Miles said:

USD / Debt / Gatekeepers

 

“How’s the market …. Is it grim enough for you yet?” Was the question my sister Michaela asked me yesterday on her way to the airport. The question made me smile; I thought it succinctly summed us up.    

The fund’s invested position is around 50%, consistent with our update in mid August. Our current bias is towards wanting to be more fully invested and ideally achieving this through identifying new ideas rather than increasing the investment in the existing names.

To this end, Nigel and I are heading overseas in a few weeks. We are seeing some infrastructure businesses in France and Italy and energy transportation and storage businesses in America. We have arranged some good meetings and hopefully we progress our thinking with regard to these companies; I am looking forward to the trip.

Domestically, we have started to pick through a group of the mature industrial companies whose share prices have significantly corrected. We perceive the lack of visibility and near term earnings risk as part of the opportunity. Our process aims to focus us on what unique insight do we think we have and what confirmation can we point to of this insight being realised. The confirmation is intended to hopefully reduce the number of value traps we end up investing in.

We expect day to day the unit price of the fund will be more volatile; this is attributable to the fund becoming more fully invested and the cost of downside protection increasing to a level we regard as being prohibitively expensive.

We like the environment and we like the investments the fund holds. We feel the volatility and general uncertainty gives us a window to build investments in businesses we want to own longer term.

Friday, September 23rd, 2011

Yes or no?