August 2018 Portfolio Manager Review
For the month of August, the New Tech and Media ETF (FNG) was up 7.84% in NAV compared to gains of 3.26% in the S&P 500 and 5.78% in the Nasdaq Composite Index.
August was a positive month for both FNG and the overall markets, and the end of the core earnings season. There was a slowdown in the geo-political rhetoric on tariffs and NAFTA, and fairly strong earnings for most companies. For the month, core holding Amazon (NASDAQ: AMZN) was up 13.23%, Alphabet (NASDAQ: GOOG) was flat at 0%, Square Inc (NYSE: SQ) was up 37.11% and Netflix (NASDAQ; NFLX) up 8.96%. Overall the biggest gainers for FNG were Advanced Micro Devices (NASDAQ: AMD) at 37.31%, SQ at 37.11%, Zebra Technologies (NASDAQ: ZBRA) at 24.51% and Cyber-Ark Software (NASDAQ:CYBR) was up 24.22%. The only two detractors in the ETF were Altbaba (NASDAQ: AABA) down 5.31% and Qorvo Inc (NASDAQ: QRVO) down just under one percent at 0.92%.
As stated previously, July was an extremely volatile month for the general markets as well as FNG, but August was just the opposite with both FNG and the general markets seeing strong and steady increases throughout the month. August saw the end of the core earnings season and part of the gains can be attributed to a bounce back effect from companies that announced earnings in July. If you recall, a number of companies were showing top and bottom line beats but saw their stock price get hit. Those names that showed strong earnings but sold off on the news recovered nicely in the month of August. To that point, our August 1st rebalance into a smaller, but more concentrated, basket for FNG seems to have worked out well as the Investment Committee had stated last month, “It is the belief of the Investment Committee that the stocks chosen to form the concentrated portfolio have much stronger fundamentals than the current price represented, and that while most issues were weak technically after the post earnings sell off and NASDAQ moving into correction territory, the stocks in the July 31 to August 1 rebalance proved too good to pass up at their current price points.”
It’s interesting to note that the August portfolio construction was almost 45% in Software/Cloud names, 20% in Communications and 5G names, 13% in Internet Retailers, 14% in Semiconductors, and the remaining makeup in Robotics and I/T Hardware, yet the top ten performers for the ETF were spread through almost every sector. The underlying portfolio of 40% cloud, 20% semis, 20% communications, 10% Internet Retailers and 10% IT/Hardware shows that the moves were company specific and not related to a particular hot sector as we had seen in previous months.
Scott Freeze, chief investment officer of
Sabretooth Advisors, portfolio manager of FNG
Top Ten Holdings
|Ticker||Company||Portfolio Weight %|
|PANW||Palo Alto Networks Inc.||5.76%|
|ISRG||Intuitive Surgical Inc.||4.89%|
|IRDM||Iridium Communications Inc||4.46%|
|NEWR||New Relic Inc||4.38%|
|APPF||Appfolio Inc. - A||4.31%|
|ZBRA||Zebra Technologies Corp-Cl A||3.98%|