As you know (and we have preached), investing in the stock and bond markets is a long-term game that requires patience.
That said, we have set our portfolios up defensively for the summer in anticipation of some downward pressure on the market. We look to take advantage of that opportunity should it come to pass.
So far, we are having a great year. Our CEA portfolios are up 7.0% net of fees vs. 2.6% for the S&P 500 Index year to date through 6/10/16. Our corporate bond portfolios are up 4.6% net of fees year to date through 6/10/16.
The changes that we made at the end of 2015 are bearing fruit. We now have twenty-four as opposed to twenty-two stocks (at the end of 2015) in our portfolios and will to add a couple of new positions should the price be right. We are more diversified. We have sold out two Chinese stocks (at considerable profit). We have greatly diminished the cyclical holdings in our portfolios. We have raised cash. In a word, our equity portfolios are very buttoned down, and we would welcome some downward pressure in the market.
On the bond side, we are buying smaller positions for additional diversification. We sold one position that we thought might run into a credit problem down the road. Our bond accounts are very “clean”, running well, and throwing off a lot of cash. Please don’t overlook this product. The product is a corporate bond portfolio with a 4.4 year duration that has a yield to maturity of 5.7%. In comparison, the five year treasury yields 1.17%.
So, we watch and wait and play defense for a bit and look to find some bargains if it is the stormy summer that I expect.
Edwin M. “Tim” Johnston III
Founder | Managing Partner
Performance Disclosures: Sandhill Investment Management (“Sandhill”) is a registered investment advisor that is not affiliated with any parent company. The performance statistics disclosed above are calculated on the rates of return from accounts managed by Sandhill, as defined below.
These accounts are managed by Sandhill on a discretionary basis. There are no non-fee paying accounts included in the composites. The U.S. dollar is the currency used to express performance. The Concentrated Equity Alpha, Large Cap Yield, and Corporate Bond composites include accounts under management from the first full month at which the account’s capital is fully invested by Sandhill. Closed accounts are included in the composites through the completion of the last full month under management and are not removed from the historical rates of return.
Sandhill claims compliance with the Global Investment Performance Standards (GIPS®). To request a complete list and description of firm composites and/or a full performance presentation that adheres to GIPS® Standards, please contact Shant Goubrial at (716) 852‐0279 x 305 or firstname.lastname@example.org‐im.com or visit the firm’s website at sandhill‐im.com.
i The information in this report has been obtained from sources believed to be accurate; however, Sandhill Investment Management makes no guarantee as to the accuracy or completeness of the information. Past performance is not a guarantee of future results. Investing involves risk, including the possible loss of principal. There is no guarantee that the CEA, Large Cap Yield, and Corporate Bond composites will achieve their investment objectives or that they are suitable for all investors.
ii For a full list of all composite recommendations for the preceding year, please contact Sandhill’s Chief Compliance Officer, Ryan Myers, at (716) 852-0279 Ext. 307 or email your request to email@example.com.