Investments Review 8: Developing Alternative Investments

The last installment of the Investments Review, though, actually, there will be an action plan coming up!

Bitcoin Portfolio share: 11.9% IRR: 40%. We hold Bitcoin across the SMSF and our individual Interactive Brokers accounts. I first got into Bitcoin in 2019 when CME futures were introduced, thinking it would be good to trade it. I made some money and gave some back. Then last year, when the spot ETFs were launched I decided to do longer term trading. I got in a bit late and made things worse for myself by buying more when the price had already risen into the $70k range. Then the late 2024 surge generated some profit, which has been partially given back at this stage. The current game plan is to sell the ETFs sometime this year, based on market indicators. I am beginning to think of switching then to shorter term trading again, we will see.

Winton Global Alpha Portfolio share: 3.3% IRR: 4%. This is my larger managed futures investment. We hold it in the SMSF as it is not tax efficient. It didn't do well when interest rates were low and especially going into the pandemic. Then there was a big surge, as interest rates increased. These investments do well in high interest rate/high inflation environments. Recently, I redeemed some of the investment. Possibly, I should set distributions to be paid out rather than re-invested.

Masterworks Portfolio share: 2.6% IRR: 3%. I started investing through this fractional art investing platform in 2018. I have had a three profitable "exits" but the remainder of the portfolio is mostly down and I haven't added more. The IRR is pretty low. I will wait for this to gradually wind down I think.

Aspect Diversified Futures Portfolio share: 1.9% IRR: 12%. I invested in this (through Colonial First State) to diversify my managed futures holdings. We hold this in the SMSF too. The period of rising interest rates was good, but it is not doing so well since interest rates started to decline. Possibly, I should set the distributions to be paid out rather than be re-invested.

CD3 Portfolio share: 1.6% IRR: 13%. This ASX listed fund mostly invests in US private equity. It is also in the SMSF. It is trading at a large discount to NAV and has a good IRR. The portfolio is quite mature and exits are occurring. So, I think this is a good investment that I will continue to hold and maybe add more to.

Investments Review 7: Developing Real Estate Investments

The smaller investments have done better here, which is not optimal...

TIAA Real Estate Portfolio Share: 3.3% IRR: 4%.  I don't have a chart for this one. Currently this is the only holding in my US retirement account (403b). I would have done better investing in a balanced fund instead. The advantages of this fund are that it has very low volatility and it is possible to predict when it is going to go up or down. So, I have switched between this and the CREF Social Choice Fund. But just sticking with the latter would have given a better return. So, perhaps I just should switch back to that.

ASADPF Portfolio Share: 1.9% IRR: 3%. This fund was originally run by Australian Unity, had a fair degree of leverage and had performed well. It was one of the initial investments in our SMSF. It also has low exposure to office property. Most Australia property funds are office-centric. But profit peaked in February 2023 and the unit value has declined 14% since then. Australian Unity made a various attempts to sell or merge the fund. In the end. ASA took it over. It is very illiquid, though we could get the distributions paid out instead of reinvested. I have been thinking of doing that.

 

URF Portfolio Share: 1.0% IRR: 10%. This is a listed fund invested in residential real estate in the New York metro area. The managers are gradually selling off the assets. The original investors in the fund lost lots of money. I came in when it was already distressed. The fund continues to trade a lot below net asset value but has caught up quite a bit recently and so we have reduced our holding. The fund NAV does not take into the selling costs of the inventory. So probably fair value is near 50 cents rather than the stated 60 cents per share. It currently trades at about 40 cents. I would sell the rest if it got nearer to 50 cents.

 

Domacom Investments Portfolio Share: 0.8% IRR: 13%. Domacom is a platform for making fractional investments in real estate etc. The company, which I have also invested in, has struggled to build a big enough portfolio to be profitable and is perpetually on the brink of bankruptcy. It is in the process of re-inventing itself as Assetora. But some of the investments on the platform, which are in segregated funds, have been quite profitable. I have bought into investments after they traded below their original offer prices. Initially, I invested in a farm, which has now been sold, then in two properties near the new Sydney airport, and two NDIS properties in Perth and the Sunshine Coast. All of these are doing well.

James Hardie and Regal Partners Trades

 

 

James Hardie (JHX.AX) announced that they are acquiring US company Azek and the merged company will have a primary listing on the NYSE, though still listed in Australia. James Hardie is actually incorporated in Ireland and so the Australian listing is a "CHESS Depositary Interest". Azek shareholders will have 26% of the total company. In reaction, Australian investors have heavily sold the company today on the ASX and it is down more than 12%. I bought shares on the following basis:

1. US analysts were upbeat on the merger on the investor call according to the AFR and US trade will be happening tonight after whatever happens today in Australia.

2. Having a primary US listing means the stock can be included in US indices with subsequent buying by passive index investors.

I'm down on the trade right now, but not too badly... 

Regal Partners (RPL.AX) got trashed again today. I think this is related to the story about Merricks' (a subsidiary) loan to a development in Sydney that is in trouble. Given, this loan is in a private credit fund and not on the balance sheet, I think this reaction (down 15%) is exaggerated. I bought more shares. 

P.S.

There is another negative story on Regal. Again, this doesn't justify such a large fall in the management company. It's a 1-2% fall in assets under management. However, it turns out that Opthea was 5.6% of assets at Regal Investment Fund (RF1.AX), which I am invested in. That is big for what is otherwise a super-diversified fund.

Investments Review 6b: More Developing Stock Investments

Because of the delay in completing this review, the last of these is now an unprofitable investment!

WCM Global (WCMQ.AX): 1.7% of net worth, 1RR 15%. This is an actively managed ETF that targets global "quality" stocks. It is managed by US manager WCM but is listed on the ASX.

There is a history of using this stock to fund other new investments (Bitcoin I think) and then more recently re-investing in it as it has a good track record:

 

The ASX gained 66% in this period and the MSCI 90%. Seems good to me.

WAM Strategic Value (WAR.AX): 1.6% of net worth, IRR 1%. This fund specializes in mainly investing in other listed funds that trade below NAV. We invested at the IPO (a mistake):

While overall it has done nothing much, it has done well in the last 1-2 years. I think this should be monitored. Maybe can be a source for investing in other things...

Regal Partners (RPL.AX): 1.4% of net worth, IRR -8%. This is a leading Australian alternative asset manager, which I normally include in the Australian small cap asset category. I thought this company was doing well, but since the release of the most recent earnings report, the market doesn't agree:

 

I think in the long-term they should do well or be acquired by a larger fund manager, so am inclined to hold. Of six analysts who follow this stock, five rate it a strong buy. Morningstar Quantitative value it at $3.16, about 10% above the current stock price.

Investments Review 6a: Developing Stock Investments

I decided to rename this category "developing" as opposed to the mature investments we considered earlier. This section covers five Australian funds and stocks. The first two are in this post. Graphs are all in Australian Dollars.

First Sentier Imputation Fund: We now have 1.6% of net worth in this fund. This is the last remaining investment in an account, which was once my core investment. The fund aims to combine long-term capital growth with tax-effective income by targeting Australian growth companies with a high level of franked dividends. It aims to outperform the S&P/ASX 300 Accumulation Index over rolling three year periods before fees and taxes.

The fund has consistently outperformed its benchmark:

Our IRR is 16%. The only downside of this fund is that the unlisted unit trust structure is not very tax efficient, as all gains are paid out in distributions. An alternative is Wilson Asset Management's Leaders Fund (WLE.AX), which is more tax efficient. We have held that for a while in the past but ended up selling to raise cash for other investments. It has done better over three and five years than FS Imputation but much worse in the last year.

This was one of my earliest investments but then I didn't hold any for 20 years until 2021 when I began to consolidate other funds in the account into it. Distributions gradually pay back our investment.

Cadence Opportunities Fund (CDO.AX): 2.5% of net worth. IRR is only 3.5%. It is a long-biased listed Australian equity hedge fund. I recently consolidated my investment in sister fund CDM.AX into this one. 

CDO has more flexibility to quickly trade in and out of positions. Initially, the fund did extremely well. Then it became practically a twin of CDM. However, recently it has again begin to diverge in a positive way from CDM. It's not really doing well though. It's still way below the 2022 peak, unlike CFS Imputation above. Unless it starts to do a lot better soon, I don't think there is a good reason to hold it.

1997

I feel that 1997 might be a good analogy to 2025. After an aborted recession in 1994 (2022) the stock market went up strongly in both 1995 (2023) and 1996 (2024). But when I left the US in 1996 for Australia the mood was that the economy was struggling and maybe another recession was coming. There was also a feeling that the stockmarket was overvalued. Alan Greenspan first mentioned "irrational exuberance" in December 1996. But the stockmarket, or at least tech stocks, went up for three more years to crazy heights in 1999 (2027) before the tech wreck. Then the boom was mainly internet related stocks, now AI and maybe quantum computing. Oscar Carboni, who is very slightly older than me, often says: "This boom is just getting started." 

So, does that mean we should go all-in on tech stocks? There are no guarantees, and so I always diversify. My largest exposures to tech are through my venture capital exposures. If I am right, venture capital should do well for a while and maybe we can get some exits. And then I have WCM Global (WCMQ.AX), Generation Global, and Hearts and Minds (HM1.AX). Pershing Square Holdings (PSH.L) has investments in Google and Uber. Unisuper has some exposure through the Sustainable Balanced Option I am mainly invested in. But overall it would only add up to around 15% of net worth (and less of gross assets). On the other hand I have 18% of net worth in crypto-related assets that tend to move with tech stocks. Given that, perhaps my exposure is big enough?

Investments Review 5: Mature Stock Investments

We usually classify the first of these investments as a hedge fund and the rest as stock investments, but here we can bundle them together as stock investments. The first two are very successful while the second two are questionable. 

We start with our fifth biggest investment currently, Pershing Square Holdings (PSH.L) managed by Bill Ackman:

Scale: Pounds Sterling

We gradually ramped our investment up to 5,000 shares and then have let our net investment decline with dividend payouts. In the meantime, profit continued to increase. The fund trades 28% below NAV. So, part of our investment thesis is that the gap to NAV will reduce over time. Pershing Square went through a period of under-performance in the years before we invested. Since then they revised their strategy and have done very well. Our IRR is 24%. The question here is whether we should add to the investment. On the one hand, it is 7% of net worth already. On the other hand, it has performed well, is below NAV, and our net investment is only about 1/3 of the total value.

Our sixth largest investment (6.1% of net worth) is Defi Technologies (DEFI.NE and DEFTF):

Scale: US Dollars

This shows that a mature investment is not the same thing as an investment held for a long time if you get lucky! Our IRR is a crazy 378%. We invested roughly 2% of net worth in this company.

We first invested in Generation Global Share Fund, which is a Colonial First State offering, back in 2008 when it was called the Generation Global Sustainability Fund. The fund is closed to new investors, which is one reason why I never sold out of it, but also it has performed well historically returning an above average 13% IRR. However, at the previous review in 2021 it had an IRR of 16.5%. So what happened since then? I ramped up our investment in 2021. This was good timing as you can see profit soared. However, it round-tripped back to 2020 values in 2022. We have let our net investment decline since then as distributions were paid out. But profit has rebounded to new highs.

Scale: Australian Dollars

This is now the only remaining investment in the Colonial First State account I set up for Moominmama in 2008 soon after we moved to Australia. We now have 1.8% of net worth in this investment. So how is this fund doing now compared to benchmarks?

While it outperformed the benchmark over the last 10 years, it has underperformed in more recent periods. So, this isn't a clearcut decision. We need to compare this to our other international share funds. One reason to hold would be to maintain diversity of managers.  Maybe this manager will increase performance in the future again while others will decrease... Because funds like this end up distributing most gains we don't need to worry about CGT.

Finally, we have Hearts and Minds (HM1.AX). This is an Australian listed investment company that invests globally using the highest conviction ideas of an array of fund managers. 35% of the holdings are based on stocks spruiked by fund managers at the annual Australian Sohn Investment Conference. The positions are then closed by the next conference. That is a good idea, but one year may be too short for all these investments to work out. And, sometimes, the conference has strayed off the path of sensible investments. Also, the management fees are donated to charity. I invested at the IPO.

Scale: Australian Dollars

I have been gradually reducing our exposure and moving the money to what I perceived as better opportunities. We have only 1.1% of net worth in this stock now. On the other hand, the fund has improved its performance in the last couple of years:Overall, our IRR has been 9%. Our net investment is now close to zero, so I am inclined to hold our position and see what happens. On the other hand, we could simplify things by eliminating this small position.

Investments Review 4: Mature Private Equity Investments

3i (III.L) is one of our more successful and larger investments with an IRR of 24% and a net worth share of 4.4%. Note that the scale on the graph is in Pounds Sterling. They are a UK based private equity manager. Most of the capital they manage now is proprietary capital and so you are investing in the combo of fund manager and fund. I first invested in 3i in 2008 but the position was very small until we started ramping up our investment in 2018 peaking at 5,000 shares in 2022. Since then, I sold off 1,500 shares because I was concerned that the majority of their portfolio was in a single company - Action, a European chain of discount stores. This took our net investment down to zero. A classic mature investment.😀 Obviously in retrospect we would have done better by just sticking with 3i.

 

Pengana Private Equity (PE1.AX) did well for a while but then went sideways since early 2023. Overall it has achieved an IRR of 19%. With good timing, I reduced my investment dramatically at the start of the sideways period. The money was redeployed in another undervalued PE fund - CD3.AX. Since then I have added some back when it seemed a lot undervalued relative to NAV. It's now at 1.6% of net worth, which isn't that big. Hopefully, it will close more of the undervaluation gap and private equity will again do better.

Aura VF1 is a conventional Australian venture capital fund that preceded Aura VF2. Net worth share is 2.8% and IRR is 15%. Both the ramp up and now down in invested capital is dictated by the fund manager. The fund has one big success story - Shippit - and a mix of smaller successes and failures. Management fees will erode the value gradually if there are no mark ups... So we just need to wait for an exit from Shippit to get our money back. Unfortunately, exits from venture capital are still relatively few and far between.

Investments Review 3: Mature Alternative Investments

We start with our best investment ever in dollar terms: gold. 

I first invested in gold back in 2006. Then there was a long period where there was no gold investment or trading till 2018 when I inherited a gold sovereign. Maybe this sparked my interest in investing in gold again starting in 2019. We invest via gold ETFs. We gradually ramped up our investment as cash became available to the end of 2021. Since then we have maintained the gold allocation at around 10% of gross assets and withdrawn cash of around AUD 350k in total. This has gone primarily to funding venture capital investments. Total AUD profit has been almost $500k and it now constitutes 9.9% of net worth with an IRR of 16.9%. At this point this beats our venture capital investments hands down. So, on a short-term basis we should have stuck with gold. In the long term, who knows? On the other hand, this remains a large investment.

Next is our investment in Regal Investment Fund (RF1.AX). It now includes hedge funds, venture investments, real assets, and private credit. We bought at the IPO and then doubled our investment a little while later. We cashed out around the post-pandemic peak and then bought back in. However, the fund has not replicated its amazing performance of 2020-21 but on the other hand has not done badly and so we have been content to let our net investment drift down with dividends and occasional trades. More recently we have added to our position again including through a share placement:

At this point, I am happy to wait and see, as it has gained 26% over the last year. Lifetime IRR is 26.5% and net worth share is 3.6%. 

Wilson Alternative Assets (WMA.AX) is another diversified alternatives fund. Unlike RF1 it continues to trade at a large discount to NAV. We ramped up our investment into 2021 and then let it drift down with distributions paid out. As a result the value of the investment has been constant for a few years but profit has slowly increased. Here I am waiting for some more closing of the gap to NAV, as when Wilson took it on they promised to close the gap or put the future of the fund to a vote.

IRR has been 10.7% and currently it makes up 3.0% of net worth.

Investments Review 2: Mature Superannuation Fund Investments

We each have an employer superannuation fund. Moominpapa has Unisuper (Sustainable Balanced Option) and Moominmama PSS(AP) (Balanced). Each is a diversified fund. PSS(AP) has more private equity, hedge funds, and real assets, while Unisuper is more public stock focused, particularly international stocks. These are two of our biggest investments. Unisuper is 10.0% of net worth and PSS(AP) 8.3%. And they have performed fairly well. Unisuper has an IRR of 10.5% and PSS(AP) 8.9%. We need to keep making contributions into these funds if we want to get the full employer superannuation contribution (I think). But we could roll over some of the money to our SMSF if we wanted. In fact, I have begun to do that using a transition to retirement pension. You can already see the effect in this graph:

 

That's the move down in the red line (net investment) on the right. This is classified as a mature investment, because profit (golden line) exceeds the red line. Back in the 1990s I contributed to Unisuper (or SSAU in the early days). You can see that saving at the left. But then I rolled it over into Colonial First State's retail fund, which allowed me to invest in a geared share fund, greatly expanding my investment. Eventually, I rolled that over into the SMSF. As will usually be the case, almost all the profit has been made since 2012 and the majority since the pandemic low.

We have "only" been investing in PSS(AP) since 2007. Again, we made no money till 2012 and the majority since March 2020:

 

The net investment or input curve is now sloping down because:

• Moominmama is now working part-time
• We only make employer contributions to the fund and make additional contributions for her to the SMSF.
• Profit is computed pre-tax and in order for the value (green) to be equal to the sum of profit and input we need to deduct the imputed tax from the input series.

So, we are kind of divesting from this fund too. 

This is what mature investments will look like - profit is still climbing though we are pulling money out of them.

Investments Review 1: Unprofitable Investments

We have six unprofitable investments:

• Tribeca Global Resources Fund (TGF.AX)
• Unpopular Ventures
• Aura VF2
• Dash Technologies/IPS
• Domacom (DCL.AX)
• Pershing Square Tontine Holdings (PSTH) 

We can only sell the first of these... You are going to see a lot of graphs like this during this investment review:

 

The red line is the net cash we have invested, the green line is the current value of the investment, and the golden line is profit. I bought this investment at the IPO (a mistake). I reviewed TGF in the previous investments review here. The investment was marketed on the basis of the high returns the team got with this strategy prior to launch. But unfortunately that performance has not been replicable. Instead, their performance has been erratic to the up and down side. I ramped up my investment by "buying the dip" until 2021 but then missed the chance to cash out at the top. Since then, net investment has declined as dividends have been paid out. But net profit has also drifted down. I guess I am hoping the managers have another bout of erratic out-performance allowing me to cash out at a profit, but I seriously wonder if I should just sell instead. Our internal rate of return (IRR) is -0.5% and the investment is 2.8% of net worth

What's up with all the other unprofitable investments that we can't do anything about?

Unpopular Ventures is a venture fund on Angellist. We contribute USD 10k per quarter to their "rolling fund" and occasionally invest in some of their syndicates. The investments have so far generated a little net profit. But the fund is managed on a 2 and 20 basis and you pay ten years of 2% annual management fees up front! So, each investment in the Rolling Fund is immediately marked down by 20% or so.

Our internal rate of return is -7% indicating the underlying profitability. And their funds from the years immediately prior to our initial investment have done very well. So, we could stop making new contributions here, but I think we can continue until the fund is at 5% of net worth say. We are now at 3.5%.

Aura VF2 is a conventional Australian venture fund that is still making capital calls. One of their early investments, Lygon, went bust but has been restructured. This is the main reason the investment is down. Some of their other investments are doing well. The IRR is -3% and the investment is 2.6% of net worth.

Dash Technologies took over Integrated Portfolio Solutions, which was an Aura Venture investment. Unfortunately, IPS didn't manage to make the breakthrough they hoped for when we invested in the syndicate. The takeover was for a mix of cash and shares in Dash. Half the cash has been distributed, the rest is coming later this year. The remaining investment is 0.6% of net worth. The IRR has been -5%.

Domacom provides fractionalised investments in real estate in Australia. It is currently suspended from the ASX. My investment thesis was that the company was likely to be acquired by a larger financial institution that could leverage the investment through its distribution network. But that never happened and I missed the opportunity to get out during the previous period when the company was relisted on the exchange. It has gone through a lot of recapitalizations and things are again looking up. It is only 0.1% of net worth with a -36% IRR!

Finally, PSTH was a SPAC vehicle set up by Pershing Square Holdings. It tried to acquire Universal Music Group but was blocked. Ackman has restructured the company and claims to be still looking for targets. So, it has zero carrying value and it is a case of wait and see. The IRR has been -13%.

Investments Review: 2025 Edition

I have been closing some investments that I wasn't happy with, but it's several years since I systematically reviewed my investments. Currently, we "only" have around 30 investments if we bundle micro-investments with Unpopular Ventures and Masterworks into two single investments. But it could still be too many. This time I want to look at things in a different way. Instead of looking at asset classes, I will look at investments based on their maturity.

A mature investment has total profit that is greater than the net cash invested. This could be because either it has been super-successful or because we have pulled out part or all of our original investment. The remaining investments are either profitable or unprofitable. It looks like we have 12-13 investments in each of the mature and profitable baskets and 6 in the unprofitable basket. I think I'll start with the unprofitable basket as it is easiest to deal with.

Performance of Individual Investments 2024

This post breaks down the investment returns for 2024 at a very granular level. Other costs and benefits like interest and fees and exchange rate gains and losses are not included here. I also don't go down to the level of the very small individual investments inside the Masterworks and Unpopular Ventures boxes. All numbers are in Australian Dollars.

The grey shaded investments are ones we no longer hold (some were short term trades or investments). The numbers in yellow are total wins and losses and in green the total investments return. Last year's results are here. Some of the same investments were again major winners this year: 3i (III.L), gold, Unisuper, and PSSAP. Pershing Square Holdings (PSH.L) moved down the league table a bit this year. There are two newcomers in the top three: Defi Technologies (DEFI.NE) and Bitcoin. Gold also returned nearly three times the amount it did in 2023. These pushed 3i down from the top spot to fourth place.

Some of the same investments were again losers this year. On the other hand, the Cadence funds, Regal Partners, Aura VF2, and APSEC moved from losing last year to gaining more than $10k this year.

The top investments are mostly our biggest. 3i is relatively small though at 4% of the portfolio and our Pershing Square position is slightly bigger than our Defi Technologies position but did not perform as well this year.

Regal Funds Share Purchase Plan

Regal Investment Fund (RF1.AX) is doing a share placement and a share purchase plan (SPP). Under the SPP you can buy up to AUD 30k of shares at the recent NAV of AUD 3.41. They have made an official 20% average rate of return since inception. My internal rate of return is higher than this. So, I think I should take up all of this, but don't have anything I want to sell in the SMSF's brokerage accounts. I could either make an additional AUD 30k non-concessional superannuation contribution to my account or withdraw something from one of the SMSF futures investments. It's probably the last chance to make non-concessional contributions to my account, as I could hit the balance transfer cap of AUD 1.9 million by 30 June 2025. Also, the futures investments have been weak recently, so I think they might see a return to the mean in terms of performance and selling now might not be a good move.

Sold All My Shares in Platinum Capital

The company announced the result of its strategic review: They will merge the listed investment company PMC.AX and their ETF PIXX.AX. The price jumped on the news to the $1.45-1.46 range. This leaves about a 5% potential gain to the current NAV of PMC.AX. But we have to wait probably till the end of the year for the plan to come fruition, and if PMC.AX continues to underperform as it has recently, the NAV can fall. So, I sold all my shares today.

It was one of my oldest investments. I first invested in 2001 but sold during the dot.com crash. I then reinvested in 2005 and have held varying amounts of shares since then. The internal rate of return has been 12.02%, which was enhanced by trading the shares. Total profit AUD 100,530.

Integrated Portfolio Solutions Acquired

Back in 2021, I co-invested alongside Aura AUD 100k in Integrated Portfolio Solutions, a private company. At the time, I thought there wasn't a lot of downside risk as an acquirer would be willing to pay to obtain the client accounts they were advising. The company didn't manage to execute on the expansion plans that they touted at the time. In the wealth management/advisory/platform business there are economies of scale needed to achieve profitability. Today it was announced that the company is being acquired for roughly the value at the point when we invested. Various closing costs are going to result in about an 8% loss. Part of the consideration for the acquisition is going to be in terms of equity of the acquirer, DASH Technology Group, but now my position will be a much more reasonable amount for an investment in a non-profitable private company. I feel lucky I didn't lose more!

Longwave Small Australian Companies

Recently, what used to be the First Sentier Developing Companies Fund became the Longwave Small Australian Companies Fund. In other words, First Sentier dropped managing the fund and transferred it to Longwave. I checked Longwave's track record and it wasn't that great. So, I decided to close our holdings of this fund. I withdrew part of Moominmama's holding to fund her concessional superannuation contribution for this financial year. Then I wanted to withdraw half of my holding and switch the rest to the FS Imputation Fund that does manage to beat its benchmark. 

As my holding of this fund is under my CommSec margin loan, I had to send the Colonial First State forms requesting the transaction to CommSec. Then CommSec sent me back their own withdrawal form, which was super unclear. Turns out that they have switched 50% of my Longwave holding to FS Imputation. But then instead of withdrawing the rest, they have withdrawn 50% of the rest! I can't be bothered to fill out another set of forms to submit right now as I don't need to withdraw the money...

Coinsnacks Issues Negative Report on Defi Technologies

Coinsnacks issues a negative article on Defi Technologies. The stock fell 25-30% in Tuesday trading as a result. The article is very selective. The company has issued statements suggesting that their financial position has improved radically since the end of Q1 in March. We will have to wait till the end of the current quarter to fully understand that. The current rise in stock price is as much about that as the promotional efforts that the company has made to raise its stock price. The company issued a statement claiming that the report may be connected to short sellers, which is pointedly not denied by Coinsnack's report which says they do not own shares in the company... If I understand the Defi's statement, they were approached to sell new shares to an investment bank, which they suspect would be used to cover a short position. But that was back on 10 June, when stock price was lower. So, I am confused. Anyway, in today's trade in Europe and Canada (US market was closed) the price stabilized for now.

Getting a Bit Crazy

Crazy to see an investment up by more in a day than any of my investments have been up in a month before in terms of dollars.... So far it is up about four times this month what any individual investment has done before. Of course, no guarantee that this will hold, so thought I'd post while it lasts. If you are puzzled, then you haven't read my recent posts. Let's see where we're at a the end of the month.

No, it's not bitcoin, which has been doing nothing. Still I saw this really nice chart of bitcoin's price path to date:

The x-axis is log days since the inception of Bitcoin, while the y-axis is the log price. With this transformation, bitcoin has followed a linear path. Yes, the growth rate has slowed over time, but now we see that it hasn't been an arbitrary rate of slowing. This is called the Bitcoin Power Law Theory. Of course, this is based on econophysics and might not continue to hold in the future.

P.S.

After being up 25% in European trade we closed up "only" 6% in North American trade.

L1 Long-Short Fund

The L1 Long-Short Fund (LSF.AX) is a closed end hedge fund listed on the ASX. It has had a very strong performance, beating the ASX 200 by threefold since its inception in 2014. But is it worth investing in now? The fund trades at a premium of about 9% to net asset value, as we might expect from a fund that has historically outperformed the market. So, that is a negative but not too large a premium. I plotted the fund's total return index (NAV not market price) against the ASX 200. The pattern looked familiar. It was a lot like that of Regal Funds' RF1.AX listed fund:

I set all three total return indices to 1000 in May 2019 when Regal Investments debuted on the ASX. What are the performance statistics of the two funds relative to the ASX? Since mid-2019, LSF had a beta of 1.066 and RF1, 0.80. The monthly alpha of the two funds have been 1.05% and 1.07%. RF1's alpha is a little more precisely estimated. The betas of the two funds using market price instead of NAV are much higher. RF1 has been around 1.3.

At this stage, I am not that inclined to invest in LSF given I am invested in RF1, but I might add it in the future.