International SIF: Peugeot + Lucara Diamond join the folio
There seems to be a widely-held view that western stock markets are overdue a correction after such a long bull market.
Timing this could be difficult, but it certainly seems as though rising US bond yields could trigger a change of positioning for some investors. After a decade of ‘TINA’ -- There Is No Alternative [to equity] -- investors can now earn more than 3% from US government debt. So for income-seeking investors, owning equities with sub-3% yields could become less attractive.
Lagging the market
What certainly is true is that the performance of my international SIF portfolio has continued to disappoint since my last review in September. This virtual portfolio now lags the wider market, having fallen by 12% so far this year, compared to a 4% decline for the FTSE All World Index.
Here’s a snapshot of how the folio’s 20 holdings have performed so far:
It’s clear that the portfolio as a whole is not performing well. Seven holdings are down by more than 30%, and only five out of 20 are showing a profit.
I may have been caught in the early stages of a deflating equity market. Or I may have made some poor selections. I’m not yet sure.
However, I am planning to make some changes.
As I discussed in September, I’m going to shift the portfolio to a set of fixed geographic allocations. This will take a few months to achieve, but will eventually arrive at the following approximate weightings:
US/Canada: 42 pc
Europe (ex-UK): 33 pc
Asia/Australasia: 25 pc
UK: 0 pc
Without further ado, let’s move on to the first of this month’s two new stock picks from my International SIF stock screen, which you can find here.
Peugeot SA (EPA:UG)
If you don’t follow the motor industry, you may not realise that Peugeot, Citroen and the DS brands are all part of the same group. They’ve recently been joined by Opel/Vauxhall, which the French firm bought from US rival General Motors.
In the UK at least, new car sales appear to have been hit by the new WLTP emissions tests, which came into force in the EU on 1 September 2018. Friday’s profit warning from UK dealership Pendragon (covered here by Graham Neary) was blamed…
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Peugeot S.A. is a holding company. The Company operates through three segments. The Automotive Division covers the design, manufacture and sale of passenger cars and light commercial vehicles under the Peugeot, Citroen and DS brands. The Automotive Equipment Division corresponds to the Faurecia Group consisting of Interior Systems, Automotive Seating and Clean Mobility. The Finance Division corresponds to the BPF, which provides retail financing to customers of the Peugeot, Citroen and DS brands, and wholesale financing to the brands' dealer networks. The Company's other activities are grouped under Other Business, which includes the holding company and minority stakes in Groupe Gefco, as well as in Peugeot Motorcycles. The Company's brands and services include Free2Move, PSA Powertrain, Banque PSA Finance Group (BPF) and Mister Auto. It operates through Adam Opel AG (Opel) and General Motors UK Ltd (General Motors). more »
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Lucara Diamond Corp. is a diamond mining company focused in Africa. The Company's business consists of the acquisition, exploration, development and operation of diamond properties. Its segments include Karowe Mine, and Corporate and other. The Company holds a 100% interest in the Karowe Mine and three prospecting licenses located in Botswana. The Karowe Mine is located in north-central Botswana and is part of the Orapa/Letlhakane Kimberlite district. The kimberlite at the Karowe Mine (the AK6 Kimberlite) consists of three distinct intrusions, which form a contiguous tri-lobate kimberlite pipe. The Karowe Mine is the mine developed from the Company's AK6 Project. The Company holds interest in two precious stone prospecting licenses (PL367/2014 and PL371/2014), which host kimberlites, BK02, AK11 and AK12, AK13 and AK14. The prospecting licenses are located within a distance of 15 kilometer and 30 kilometer from the Karowe mine. more »
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