By CJ Brott
The month of May was a very active trading period for the Capital Ideas portfolio. Due to the choppy markets and macro-events, several positions were liquidated and proceeds were used to reposition the portfolio for future growth.
For example, I sold off the last remaining position in EV Energy Partners LP (EVEP) and reinvested part of the proceeds in Southcross Energy Partners LP (SXE). My aim is to move my energy investments from the slower developing Utica shale area to the much more active Eagle Ford fields. In my opinion, I possibly picked up a more promising equity position without any sacrifice of yield.
In the momentum investing portion of the portfolio, I purchased the Select Sector SPDR Technology ETF (XLK). As the biotech sector has bottomed and the semiconductor stocks have started moving up, I thought I was prudent to buy shares in the ETF.As with any momentum-based trade, I will pay close attention to price trends and liquidate the position as relative strength or momentum declines. Due to market rotation, I was able to purchase Sprouts Farmers Markets (SFM) off of its recent high. The company uses low prices on high quality produce to lure in shoppers. According to reports written by UBS and Wells Fargo, the company sells a comparable basket of goods at approximately 17% below the cost at major grocers such as Kroger (KR) and Safeway (SWY). The savings are even higher when compared with Whole Foods (WFM) and other "healthy" grocers. In my opinion, the political bonds between Germany and France are weakening. That matters, because I believe these two countries are the supporting pillars of the Euro currency. With Germany approaching full employment while unemployment in France continues to rise, they are bound to require conflicting monetary policies from the European Central Bank. My belief is that this strain should continue to depress the nascent recovery in Europe.
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