This was yet another solid week for your Global Stock Investor portfolio — with all of your positions up — including a 4.40% gain for your newest position in PowerShares DB Agriculture (DBA).
This is a good time to reiterate my fundamental long-term view. The unease in global markets has everything to do with subprime loans and the housing sector — and nothing to do with the fundamental business prospects of the holdings in your Global Stock Investor portfolio. The growth prospects for all of our picks, ranging from Coca-Cola Hellenic Bottling (CCH) to ArcelorMittal (MT), remain solid. The chairman of Germany’s BASF, the world’s largest chemical company, came out in the London Financial Times last week to accuse the global media of fear mongering and talking the world into recession. The fundamentals of his business, and thousands of others across the globe, are just not feeling the “catastrophic” effects of the credit crunch.
That’s why your Global Stock Investor is a mix of themes that are in their own bull markets — agricultural commodities with Potash (POT) and the DB PowerShares (DBA), gold with Barrick Gold (ABX) — as well as companies that are underpinned by the strongest global megatrends. Those latter companies will bounce back solidly once sentiment turns. The biggest challenge today is to close your ears to the Cassandras and avoid selling out of names that will come roaring back as the credit crunch works itself through the markets. Company CEOs who are closest to their businesses are doing the same thing. They are buying back shares in their own companies at a rate unseen since January of 1995.
The CurrencyShares Japanese Yen Trust (FXY), up 7.54%, remains the steadiest of your current picks. Barrick Gold (ABX), up 18.27% since November, is both a safe haven and a play on the global bull market in gold. The biggest bull market on the planet is in agricultural commodities with Potash (POT), up 39.19%, and PowerShares DB Agriculture (DBA).
PORTFOLIO UPDATE
Barrick Gold (ABX) rallied 3.2% this week, as it once again approached the $50 level. With the bull market in gold still intact, Barrick remains a BUY.
Coca-Cola Hellenic Bottling (CCH) reported 2007 U.S. GAAP results of 1.36 Euros EPS, which was 6.8% above prior guidance, and up 24% from last year. Guidance for 2008 is growth of 13% to 15%. This Warren Buffett-style stock will be generating huge quantities of free cash flow for expansion, buybacks, and dividend increases for many years to come. CCH remains one of the best growth opportunities on the globe for the long term and remains a BUY.
PowerShares DB Agriculture (DBA) soared past the $40 mark for the first time, and is up 4.40% just since last week. Expect agricultural commodities — wheat, corn, soybeans and sugar — all to continue to hit record highs. Your second bet on the commodities boom is a BUY.
iShares MSCI Brazil Index ETF (EWZ) gained another 2.45% this week. The fundamentals of Brazil remain in place and EWZ is a BUY.
CurrencyShares Japanese Yen Trust (FXY) continues to be locked in a trading range. It will underperform in strong markets and outperform in weak ones. It remains a BUY.
ICICI Bank (IBN) rallied a solid 3.55% this week. India’s Citibank will bounce around with the global sentiment. BUY ICICI Bank.
Millicom International (MICC) was up 2.14% for the week. Central America and Africa posted 71% and 66% increases in subscribers in 2007, respectively. Overall, Millicom added one million subscribers in the final three months of 2007, its biggest quarter ever. The stock is a BUY.
ArcelorMittal (MT), the world’s No. 1 steelmaker, announced that it would raise steel prices 10% to 15% in the United States and Europe, due to both rising costs and high demand. The company also reported that it repurchased an additional 25 million of its own shares recently. Lakshmi Mittal, the world’s fifth-richest man, didn’t get to his position by making bad calls. The stock remains a BUY.
Potash (POT) was up 2.16% this week, as the stock broke through $150 for the first time. George Soros increased his positions in Potash during the fourth quarter of 2007 — just about the same time you got into the stock. The agricultural megatrend has legs and the stock remains a BUY.
Veolia Environnement (VE) climbed 3.42% this week. Oklahoma City approved a four-year contract extension with Veolia to continue managing the city’s four municipal treatment facilities. Veolia is truly everywhere and remains a BUY.
