Big Winners and Losers, page-12

A recurring theme during the latest quarterly reporting season has been that many stocks fell sharply when their results were announced, including many stocks in LSF's portfolio. This week it was the turn of JHX and NWS, which each fell by more than 10% on the day that their results were released. Interestingly, some stocks that suffered from this syndrome have recovered well. For example, SBM has regained most of its results-driven fall of a few weeks ago, mainly because the price of gold has risen. SFR fell by 13% on the day its results were announced a few weeks ago but since then has blossomed and is now well above where it was before it released its results. NWS fell by 11% on the day that it released its results, and then rose by 8% the next day, and then rose by 5% the day after that. Here is an idea for LSF to consider. In the recent uncertain market, if each stock in LSF's portfolio had been sold just before its quarterly results were announced, and then bought back again afterwards, then LSF's NTA might now be much higher.



During the last week, the numbers of big movers in LSF's (30 June) portfolio were as follows:

6 stocks had a single-day rise of more than 10%.
22 other occurrences of stocks with a single-day rise of 5-10%.

2 stocks had a single-day fall of more than 10%.
7 other occurrences of stocks with a single-day fall of 5-10%.



During this week which saw an outsized market rally, LSF's published NTA rose by 5 cents and the SP rose by 25 cents. The discount between the last-known NTA ($2.7734) and Friday's closing SP ($2.69) is now 8 cents, a substantial reduction compared with a week ago when it was 28 cents.

My opinions: The three-day lag before the daily NTA is published means that the NTA and the NTA-SP discount will probably both be several cents higher in three days time when the published NTA catches up with this week's market moves. If LSF consistently outperforms the market then the NTA-SP discount might shrink further. Otherwise, I don't think that the discount will remain below 15 cents for long. My guess is that if markets remain bullish then the discount will perhaps vary between 15 and 20 cents, compared with a typical discount recently of 25 cents.

Markets don't experience the biggest rally of the year every week, so my sentiment might soon change to sell depending on where markets and NTA readings go next week.