The Tweed Update by Roger Tweed

Roger TweedTurnaround – What a difference a month makes!  After a stellar past four weeks, our portfolio has pulled to within two percentage points of the performance (since January 10) of the S&P 500, versus four percentage points on July 5.  All of our positions, except for Wisdom Tree Japan Hedged Equity (DXJ), gained ground over the past four weeks.  But the real driver of the improved performance of our portfolio is Facebook (FB) and its 56% gain for the period.  Since July 5, our portfolio gained 8.4% while the S&P 500 gained 4.8%.  Since its January 10 inception our portfolio has gained 14.91% while the S&P 500 has gained 16.58%. 

Our Facebook shares skyrocketed after the company’s stellar second quarter earnings report on July 24.  Income increased by 65% and revenues increased by 53% year-over-year.  And for those who still questioned Facebook’s ability to generate revenue from its mobile users, 41% of Facebook’s revenue came from mobile in the second quarter (up from 30%).  Average revenue per user grew 25%, while the number of users grew by 21%, and advertisers are now willing to pay more to place ads on Facebook.  With Facebook delivering accelerating revenue growth, the stock price finally closed above its May 2012 initial offering price of $38 on August 2, and should continue higher.

SPDR China (GXC) saw gains of 10.6%, as China’s second quarter GDP was reported at 7.5%, and its July purchasing managers index was a slightly expansionary 50.3, giving hope that China will be stabilizing soon.  American Capital Agency (AGNC) had a rare gain of 8.8% as interest rates pulled back in late July.  Mortgage REITs like AGNC are still not the place to be, and I’d use this strength to get out.  SPDR Gold (GLD) also experienced a rare gain of 7% due to weakness in the dollar.  Although I would not sell gold here, this is not yet a turnaround for precious metals.

Wisdom Tree Japan Hedged Equity lost 1.4% as the Nikkei index lost 3.5% in July.  The weaker dollar and a “sell the news” attitude following Prime Minister Abe’s party’s recent election victory led the Yen higher, which is not a part of Abe’s economic plan.  This momentary weakness should be shrugged off soon.

I am ecstatic to see my belief in Facebook finally being rewarded.  Having your largest position turn around so dramatically is gratifying.  And with nine of our 14 portfolio positions posting gains of over 20% so far this year, I am looking forward to the next five months with some optimism.

2013 MODEL PORTFOLIO

(As of August 2)

Stock     Amount   Change                 Index      Amount  Change

F           $    875.00               24.9%            FB          $ 1,217.60                    20.8%

BRK-B           $    824.74                      23.6%   BGS       $    811.44                    12.2%

BA        $    971.10               38.5%            NWSA             $      98.04            44.3%

AIG       $    918.27               33.7%                  GLD          $    505.44            (23.1%)

GE        $    815.10               15.2%                  GXC          $    625.95            (10.3%)

AGNC            $    496.98              (27.7%) DXJ       $    851.22             23.1%

WFM              $    877.60              22.5%  FOXA              $    819.78                    29.3%

 

STOCK TOTAL – $ 8,228.67;  REIT/ETF TOTAL – $ 2,479.59; CASH TOTAL – $ 782.46

 

GRAND TOTAL $  11,490.72  GAIN/LOSS since 1/10/13          14.91%

S&P 500 Index                              GAIN/LOSS since 1/10/13                 16.58%