2.11.2022 Alpine Select Ltd.: Monthly Update October
Alpine Select has published the monthly update October 2022.
Klick here to download the monthly report.
Alpine Select hat den Monatsbericht Oktober 2022 publiziert (nur in Englisch).
Klicken Sie hier um den Bericht einzusehen.
In the second half of October, western indices witnessed a technical relief rally as hopes for a more dovish stance on rising interest rates by the various central banks became more likely. Risk assets had a run in October and global indices were up: S&P +8%; NASDAQ: +3.9%; SMI +5.5%.
The exception was China with its CSI Index declining -7.8%. This was mainly due to re-election of Xi Jinping who emerged from the CCP’s 20th National Congress stronger than ever, with a third term secured and some of his rivals side-lined – which caused the markets to decline.
We acknowledge the robust market reaction in October but also saw unusual volatility in some megacap names with earnings disappointments. Some examples: META: -55%, INTEL: -52%, NVIDIA: -51%, AT&T: -46%, COMCAST: -44%. The magnitude of the losses is a strong indication of what to expect in the new market cycle as shrinking margins and outlooks could disappoint. No stock, even the most popular, is immune to dramatic falls.
We have written about the opportunity in the Cheyne Total Return Credit Fund portfolio due to widened spreads in the investment grade credit market of around 40% to maturity. As there has been some degree of relief, the allocation performed +6.5% in October.
Our position in Idorsia Convertibles (CB) has reached the target allocation. We are surprised that CB is currently priced like an ordinary fixed income debt security without the CB specific equity option. The yield is at 8.5% and yield to put is around 11% per annum.
Blockchain and Digital Assets market had another solid month, outperforming the broader tech sector. Noteworthy is the successful system upgrade on Ethereum (The Merge), which eliminated the need for energy-intensive mining (Proof of Work) and instead enabled the network to be secured using staked ETH (Proof of Stake). This is a key step for sustainability and ETH rallied +17% in October, outperforming BTC +5%. We estimate +8-10% contributions from our fund allocation.
About Alpine Select
Alpine Select Ltd is an investment company domiciled in Zug and has been listed on the SIX Swiss Exchange since 1998. The company offers shareholders the key benefit of investing into a global diversified and CHF hedged alternative investment portfolio. The portfolio exposure is actively being risk adjusted to current market sentiment and outlook. The investment style is value oriented and the investments are selected based on the company’s target return of 6-8% p.a. above CHF risk free rate. Alpine Select maintains an active and constructive dialogue with management and board of directors of its portfolio companies in the best interest of its shareholders. Alpine Select does not charge any management or performance fees.