Author: Brendan Ruchert-Dixon
Covestor model: Alpha Trapper
In November we saw continued uncertainty in the market, along with mixed news from both the US and Europe. With a 2.67% gain, my Alpha Trapper portfolio outperformed both the S&P 500 (-0.51%) and the benchmark Dow Jones Global Index (-3.29%).
On the final day of the month, the market got a boost from news that the Fed and central banks worldwide would coordinate to provide short-term dollar loans to European banks that no longer trust each other enough to lend to one another – much like in 2008. This probably was a necessary step to keep the situation from degenerating further, but is not obviously sufficient on its own. It alleviates some liquidity concerns facing the banks, but they (and many sovereign governments) must still tackle the larger, more chronic problem of solvency.
These latest central bank actions may have been enough to spark a medium term rally, but many cracks remain in the system that could quickly derail any recovery. For now I remain positioned to attempt to benefit in different ways from both the up and down swings.
Portfolio holding Asta Funding (ASFI) will finally report its annual results this month. I expect some visibility into whether and how much they have followed through with their stock repurchase plan, as well as continued balance sheet improvement. I’d love to see its book value jump back above $12 per share, and would not be surprised to see some quick share price movement shortly before or after the earnings call.
