd is Down by 2.39%, leading the benchmark by 8.55% all-time (April 1st 2011).

EGP 20.  The EGP20 index is Down by 9.33%, lagging the benchmark by 2.12% since July 1st.  Since inception the EGP20 is Down by 19.98%, lagging the benchmark by 9.04% all-time (since April 1st 2011).

S&PASX200TR  The benchmark index is Down by 7.21% since July 1st. The benchmark is Down 10.94% all-time (since April 1st 2011).