Sunday, April 3, 2011

Update No. 1 - 03/04/11



Inception April 01 2011
Current Price
Performance Since inception
EGP Fund No. 1
1.00000
1.00116
0.12%
EGP20
1000.00
993.15
(0.69%)
S&PASX200 (TR)
35632.05
35808.44
0.50%

EGP Fund No. 1 Pty Ltd.  Well, only 1 trading day, so not much to report yet, as you can see – up only 0.12%, and already trailing the benchmark by 0.38%.  This is the disadvantage of having your assets in cash during a rising market period.  As we will keep our holdings closely guarded, I thought I would instead give you an overview of the positions we intend to take.  As at a few days prior to launch, when Dave and I discussed the initial make-up of the portfolio, we found the following to be the case:

·         We are likely to hold only 8 or 10 stocks initially, as I’ve mentioned, we expect it is unlikely we will ever have cause to hold more than 20
·         Of those selected, only 2 are members of the ASX200
·         The largest stock we will hold has a market capitalisation of over $2b
·         The smallest stock we will hold has a market capitalisation of less than $30m
·         The raw average market capitalisation of the stocks will be about $400m
·         The ‘weighted’ average market capitalisation (as per our intended portfolio construction) will be about $196m
·         The highest P/E stock we will hold has a P/E ratio of about 18.5x
·         The lowest P/E stock we will hold has a P/E ratio of about 4x
·         The weighted average portfolio P/E (as per our intended make-up) will be about 8x, this compares to a current market P/E of nearly 13x (depending on where you source your information)

We expect this group of stocks to grow their earning by something over 20% over the next 2 financial years, and we think it likely the P/E ratios will likely lift also, so barring some unforeseen disaster; we expect the portfolio will grow significantly over the next 2 or 3 years.

EGP 20.  The EGP20 index has declined by 0.69% in the single trading day since launch.  A few of the members had big run ups in the days prior and shed some of those gains.

S&PASX200TR The benchmark index is up exactly 0.5% since launch.

Now that the fund is operating, I will cut back on the weekly rant, we will have plenty to do just monitoring the companies of interest.  I will, however, always use this chance to comment on anything business/market/wealth creation related that is of interest to me, or I believe will be of interest to our investors (and/or the readers and lurkers).
Please do not hesitate to use the comments section to talk among yourselves, now that you’re getting to be a reasonably sizable crowd of monthly followers.  Also feel free to continue sending me e-mails with any topics of interest you would like to see discussed, or hear my views on.  Talk next week – Tony Hansen 03/04/2011

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