Helical Portfolio Update through April 2013
It has been a long time since the Helical Portfolio has been updated. Largely, it has been a good thing that I have been busier than usual since the start of the year, but it has reduced the time available to ruminate on my portfolios. My last update was at the start of the year, where I commented on the 2 year performance of my ‘all healthcare’ Helical portfolio. The intent was to follow that piece with a couple more performance and framing evaluations, but these did not get posted. Rather than go backwards, I will today just review changes in the portfolio since the start of the year, performance, and a look forward.
The Helical portfolio started the year with large cash position at 33.7%. My outlook for 2013 was that there would be just modest gains. The market has so far again dismissed my more dour expectations and enjoyed a strong open. Despite being on the precipice of the common ‘sell in May’ mantra, I feel the current cash position of 24.6% in the portfolio is more than adequate for any downturn. There have been 4 portfolio moves since the start of the year, including a $5000 addition made on April 15th (yup, the last minute for this Roth IRA).
The first move was alluded to in the aforementioned annual update. On January 2nd, the market enjoyed a substantial ‘up’ day, but one of the portfolio companies to which I’d been keen to add, traded substantially down. So I took that opportunity to buy an additional 100 share of Mindray Medical for $3012.99 (includes commission). I continue to believe that Mindray (NYSE: MR) will benefit from both penetration in emerging markets where Western styled healthcare is expanding, and also in the increasingly expense conscious established world. This purchase has so far proven out, but volatility is expected over the long haul, so position sizing may need adjusting from here.
The second and third additions were made in mid-February, and the fourth was the aforementioned April cash addition. On February 11th I added 15 shares of the ADR for Novo Nordisk (NYSE: NVO) for $2474.95 and on February 13th again dipped my toes into a position with Wellpoint (NYSE: WLP), 50 shares for $3169.00. The Novo Nordisk addition adds some of what most call ‘Biotechnology’ to the Helical portfolio (biopharmaceutical is my preferred term). I noted in a past blog post that I far prefer to consider established rather than start up biotechnology firms. Of the companies noted in that post, Novo has been the weaker performer to date sadly, but has a good track record of providing value to shareholders. On February 10th, the company receive word that the FDA would not approve the current application for Tresiba or Ryzodeg, two drugs containing the long acting insulin analog insulin degludec. This was a disappointing and probably lengthy setback for maintaining the diabetes franchise for the long term. But the core franchise is still quite strong. With my intent being to enjoy this position as a long term hold, I can be patient and saw this as an opportunity to initiate a position.
Wellpoint is a company I have owned before, and not all too successfully. Health insurance is in transition, and I believe the advent of consumer exchanges will change it substantially, but slowly. I continue to look for a rule breakerish play that is consumer focused via the state exchanges. I therefore liked that Wellpoint hired a new CEO with consumer facing experience, though the market saw his lack of insurance experience as a negative. Whether Wellpoint is right or not may not be known for years (5?), but the move and dip warranted my again taking a position. We are closer to the mandated expansion of the insurance roles, so that tailwind should also prove beneficial. Wellpoint has been bleeding core enrollment for a time now, I do hope to see it turn in the coming years.
The Helical ‘all healthcare’ Portfolio is now 2.25 years old. It ended April 2013 at $79,881.72. Cash on 4/30 was 24.6% of the portfolio at $19,674.17, and includes a $5000 addition may on April 15. The added cash aids the portfolio CAGR which is, and +22.1% since iintroduction 0n 12/31/2010 on 12/31/2011 The IRR of the portfolio over that past 2.25 years is a respectable +14.7%. This has been over a time where the market too has enjoyed substantial gains.