Monday The FT arrives through the front door like clockwork at 5.30am and wakes me up. I read a great article by Tony Jackson on the way to work. He asks why equity markets are so high in the face of this credit crisis. It is a question I have been asking myself as I sit here with my portfolio invested in S&P 500 put options to offer some downside protection should the equity markets listen to what the credit markets are saying. Lunchtime. Off to the gym with some lighter reading (Business Week).
Afternoon. A second downgrade for Research In Motion (Blackberry phone). Brilliant, I don’t own this stock in the fund as it has become a crowded trade, and they have been shipping more phones than they have been activating, politely called channel filling. Without the “channel filling” Research in Motion would have missed revenue estimates last quarter.
Tuesday I meet the management of a small American company that makes defibrillators. This looks like a nice growth business, which should weather an economic downturn well. However, when I look at investment opportunities I look for intra-year growth ahead of expectations, which this company is not delivering yet, so it is not an investment for me at the moment. Afternoon. Meeting with marketing to try to formulate a strategy for marketing my fund, which is difficult at the moment due to the negative perception of the sub-prime issue and weak dollar. What investors seem to be missing is that America has been experiencing a housing slowdown for the past 12 months while the economy has continued to grow.
Wednesday Today’s focus is the consumer discretionary space, I am underweight this area as I am concerned about the outlook for consumer spending in America. For a holding to stay in the portfolio the company needs to be in an area that is likely to benefit from consumer weakness or be in niche retailing. This morning I have results to review from holding in Guess? Numbers come in ahead of expectations with 56% of operating profit coming from overseas markets where the consumer is still healthy. The stock had a nice 8% positive move following the results.
Thursday Off to the Nasdaq conference today, and a one-on-one meeting with the management of Cubist Pharmaceuticals (one of my holdings). I want to find out how their product Cubicin is doing in Europe. I am particularly looking for investment ideas in the healthcare sector as it should be relatively immune to a slowdown in world economies. The fund is double weighted in healthcare.
Friday Morning meeting with the management of Hanson Natural, which makes the energy drink Monster Energy, the number two energy drink in North America. The management update us on line extensions in to coffee and Juice and discuss the upcoming launch in Britain.
Saturday Quick look at the papers and I see that the Council of Mortgage Lenders is already asking the taxpayer to bail out lenders that have had lax lending standards. Shop for Christmas presents and I am amazed by the discounts available – a consumer slowdown?
Sunday Take junior to see Santa for the first time (he is only 10-months-old). He does not really take to the big red chap and cries his eyes out. I think he is still a bit young to get excited about Christmas.
Gordon Elvey is the manager of the J O Hambro Capital Management US Opportunities Fund. His diary runs from December 3-9.