Our 2021 Picks: How did we get on in January 2022

We moved into choppier times in January, as anticipated. In our analysis of risks within capital markets, which we published at the end of last year, we noted that there were a number of factors coming into play in 2022 that would make it harder sailing for investors who have been riding the post-pandemic cyber boom. Central banks have started to raise rates and inflation is off to the races as well. It all makes for quite a potent risk cocktail to sip from in Q1.

From our perspective we were already starting to get more bullish on commodities in Q4, hence our Glencore position, which has been doing well. We doubled down on mining in January and are looking at some further oil / energy plays as we move into February. The market also seems to have woken up to the insane valuations in the tech sector, which has led to some headline grabbing numbers here too. Interestingly, although we have a gold hedge on our books, gold remained stubbornly moribund in January.

Electric Guitar

Electric Guitar is a newly listed cash shell in London which is targeting potential acquisitions in the advertising space. We love the ethos behind the company which is positioned to profit from some major changes going on in digital advertising. New restrictions on third party cookies and other changes to the way major search engines do business mean advertising agencies are going to have to get to grips with the Big Data tools and technologies or simply go out of business. Electric Guitar is looking to buy technology and data plays in this space which can form the basis of a next generation advertising consulting and tech firm. A very intriguing proposition.

BHP Group

BHP was one of two large cap miners we bought in January, as we anticipate that the commodities business is going to be one of the better performing sectors to be in this year. The company is coming off a mixed year last year – there was a 15% sell off in the stock in September, for example. But the miner has big exposure in areas like nickel, copper and cobalt, and we think 2022 will be a defining year for these metals. Annual revenue and net income at BHP have moved up steadily since 2017, and we felt the share was looking relatively undervalued going into the New Year. BHP has to tackle its environmental record if it is going to remain in many institutional portfolios.

Anglo American

Anglo American has really not looked back as it passed price levels it previously reached before the start of the pandemic. This is a mining stock which is in the process of slashing its net debt while the market prices of its commodities are spiralling upwards. At time of writing we are still a couple of weeks off from Anglo American’s full year earnings on February 24. PwC shares our enthusiasm for this sector at the moment – they said they expect the world’s top 40 miners to record after-tax profits of $118bn in 2021, which is up 68% on numbers recorded in 2020. With markets looking particularly volatile in January, we felt Anglo American looked like a solid bet.

Vertu Motors

I’ve been on a few webinars recently talking about the second hand car market, which has been enjoying something of a boom in Europe in the immediate wake of the pandemic. We’d already done well on Marshall Motor Holding, but Vertu Motors also popped up on our radar. This is a UK car dealership with over 150 outlets and which sells cars from 23 manufacturers. More people want to buy cars in the UK, as they fear catching Covid using public transport. But even second hand car prices were up by 28% in the first 11 months of last year. That’s more than any other European country. Vertu Motors is also in excellent financial shape. AT+ subscribers can read our full analysis here.

Sold in January: Cypherpunk Holdings (CSE:HODL), The Panoply/TPXimpact Holdings (LSE:TPX). Royal Mail (LSE:RMG) was moved from Tactical to Long Term.

Tactical trading portfolio

These are shorter term equity and commodity trades which we can see playing out within one to three months. We will sometimes keep these on longer if the trade is still quite range bound but we are anticipating further upside. These trades have the tightest risk parameters.

*Prices as of close of play on 31st January 2022

Longer term buy and hold portfolio

These are positions where we see a longer term growth scenario, usually in the small to mid cap space, but sometimes larger companies. We will typically be keeping these stocks on the list for at least six months and often longer. Consequently our risk tolerance is higher for these positions than for the trading list.

*Prices as of close of play on 31st January 2022

Venture portfolio

These are companies which we see as having long term and considerable growth prospects. Due to their size and the nature of the business they are in, we feel that our normal risk management constraints should not be applied to these stocks.

*Prices as of close of play on 31st January 2022

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