Our 2021 Picks: How did we get on in March?

March saw some much more difficult trading conditions for many investors with ongoing worries about the bond market and US stimulus activity.

But in the background there were also the first signs of progress with the roll out of Covid vaccines in the UK and USA. This has meant a return to higher levels of positivity among investors more generally, while at the same time analysts are starting to worry about valuations in some areas of the market, especially tech stocks. Towards the end of the month we saw some big moves in US bond yields and there were concerns that some of the more recent US treasuries auctions have been more muted.

As veterans of the markets we have seen several hedge fund blow ups that grabbed headlines, and the Archegos Capital implosion did at first glance feel like more of the same. There was some impact on specific prime brokers that had direct exposure to Archegos – e.g. Credit Suisse and Morgan Stanley – and we’ll be looking at that in more detail this month (April).

The Armchair Trader’s March picks

We took a bit of a punt on South African bank First Rand (JSE:FSRJ), partly because we do sincerely believe that South Africa has the components for an interesting post-Covid recovery, and also because the bank seems like a well-positioned proxy for wider growth in the economy. It is a very diversified blue chip with a very big institutional shareholder base. In March it largely trod water but this looks to us like a longer term play.

Lloyds Bank (LSE:LLOY) is coming back into vogue with larger shareholders: we know that it is a regular favourite with smaller investors, but the price action for this FTSE 100 stock is determined by bigger investors, and we could see fund manager sentiment for the bank swinging back in Q1. This stems mainly from a returning of confidence specifically in the UK economy and for Lloyds Bank’s prospects as an institution with focused exposure to that economy.

In the case of Glencore we added it to our short list because we saw a lot of uncertainty around the company on the part of investors. While we did not anticipate a major down turn in the share price, this was more of a short side trend following position. The company is sitting in a little bit of an inter-regnum scenario as it awaits a new CEO, so we doubt there will anything new or special coming out of Glencore before he takes the reins.

We added Rritual Superfoods (CSE:RSF) to our list in March as the company launched its IPO in Canada, following this up with a subsequent listing in Frankfurt. We were kicking the tyres on Rritual ahead of its listing, but liked the fact that it sits in the fast growing North American market for organic adaptogens (mushroom-based food supplements). This is a longer term small cap growth story, but the stock was up over 25% at listing and the company has since inked a major US distribution deal.

Our Nordic correspondent flagged up a couple of stocks he likes, namely Qt Group and Nordnet. Qt Group is a Finnish software developer, an ex-Nokia company that spun off from Digia Oyj in 2016. The stock hit an all time high in February and is being touted in some quarters of Helsinki as one of the best Finnish growth stocks of all time. Nordnet is a pan-Nordic brokerage which has established a massive market share for trading accounts across the region. It has been a direct beneficiary of the steady growth in enthusiasm for online trading in 2020.

Here’s how our picks are performing

*Prices as of close of play on 31st March 2021