November Active Portfolio Return
Navigating Short-Term Pullbacks While Staying Ahead of the Market
For November, the Active Portfolio (AP) experienced a pullback of -12.56%, largely due to weakness in some tech stocks within the portfolio. However, the great news is that December has already recouped all those losses, and the AP went on to actually in a new! Crazy how fast things changing in this market.
Please note that we updated the method used to calculate returns. We now more accurately account for corporate actions, such as dividends, to provide more accurate performance figures. In line with this change, we’ve also added a new “Corporate Actions” tab to our Active Portfolio sheet, which you can view here.
Despite this short-term setback, the portfolio remains strong, with its November ending value sitting at $295,047 and a CAGR of 36% since inception, continuing to outperform the broader market over the long term.
About the Active Portfolio: The Active Portfolio is a model portfolio we launched in the middle of 2022. This simulated portfolio includes our highest-conviction medium to long-term investment ideas within the MS Mircrocap Quality Index (MSMqi) platform as well as from our broader research pipeline outside of the platform. Unlike our MSMqi products, which are diversified and will eventually grow to include hundreds of equally weighted stocks, the Active Portfolio is intentionally more concentrated—typically 10 to 20 differently weighted names at a time. The portfolio incorporates a variety of strategies, including momentum, buy-the-dip, special situations, turnarounds, and other setups where we see outsized risk-reward potential. We make and disclose adjustments to the portfolio through alerts. Each stock in the AP includes continual price target commentary so subscribers can track our evolving conviction levels. While this is not a day-trading strategy, we occasionally employ “side-pocket” swing trades around core holdings to capture short-term alpha.
Portfolio Alerts
For November, there were no position changes to the Active Portfolio (AP). We continue to monitor all positions closely, maintaining our current allocations while looking for opportunities to enhance the portfolio when the market presents favorable conditions. We’ve already sent some alerts on changes we made in December, and we have a few more on the way. You can see those changes here and here.
Side Pocket Trades
About Side Pocket Trades: Side Pocket Trades are small, shorter term trades we send alerts on to provide a little extra alpha (10% to 20%) to the Active Portfolio. These are not usually day trades and can remain alive until we feel that the trade opportunity has been fully played out. Lots of these trades will be based on information arbitrage, where investors have not caught on to information hidden in press releases, earnings call transcripts, SEC & SEDAR filings and investor presentations. We track and archive all trades.
No new Side Pocket Trades were added in November, but the strategy continues to deliver strong performance. At month-end, the average return across all extra-alpha positions was 29%. Three positions remain active: one up 1%, another up 5%, and a third up 216%.
You can review the current Side Pocket Trade positions below: