Closing a Very Strong Q1 for The Alpha Investor Letter

Nicholas Vardy

Nicholas Vardy has a unique background that has proven his knack for making money in different markets around the world.

U.S. markets closed a tough week, with the Dow Jones down 1.30%, the S&P 500 falling 1.13% and the NASDAQ tumbling 1.88%. The MCSI Emerging Markets Index also fell 0.57%.

Big gainers in your Alpha Investor Letter portfolio included the PowerShares DB US Dollar Bullish ETF (UUP), which recovered 1.09%; the Guggenheim Spin-Off (CSD), which added 0.98%; and the iShares MSCI Philippines (EPHE), which added 0.65%. The Guggenheim Spin-Off (CSD) also hit a new 52-week high.

India’s ICICI Bank Ltd. (IBN) hit its stop and you were stopped out at a loss.

The iShares S&P Global Timber & Forestry Index (WOOD) fell below its 50-day moving average and moved to a HOLD.

Market sentiment definitely soured this past week, and the market’s lack of direction is starting to wear on traders. To put this into perspective, the S&P 500 Index closed at 2,068 yesterday. Back on Nov. 24, it closed at 2,069. That’s now four months of going nowhere fast.

In contrast, your Alpha Investor Letter portfolio closed a very strong quarter. At the close of Q1, 14 out of your 16 positions in the Alpha Investor Letter were in the plus column over the past three months. Five of those positions were up by double-digit percentages.

Skyworks Solutions (SWKS) soared 40.55%; the iShares Currency Hedged German ETF (HEWG) gained 21.29%; Actavis plc (ACT) jumped 19.47%; Markel (MKL) leapt 13.57%; and the Market Vectors Biotech ETF (BBH) ended Q1 with a 12.31% gain even in the face of last week’s sharp sell-off.

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Berkshire Hathaway (BRK-B), which was weighed down by its substantial weighting in U.S. large-cap stocks, which, as a whole, are set to record their worst earnings results since 2009.

Here it’s worth looking at how a U.S. large-cap bet like Berkshire fares against your holding in the small-cap Vanguard Russell 2000 ETF (VTWO).


As you can see, domestically-oriented U.S. small-cap stocks outperformed the large-cap-oriented Berkshire by 8.07% in Q1 alone.

U.S. large caps are clearly struggling against the headwinds of collapsing energy prices and the soaring U.S. dollar.

Fortunately, your Alpha Investor Letter portfolio has little exposure to U.S. large caps. And your bet on the U.S. dollar through the PowerShares DB US Dollar Bullish ETF (UUP) was up 8.05% in Q1 alone.

Portfolio Update

Guggenheim Spin-Off (CSD) added 0.98% last week and hit a new 52-week high. CSD had an exciting week due to a strange twist of events. News rang loudly last week that Kraft would merge with H. J. Heinz to create the fifth-largest food company on the planet. Since Kraft spun off from Mondelez International back in 2012, Kraft now qualifies for inclusion in CSD’s holdings and holds the #9 spot. CSD is a BUY.

iShares S&P Global Timber & Forestry Index (WOOD) fell 1.00%. This position in timber has been riding along its 50-day moving average (MA) for the past three weeks — biding its time as the spring season kicks off. With all the positive news surrounding the pop in housing starts, the future bodes well for lumber as home builders ready for the home-building season. WOOD dipped below its 50-day MA and is a HOLD.

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Global X Guru Index ETF (GURU) dipped 1.06%. As the U.S. stock market recovery from its collapse after the Great Recession starts to fade, gains become tougher to find. Exchange-traded funds (ETFs) such as GURU can be excellent investments since they track the bets of the biggest names in the investment industry. GURU is a BUY.

PowerShares DB US Dollar Bullish ETF (UUP) rebounded 1.09% last week. Although recent Federal Reserve statements have buffeted the dollar, it appears they signal a buying opportunity and not the end of a trend. UUP looks to be making a comeback and the dollar rally looks like it is set to continue for now. UUP is a BUY.

Actavis plc (ACT) dipped 3.72% and Market Vectors Biotech ETF (BBH) fell 3.71%. These biotech positions have suffered equally during the biotech pullback that has taken place over recent weeks. Although ACT is a single stock, its pullback was remarkably similar to the well-diversified BBH exchange-traded fund — confirming a sector-wide correction. That said, I believe that this correction offers an excellent buying opportunity. ACT and BBH each remain a BUY.

iShares MSCI Philippines (EPHE) added 0.65%. EPHE recovered nicely over the past week and is nearly back to its recent 52-week high. The positive investment case remains in place for the Philippines and I expect this position to rise in the weeks and months to come. EPHE is a BUY.

Newly Updated Special Reports

As a courtesy, I invite you to view the newly updated version of The Top 12 Stocks for 2015, which features three of my top investment recommendations from the recent Orlando MoneyShow, as well as bonus picks from each of my fellow investment newsletter editors at Eagle. Also check out other recent reports: My Safest Bet on Booming Biotech, Alpha Opportunities: Where the Smart Money is Investing Now, Buffett-Beating Investment Strategies: 3 Ways to Outperform Berkshire Hathaway, Hedge Fund Secrets of the Masters and The $19 Trillion Key to IoT. These reports and others are available FREE on my website to you.

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Nicholas Vardy

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