Multi Currency Portfolio Update #13

by | Apr 5, 2008 | Multi Currency Investing

Here is the updated performance of the six multi currency investment portfolios that Jyske Bank created with our direction. We have been tracking them for educational purposes beginning November 1, 2007.

These portfolios are all still down %. See them in detail at

2008                     Dec 14         Feb 19         Mar 20          April 5
Infrastructure       -20.97         -69.39         -79.79        -83.22%
Emerg Mkt             – 9.82         -44.27         -53.75       -54.20%
Danish Health       -32.51         -78.99         -79.55        -85.34%
Green                    -14.31         -54.29         -58.78       -56.66%
$ Short Non            – 9.08         -18.99         -19.69       -18.31%
Blue Chip                – 5.14         -24.98          -47.55      -35.06%

Thomas Fischer sent this note with this update. “Hi Gary, attached is the latest up-date and unfortunately there is no recovery in sight. Its been a “perfect” storm with falling asset prices, falling emerging currencies and rising funding currencies. Every time the markets seem to quiet down some bad news hits the front page again. Hopefully we will get a normalized market again but at the moment everybody is afraid “being left holding the baby. Thomas”

There are several lessons we can derive from this thought.

The first lesson is that in difficult times, some real; bargains appear.

Take a look for example at the Blue Chip Multi Currency Portfolio.

Curr            Investment               Invested         Value
SEK          Hennes & Mauritz B     $50,000      $47,185
CHF         Roche Holding AG       $50,000      $56,599
JPY          Toyota Motor Co.        $50,000      $45,881
USD         Samsung Electronics   $50,000      $51,083
EUR         Nokia                          $50,000      $39,806
EUR         Adidas AG                   $50,000      $51,213
Investments Total Value           $300,000    $291,769
Curr              Interest    Borrowed     Payoff     Interest
JPY                2.750%    $100,000   $115,054  $1,335
CHF               4.375%   $100,000   $116,999  $2,161
Total Liabilities                                           $233,389
Net Amount                                                  $58,380

This portfolio is down badly but two of the shares in this portfolio are on Jyske Bank’s best buy list.

One is Roche Holding Ag. Jyske says:

“Roche will expand its leading position within treatment of cancer, which is a major market (above USD 50bn), which will unfortunately grow markedly in future. The company will be able to increase its earnings capacity and is not affected by a potential recession in the US. Roche is not facing any important patent expiration.”

Adidas is another of Jyske’s best buys and Jyske says:

“The share has an attractive valuation and is trading at a large discount to its main rival Nike. As the official sponsor of EURO 2008 and the Olympic Games in Beijing 2008, Adidas will in our opinion accelerate its 2008 sales. The acquired Reebok is still lagging behind Adidas, but synergy effects will have a positive impact in 2008. The low USD will have a positive impact in 2008 due to purchase of goods in USD.”

In the Danish Health Portfolio $50,000 was invested in Genmab. This investment has dropped to $34,020.94.

Jyske says that this is a high risk share but that Genmab is fundamentally undervalued. Their high earnings forecast for 2008 was a surprise since the company guided a loss of between DKK 800m-DKK 900m. Jyske says this is due to the company’s solid pipeline of new drugs. There are such good prospects offered by Genmab’s Ofatumumab project, that Jyske assesses the fair value of the Genmab share at DKK 400. Jyske thinks that the present share price of DKK 242 is an attractive opportunity because the solid potential of the product pipeline is not reflected in the current share price.

Jyske anticipates that the next important price trigger will be the publication of phase III data for Ofatumumab. This is a product for chronic lymphocytic leukemia. The phase III data are expected in June 2008.

Jyske points out the risk. For 2008 Genmab anticipates that there will be a large 2008 loss but that the loss can primarily be attributed to higher R&D costs whihc create the solid advance in the company’s product pipeline. Genmab expects that 90% of its 2008 budget will be spent on R&D.

Another lesson is that no market ever goes up all the time.

Our 2006 and 2007 portfolios looked great if you looked at them from November to October.

In the 2006 the results were:

US Dollar Long 9.04%
US Dollar Short 10.43%
US Dollar Hedge 11.46%
Emerging Market 42.93%
Asia Emerging Market 114.16%

The 2007 results were:

Swiss Samba 53.32%
Emerging Market 122.62%
Dollar Short 48.19%
Dollar Neutral 38.67%
Green 266.30%

Yet all these portfolios had serious dips each in the middle of 2006 and 2007…worse than we have seen from November till now.

The only difference is that these portfolios dipped immediately from November.

Take the 2006 Asia Emerging Market that rose 114.16%. If an investor put in $300,000 in March 2006, ($100,000 invested and $200,000 borrowed) the portfolio was down 44.91% by July 2006. With the two times leverage, the investor lost $134,710. Those who jumped in at the early top lost everything plus 34.71% more.

The current loss with that same emerging market portfolio $54,200…is barely 40% of the loss then.

The lesson is that annual performance means little. One needs to take a longer view and remember three of the most important fundamentals of investing.

#1: Short term market movements, ruled by human emotion, can never be accurately relied upon.

#2: Long term market movements, ruled by supply and demand, can always be relied upon.

#3: Finding good value is always a key to finding good investments.

Until next update I hope you find good value everywhere.


Join me in North Carolina with Thomas Fischer from Jyske Bank for an update of the portfolios and more. May 23-25 International Investing & Business Made EZ.