Our 2022 Picks: How did we get on in September?

September remained a fairly volatile month for the portfolio, with the bullish USD market dominating much of the market sentiment out there. A lot of portfolio managers we spoke to remained very focused on inflation numbers and the actions of the Federal Reserve. Towards the end of the month we saw the UK market, especially gilts and the GBP, hit by the mini-budget introduced by new Chancellor Kwazi Kwarteng.

Surprisingly we sold out of fewer positions in September than in August. The previous month felt more like a cleaning house exercise. We kept our focus on energy and mining as two sectors where we still see considerable profits to be reaped. Our long position in uranium via Yellow Cake continues to benefit and we also saw some good numbers from our stake in Cleantech Lithium on the back of discoveries there.

Nvidia Corp NASDAQ:NVDA

We put on a short trade on Nvidia Corp largely because foresaw difficulties for the US tech giant, even as it was hitting 52-week lows. ETF ‘star’ Cathy Woods was buying stock at that level, which provided further incentive to short it. We could also see some key geo-strategic underpinning this trade as the Biden administration was already signalling restrictions on Nvidia’s ability to export advanced chips to China. This will force China to start doing some of its own homework, but was not good news for Nvidia shareholders. We missed the big drop in the stock, but at time of writing the stock is trading 18 cents under our entry price. We anticipate further drops.

Next Energy Solar [LSE:NESF]

We bought into this investment trust at the start of September as we felt it offered great exposure to the combined trends of higher electricity prices and the build out of the European alternative energy generation capacity. This is a focused play on solar but we regard this as an industry with significant growth prospects. The fund itself owns assets both in the UK and Italy (which admittedly sees more sunshine than Britain). The fund has 100 producing assets and 865 MW of capacity. As it continues to build its portfolio of farms so it will continue to make more money for shareholders.

Gabelli Merger Plus+ [LON:GMP]

We acquired shares in this investment trust, which is a listed version of a hedge fund strategy managed by heavyweight Wall Street firm Gabelli. This is a fund manager with pedigree going back to the 1970s. With markets in such a dire state in September, we wanted part of this portfolio to be in a safe pair of hands. In this case, the trust capitalises on announced mergers from which it can earn a spread between the deal price and the market price of the acquired company. It invests predominantly through equities and instruments tied to equities.

HealthEquity NASDAQ:HQY

Another sector where we are consistently seeing some gems is healthcare. Investors obviously view this as an area which will be able to weather global recessionary forces. Private healthcare is also a rapidly expanding sector in many countries as people get wealthier and are prepared to spend money on alternatives to often struggling state-funded options. HealthEquity shares were going up and the company was reporting some excellent numbers with very supportive fundamentals. The company specialises in tech-based solutions that are used by companies in the sector – e.g. helping consumers compare services on the market in the US.

Atlas Salt update TSXV:SALT

We also had the opportunity to catch up with the management team at Atlas Salt in September while they were in London. Regular followers of our tips will recall we originally bought into this salt mining project in Newfoundland when it was trading under the name Red Moon Resources. This is a fantastic dual-opportunity play, with a huge Canadian salt project combined with a secondary project that could be used to store hydrogen in salt domes. Management told us there is a plan to hive off the hydrogen storage into a second company which will also be listed. With the Canadian and German governments now agreeing to a transatlantic hydrogen transportation strategy, Atlas is looking like a very exciting opportunity.

Stocks sold in September

EnWave, Genesco

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 30th September 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 30th September 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 30th September 2022

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