WEBINAR: Global Portfolio June 2018 – Annualised return back to 35%; goodbye MetroBank, hello Adobe

LONDON — This has been an active month for the Biznews Global Share portfolio, with a sharp deterioration in the value of the Rand boosting the SA-based annualised return to an annualised 35% since the portfolio's formation in December 2014. There was also a significant adjustment in the month. We appreciate that the only constant in this world is change – so we're conscious that one of our favourites might fall from grace. This has happened five times in the past three and a half years as we've exited Novo Nordisk, Barclays, IBM, Tesla and Facebook. Mindful that another candidate could emerge anytime, I've been keeping an eye on Adobe, Netflix and Twitter as our three most likely candidates. Today we pulled the trigger on Metro Bank in the wake of a fresh scandal, selling out of an investment that has been a laggard. We selected Adobe to replace it and purchased the first of three tranches today. – Alec Hogg.Features of the past month:.A good month for the share prices of Amazon and Alphabet, which between them account for 40% of the portfolio, ensured a healthy uplift from $358k to $360k in the total portfolio, despite some notable price declines elsewhere. Chinese companies Tencent and Alibaba came under pressure as Donald Trump cranked up the rhetoric around his proposed trade war, and Apple also eased because of its exposure to the Middle Kingdom. All emerging market currencies suffered in the wake of heightened tension, including the Rand, which fell from R12.45 against the US Dollar to R13.68. The Rand was also impacted by concerns over implications of the ANC's stated approach towards Expropriation without Compensation of land. As the portfolio is a pure Rand-hedge, the currency's decline has a very positive impact on its value for South African investors, lifting the total from R4.5m to R4.75m..___STEADY_PAYWALL___.Metro Bank – The stock, bought in November 2016 for £32.82 was sold out of the portfolio at a price of £31.92. As Sterling appreciated against the US Dollar from $1.24 to $1.32, we ended up making a small profit of $600. But that was not the motivation for the sale, it was, instead, in recognition of a scandal which has hit the business. The bank's charismatic founder, chairman Vernon Hill, is accused of inappropriately feeding contracts to his wife. It was raised at the bank's AGM and on June 8 received a full page in the London Financial Times which said an identical problem led to his ejection some years back from a similar challenger bank which he had founded in the US. Although I remain a huge fan of the business model (we are Metro Bank clients) and am in awe of Hill's energy and entrepreneurship, there is no upside for shareholders in the issues currently bedevilling the business. We have a policy of running when scandal hits a company we're invested in. So it's goodbye Metro Bank..Adobe Systems – The first of three tranches of Adobe Systems shares have been purchased. It will eventually account for 8% of the portfolio to replace Metro Bank and absorb most of the cash being held. Nasdaq-listed Adobe, creator of the ubiquitous PDF and Photoshop looks perfectly positioned for the massive changes which are occurring in the broader media space. A lot of detail was shared during the webinar on the reasons for the purchase, including the power of its subscription model, an $8bn share buyback programme, and growing appreciation of the value of its user-processing data offering. Adobe was preferred above Twitter and Netflix, both of which we missed out on by not buying earlier. .Amazon.com – The cornerstone of the Exponential portfolio, Jeff Bezos's creation has now completely shrugged off the poorly veiled attacks from the White House. Although unrelated to Amazon, founder Bezos also owns the Washington Post newspaper, the harshest critic of US president Donald Trump. During the month Amazon's share price broke through a new barrier, hitting $1,750, taking its market capitalisation to over $850bn, before easing back to its current $821bn. It is now the second most valuable listed company in the US behind Apple ($915bn) and comfortably ahead of Alphabet ($781bn)

WEBINAR: Global Portfolio June 2018 – Annualised return back to 35%; goodbye MetroBank, hello Adobe

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