Q3 2024 Portfolio Update
A year to date total return of 16.2%.
Another quarter down, and another strong performance for our portfolio. This was, admittedly, an interesting quarter in which we executed several tactical transactions without materially altering our portfolio. We made one exit, added one new company, and made a few adjustments with additions and trimmings.
Before we delve into our Q3 2024 Portfolio Update, here's a list of the long-form articles we published during the quarter, just in case any slipped under your radar.
Without further ado, let’s discuss what happened in Q3 and the rationale behind each transaction in our portfolio.
1. What’s moving the market
The July jobs report, published in August, showed an uptick in unemployment to 4.3%, which pushed the stock market down on 5th of August due to concerns of a ‘hard landing’. However, days later, inflation came in at 2.9%, the lowest level since 2021, easing investor fears.
The August jobs report added 28,000 more jobs compared to July, with unemployment stabilizing at 4.2%. Alongside a CPI report of 2.5%, lower than July's figure, led the Fed to cut rates by 50 bps for the first time since the COVID era, bringing renewed optimism to the market.
Source: CNBC
While September's CPI print came in at 2.4% year-over-year (slightly higher than expectations by 0.1%), and the nonfarm payroll report remained solid, the uptick in jobless claims to 258,000, hitting a 14-month high, adds some uncertainty to the market outlook. Reports suggest this surge could be tied to Hurricane Helene and the Boeing strike, so it may continue with Milton Hurricane.
Additionally, the drop in chip stocks, following the lower-than-expected orders of €2.6 billion versus the €5.4 billion expected for ASML 0.00%↑, and the downward revision of FY25 revenue forecasts by €5 billion, coupled with escalating geopolitical tensions, means it’s too early to declare victory. Nonetheless, we do believe that a diversified, high-quality stock portfolio is essential to navigate short-term uncertainty while compounding over the long term.
As for the China stimulus, while the political regime creates long-term uncertainty for Chinese stocks, many are trading at attractive valuations, offering potential short-term opportunities. Although our portfolio doesn’t have direct exposure to China, we do hold three stocks that generate a significant portion of their revenue from the region. These companies stand to benefit from the stimulus while adhering to the robust corporate governance standards of the US and EU.
2. Performance
As of September 30, 2024, our total return for Q3 2024 was 6.7%, with a year-to-date (“YTD”) return of 16.2%. This outperformed the S&P 500’s quarterly return of 5.9%, though it lagged behind its YTD return of 22.1%. Since inception (January 28, 2022), our cumulative return stands at 43.6% (annualized: 14.5%), compared to the S&P 500's return of 35.7% (annualized: 12.1%).
Source: S&P Dow Jones Indices, Broker, StockOpine analysis
Let’s jump into the specifics.
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