Financial Log Book - First Quarter 2019

Positioning for 2019

In an earlier post, I remarked on the process of winnowing out crew members and adding a few new members with better prospects.  You can see it here:
https://finanacialpassagemaker.blogspot.com/2019/01/the-financial-log-book-performance-2018.html

The measures avoided some of the pain that would have otherwise been felt due to the poor performance of the broader market in 2018.

Performance for the First Quarter of 2019

Entity	Wt	Initial Price/ Purchase * Date	Price * March 15/19	Gain/Loss** Since Purchase %
Wheaton Precious Metals (WPM) (formerly Silver Wheaton)	H	12.37 2007-09-04	30.4	145.8
Oaktree Capital Group (OAK)	M	56.45 2013-10-28	48.99	-13.3
Clean Seed Capital (CSX)	M	.51 2015-01-07	0.39	-24.5
Questor Technologies Inc. (QST)	L	1.74 2015-05-22	4.2	141.4
Abitibi Royalties (RZZ)	M	2.57 2015-11-20	13.21	414.1
Fairfax India Holdings Corp (FIH.U)	H	10.42 2015-12-16	13.6	30.5
CO2 Grow Inc. (GROW)	L	.15 2018-12-18	0.33	103.1
Rocky Mountain Equipment (RME)	L	8.81 2019-01-05	8.9	1

*    Prices are quoted in the currency of the exchanges where equities are listed.  As a result the gain/loss is not an accurate measure of the performance of the portfolio as the $US has risen significantly against the $=Cdn since many US positions were established.
**   Gain/Loss exclusive of dividends

Relative weightings of holdings in the portfolio when the position was first established:
H = >9%
M = 5-9%
L  = <5%

Commentary 

1. The performance of CO2 GRO  has been gratifying.  I have the sense that the share price will be volatile given the small size of the company and the potential response of the market to announcements such as partnerships with major equipment/service providers, the provision of services to more greenhouse operators and the like.  Approval of the technology for cannabis by federal regulators will be a key catalyst.  I see no reason to take profits at this stage.  
2. The precious metals companies have been steadfast crew members and should perform disproportionately well in the event of a major downturn in the markets as investors seek "safe havens".  Abitibi, in particular, is on the potential cusp of significant new revenue flows from royalties and has the added benefit for investors of a play on increases in the price of gold by virtue of its significant holdings of stocks in well managed mining companies.  
3. Agricultural stocks are being held with the long view in mind.  At present, farm incomes are at a decade low and commodity prices present highly uncertain prospects for North American farmers due to foreign competition and trade wars.  At the same time, the stock of farm equipment is getting aged and in need of replacement as it's always a compromise between reliability and operating costs. The farm economy will eventually recover.  Having some skin in the game at this stage has focused my attention.  As mentioned in an earlier post, I've assembled a watch list of agriculture-related companies that I'll buy once the sector starts performing better.  Clean Seed was purchased with the long view in mind and it continues to make significant progress despite the rather miserable state of the farm economy.  To my mind, this demonstrates the potential of the technology and the acumen of management.  
4. Oaktree is in flux.  Google "Brookfield and Oaktree" to learn more.  OAK is a crew member because it should be resilient during market downturns.  The accumulation of healthy dividends since the purchase in 2013 have blunted the impact of the reduction in the share price.  
5. The best days for Fairfax India are ahead.  Management has assembled its portfolio of companies in a deliberate manner and is in it for the long game - a play on the potential of India.  

I will monitor the portfolio more closely than normal as I have the sense that markets are facing the potential of a major adjustment.  As noted in an earlier post, THE most significant contributor to my portfolio losses in past years was a downturn in the broader market.  This time around, I am maintaining a large cash position and am monitoring conditions as per the approach of Howard Marks' Mastering the Market Cycle.  I have also tried to select stocks which should be fairly resilient in the event of a broader market correction.