Open House!

Upcoming open house dates:

January 7, 2012 (Saturday) from 2:00 – 3:30

January 15, 2012 (Sunday) from 2:00 – 3:30

January 25, 2012 (Sunday) from 2:00 – 3:30

In August the portfolio underperformed he MSCI North American benchmark, declining by 5.4% on a gross basis (and 5.42% on a net basis) while the benchmark declined by 4.3%. The year to date and longer term returns are now mixed vs. the two benchmarks and we are in the process of transitioning the long term reporting. The underperformance to the portfolio’s benchmarks was due mostly to sector allocation but both geographical allocation and stock selection were negative as well. On a geographic basis, both the U.S. and Canada had negative attribution. On a sector basis all except financials contributed negatively to performance. Although Materials was the only sector to post positive returns in the benchmark, the sector had the most negative attribution as our only holding in that sector posted a small negative return, but negative nonetheless. Industrials had the second worst contribution to performance with concern about a slowing economy taking down all of our stocks but hitting Hertz Global the most. As we mentioned last month Hertz, which declined vs a gain of 24% last month, illustrates the extremes of volatility that the market is exhibiting as it alternates between fears and hopes about the near term economic outlook. Health Care also had negative attribution, with a mixed showing by the stocks. While Community Health Systems took a hit because of concern about hospital admissions, Human Genome rose because they received priority review from the FDA for their lupus drug. Telecom was another sector which was positive for the benchmark but where our only holding posted slight negative returns thus causing a negative attribution. In spite of absolute negative returns, and a negative sector allocation, Financials was the one sector that posted a positive attribution due mostly to positive returns by CIT, Ameriprise and Annally. The other four sectors, Information Technology, Consumer Staples, Energy and Consumer Discretionary, all posted slightly negative attribution.