November 2015 Performance Update - Intelligent Investor Growth Portfolio

After the sharp falls in August, the sharemarket continued to bump along the bottom in November, as investors continued to digest the effect of falling commodity and the potential for interest rate rises in the US.

After the sharp falls in August, the sharemarket continued to bump along the bottom in November, as investors continued to digest the effect of falling commodity and the potential for interest rate rises in the US. This caused the All Ordinaries Accumulation Index to slip 3% and recover 5% before falling back to end down 0.7%.

Against that backdrop, the Intelligent Investor Growth Portfolio performed reasonably well, with a total return of 0.9% compared to a 0.7% loss for the All Ordinaries Index. The portfolio has now returned 5.8% since it started accepting client money on 1 July 2015, compared to a 2.1% fall in the benchmark. Since the portfolio was established in July 2001, it has returned 10.1% a year, compared to 7.6% for the benchmark.

The best performer in November was iCar Asia, which gained 24% following some good news in its Indonesian operation and possibly some speculation over whether it might be a takeover target after REA Group launched a bid for iCar’s Asian property counterpart iProperty Group.

OzForex was the next best performer, with a gain of 21% after the company received a takeover proposal from Western Union. The price looks fair and the board of OzForex has agreed to Western Union’s request for access to perform due diligence, so the bid looks a reasonable prospect to proceed. With the share price still below the indicative range of $3.50–$3.70, we continue to hold.

There were also some strong performances amongst the portfolio’s larger holdings, including gains of 8% from Computershare and 5% from Carsales. The worst performances were happily confined to smaller exposures: a 19% fall in South32 due to further falls in commodity prices, a 21% fall in Fleetwood and a 25% fall in Ainsworth Game Technology after the pokie machine maker watered down profit growth expectations for 2016 and lost its head of game development.

During the month, the portfolio bought a 3% stake in BHP, after its share price fell due to the tailings dam collapse in Brazil and further commodity price weakness. Its share price fell another 11% after the purchase, but it’s impossible to time these things perfectly and we’re comfortable with the long-term prospects of what remains a highquality miner. We also took up our rights to buy further shares in Origin Energy.

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