Share Tips Update: Crude Oil, Bitcoin, Borussia Dortmund, Man Group

There was not a great deal of activity in the portfolios in July as we moved into the traditional quieter part of the year. Yext was notable as the only company we sold.

As ever macroeconomic concerns dominated markets in July and the output from the usual commentators on the newswires, CNBC, et al. Focus remained on the Fed and other central banks, and interest rate policy. China is also a major source of worry for many investors as there are still fond hopes that it will somehow buck the trend and turn the global economy around, as it did in 2009.

I suspect that as long as interest rates continue to rise, and the conflict in Ukraine prevails, many stock investors will find reasons to stay out of the market and get in some more beach time this summer. But there still remain some very profitable and interesting opportunities out there.

Oil and Bitcoin

These two macro trades in our short term portfolio continue to look interesting to me. The long Bitcoin trade encapsulates a return to confidence in crypto, which to be honest was always there if you spoke to the institutional participants in the market. They don’t seem to be stepping away from cryptocurrency (we are meant to call it ‘digital assets’ now) despite the posturing we were seeing from the SEC and Coinbase in July.

Oil is also an interesting market right now: again, headlines dominate, with the energy press investing too much faith in the efforts of Saudi Arabia and Russia (and the rest of OPEC) to turn the oil train around. As long as uncertainty hovers over the economy of major global oil buyer China, medium term oil in my view is going to be in a parlous state. We were up 8% on short oil by end of July, unleveraged.

Borussia Dortmund

I generally don’t like owning football clubs: I think they are over-rated as investments and too many punters are just buying the brand, not the fundamentals, when they get into football stocks. I was surprised to see German club Borussia Dortmund [ETR:BVB] topping my European stock screen in early July however. Overall the club has some very good financial fundamentals and a major asset in the form of its stadium, the mighty Signal Iduna Park. The club’s debt situation looks less rosy, but in terms of share price action, I thought it had been sold down as far as it is likely to go over the short term and want to see if I can capture some upside over the winter.

Man Group

I am extremely familiar with Man Group LON:EMG having covered it as a journalist for over 20 years. I also know the former CEO, Luke Ellis, who is stepping down in favour of Robyn Grew this summer. Regular readers of The Armchair Trader will know that I’m a big fan of the private credit sector, especially in the UK. Man Group has been exhibiting some very strong financial performance indicators as Ellis hands over the reins, but it is also adding to its private credit muscle within its existing private markets division. I suspect this will help to beef up its profit margins yet further as more institutional investors buy into private credit.

Sold in July: Yext

So how are our picks getting on?

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 July 2023

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 July 2023

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 July 2023