Note: All performance calculations are based on AB Invest Capital per share book value and include dividends. Numbers are updated quarterly.
Comments 2nd Quarter of 2018:
We focused and strenghtened our Public Security positions in the US during recent market volatility while holding on to our core Private Equity investments. We can report similar trends to previous quarters were we continue to deliver better return in our Private Equity investments than in Public Securities. We believe however that the public market has some more legs to run before we see any down turns and it has yet again become a stock pickers market. A few focused trades in international currencies based on the strengteneing of the US dollar improved our return in the quarter, while write-downs of some smaller positions were realized in the end of the quarter. Net-net we improved our performance in the quarter from just below beating S&P 500 by 10%-points to climbing back up above this benchmark. We continue to hold an unusual large amount of cash ready to invest as opportunities arise.
We believe that investing in operating companies will continue to have better return than dividend paying stocks at this time. By paying attention to our operating companies we enjoy their ability to generate cash that we are able to reinvest. Our float of cash pile recorded all time high by the end of the quarter.
People often ask us why we don't invest in high growth tech, distressed assets, junk bonds, non-prime, or the like. To answer this I would like to use a quote from an intelligent investor I admire. I think this answers the question: " I get in trouble for doing things I know... Why would I spend my time doing things I don't know", so please stop asking me to invest in things I don't know. The answer will remain the same.
We are pleased to report to our shareholders that in the 2nd quarter of 2018 we beat our benchmark index S&P 500 by +11.76%, much related to gains in our operating companies and currency trades. As such we met our goal to beat S&P 500 by at least 10%-points, which we believe we can continue to do in the long run.
Anders J. Berggren
Chairman, AB Invest Capital
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