October 2018 Portfolio Manager Review
In October, AdvisorShares Vice ETF (NASDAQ: ACT) did exactly what it is designed to do: lose less than the overall market. While the S&P 500 was -6.84% last month, ACT was only -4.84% on its NAV and -5.25% on its market price.
As I’ve said before, we believe AdvisorShares Vice ETF can provide long term outperformance by losing less than the overall market in negative months (lower drawdown), and by providing simple positive returns in up months for the market. Last month, September, was the 6th straight month of positive performance for the Fund. (February & March of this year were negative months for both the Fund and for the S&P 500 Index).
A few winners: top 10 holding Craft Brew Alliance (NASDAQ: BREW) was up more than 12% for the month. It was down last month, and I bought more. Largest holding Boston Beer (NYSE: SAM) gained 6.88%. Philip Morris International (NYSE: PM) gained more than 8% and Altria (NYSE: MO) gained over 7%. Tobacco company Universal Corp (NYSE: UVV) was up more than 5.6%. PM, MO, and UVV were also up nicely in September. In negative markets or volatile times – beer and tobacco are the place to be (no matter what you think of tobacco on a more personal level).
As I said, we are pleased that the Fund lost less than the overall market in October, but we still certainly had losses – mostly from our more growth-oriented holdings. Stocks we have as cannabis-related holdings AbbVie Inc (NYSE: ABBV) dropped more than 16%, Catalent Inc. (NYSE: CTLT) was down more than 11%, and Corbus Pharmaceuticals Holdings (NASDAQ: CRBP) was also down more than 11%. A handful of stocks we own for alcohol sales (as compared to alcohol producers), were also down in October after being great performers in many prior months. Dave & Buster’s Entertainment (NASDAQ: PLAY) dropped more than 10%. RCI Hospitality (NASDAQ: RICK) was down more than 11%. BJ’s Restaurants (NASDAQ: BJRI) dropped more than 15%.
Also in October, recreational marijuana use was legalized in Canada – and most marijuana stocks dropped straight down through month end. (They have recovered somewhat more recently). Don’t get suckered in to marijuana stock hype. Some people in that business may make huge profits, but many individual investors will lose badly on wild volatility or even on pump and dump stock manipulation. In ACT, we believe we are investing correctly in cannabis by investing only in U.S. federally legal companies that are related to or can profit from the cannabis industry. We are not involved in the Canadian cannabis growers and sellers and the extreme risks that they carry. They are not legal in the U.S. at a federal level.
We’re glad this ugly month of October is behind us, and as I’m writing this – I’m glad these crazy mid-term elections are behind us too. Perhaps we can look forward to a more “normal” market.
Vice (ACT) Portfolio Manager
Top 10 Holdings – as of 10.31.2018
|Ticker||Company Name||Portfolio Weight %|
|SAM||BOSTON BEER COMPANY INC-A||5.94%|
|TPB||TURNING POINT BRANDS INC||5.47%|
|BJRJ||BJ'S RESTAURANTS INC||5.24%|
|PLAY||DAVE & BUSTER'S ENTERTAINMEN||4.92%|
|LVMUY||LVMH MOET HENNESSY-UNSP ADR||4.86%|
|RICK||RCI HOSPITALITY HOLDINGS INC||4.62%|
|DRI||DARDEN RESTAURANTS INC||4.62%|
|CRBP||CORBUS PHARMACEUTICALS HOLDI||4.35%|