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all in all what we experienced has been a
most volatile quarter. Our portfolios have
reflected this and although we have
performed much better than the markets,
bringing home plus sided figures, we still
have felt the squeeze. However, we
reverted to cash on a good proportion of
the portfolios back in April taking the cash
ratio to 20%. This gave us a more conser-
vative stance overall. One of the assets
we dropped out of was B.P, where we
sold out our positions whilst still 8%
positive in this stock. During this last
quarter we have seen the market take us
to our pre-determined stop losses. Of
course it was disappointing to see the
market do this, but we also have a strat-
egy and a disciplines to maintain.
continued on page 3.
Outlook
On an Economic stance, we have seen Q2
which has been influenced by new uncer-
tainty regarding the future as the budget
deficit in Greece, Spain and Portugal
which has put the equity market into a
tail spin and a flight to safety. Leading EU
governments have now put the pressure
on all the other EU countries to get their
houses in order. This will for some coun-
tries mean hard time to come – but it will
benefit the euro zone in the future.
We have experienced very mixed signals
from the key figures front, which shows
that growth is slowing down, but still
moving forward. We do not believe in
double dip, as the global recovery is
shown to be broad based from the
emerging market , US and through into
Europe. The key figures have recently
shown that consumption, speed in gen-
eral of the global economy, have slowed
down. A part of this can be explained by
the stimulation packet from 2008/09
which is now ending, meaning that there
will be impact in the shorter term. Sover-
eign deficits and Chinese growth have
also contributed to risk aversion creeping
back over these last several months and
making this an area to be very aware of.
So for Q3? We believe it will shift from
global economy to the company earnings
which will be coming in mid July. We also
can see that soon there may be a shift
from the focus on Europe, crossing the
Atlantic and addressing some of the US
deficit problems. Once again an area we
will be keeping a close eye on. Although
we talk about risk aversion in the mar-
kets, we also see the equity market as
showing good value at present levels and
some of the bad news seems to be priced
in. So therefore our main objective for Q3
will looking for value, looking for the
downside risk and watching the unravel-
ling deficit debacle.
Strategy
Q2 We have seen the stock market in
general trading down with between 6% to
12% year to date, caused by the Euro
zone sovereign debt issues. Standing
alongside these issues we have seen the
Euro falling to an 8 year low against the
JPY and 5 years low against the USD. So
Special points of interest:
Europe starts the summer season in a
bit of a “Haze”
AlphaCapita looks at the U.K
An insight to what makes AlphaCapita
stand out amongst its piers
Europe starts the summer season in a bit of a “Haze”
Inside this issue:
VODAFONE 2
MODERN ASSET SECURITY 2
B.P DROPPED 3
STRATEGY CONTINUED 3
WHY ALPHACAPITA? 4
JULY 2010 NEWS LETTER
“Spain and Portugal feeling the heat this
summer”
Vodafone Group Plc is the world's leading
mobile telecommunications company,
with a significant presence in Europe, the
Middle East, Africa, Asia Pacific and the
United States through the Company's
subsidiary undertakings, joint ventures,
associated undertakings and investments.
The Group's mobile subsidiaries operate
under the brand name 'Vodafone'. In the
United States the Group's associated
undertaking operates as Verizon Wire-
less. During the last few years, Vodafone
Group has entered into arrangements
with network operators in countries
where the Group does not hold an equity
stake. Under the terms of these Partner
Market Agreements, the Group and its
partner operators co-operate in the
development and marketing of global
products and services, with varying levels
of brand association.
At 31 March 2010, based on the regis-
tered customers of mobile telecommuni-
cations ventures in which it had owner-
ship interests at that date, the Group had
341 million customers, excluding paging
customers, calculated on a proportionate
basis in accordance with the Company's
percentage interest in these ventures.
The Company had a total market capitali-
sation of approximately £71.2 billion at
12 November 2009.
· Establisded in 1982
· Revenue £44,472 million
(March 2010)
· Market Cap approximatly
£88.0 billion
· Employees approximatly
85,000
The idea was to protect our clients funds
at a "multi-level". We identified the areas
When we created AlphaCapita we
worked hard on listening. Listening to
what our clients where
saying. One of the things
that we heard a lot was
security of assets.
We looked at this long and
hard and came up with the
idea of segregated account
management. Not "rocket
science" we hear you say,
but why then do we hear
about this issue time and
time again? maybe it's
because other asset man-
agers are not doing it?
of risk for the clients. Firstly there was
Brokerage risk, the risk of the trading
platform. Secondly the risk of Alpha-
Capita as a business. We set about ad-
dressing these two risk areas by:
Firstly, making sure that our brokerage
held all Accounts in the "Clients name"
not pooled accounts.
Secondly we looked at the business risk
of AlphaCapita. We look to manage our
clients funds, we do not want to have
clients cash or assets under our name.
Meaning that we have the right to make
investment decisions on behalf our
clients under our discretionary man-
date. However, we have no ability to
transfer or remove funds.
Modern Asset Security
financial year, as economic recovery
should benefit our key markets.”
Vittorio Colao, CEO
“Vodafone’s financial results exceeded
our upgraded guidance on all measures.
Revenue trends have improved again in
Q4 driven by growth in mobile data and
fixed broadband. Cost reduction targets
were delivered ahead of schedule ena-
bling commercial reinvestment to im-
prove market share and further
strengthen our technology platforms.
Free cash flow of £7.2 billion and confi-
dence in Vodafone’s prospects have
enabled us to increase dividends by 7%
and to target 7% per annum growth in
total dividends per share for the next
three years. We are creating a stronger
Vodafone, which is positioned to return
to revenue growth during the 2011
VODAFONE
Page 2
“AlphaCapita
(Switzerland) SA buys
into Vodaphone to
secure the allocation
within the tele-
communications sector”
“Chart shows Vodaphone 2007 to
present”
“Not "rocket science"
we hear you say, but
why then do we hear
about this issue time
and time again? ”
We all watched as the B.P disaster
revealed itself in the Gulf of Mex-
ico. B.P has been a house hold
name, not just to our portfolio, but
pretty much every fund manager
across the planet. It is probably the
most held private stock in a retail
portfolio in the U.K. so what a
shocker to see the news literally
poor out. AlphaCapita has a "buy
and hold" strategy, however we
always have a get out of jail card
for abnormal market scenarios. We
classified B.P as one such scenario
back when the news was out and
after assessing the short term
damage report.
We made the decision to drop B.P
if we got to a 8% net positive of the
stock. In reality that figure was
reached very quickly and we took
our 8% and sidelined to cash on
this allocation. The price was at the
time "510" and as this is written is
at "323". It is our fundamental
belief at AlphaCapita to protect our
clients money whenever we can
and this was certainly one of those
situations.
On the upside we took home the 8% profit, but we also liked the short term opportunities and therefore went long the stock utilising CFD's to trade the
upside from 309 with a reasonable stop and take profit orders catalogued.
B.P “dropped” by AlphaCapita
Page 3
“B.P dropped but
with 8% profit
and short term
upside
opportunities
taken into
consideration”
Strategy—continued from page 1.
We have kept our focus on well driven
companies with a high exposure to
emerging markets and high dividend. We
have used a part of the cash to re-enter
the market, Vodafone for example where
we bought in at a discounted price.
AlphaCapita is working hard to utilise
these market conditions, not only to buy
in high quality stocks at a right prices, but
to find opportunities to smooth the yield
curve by hedging our down side risk. We
are continually looking at the short term
risk management as well as the long term
goals.
In regards to currencies, we re-opened a
long EURJPY position, we believe a rever-
sal and a correction in the near future off
the back of the 8 year low levels as we
have mentioned before. We recognise
why the EUR has fallen in recent times,
but we must look at the two currencies with
open eyes, the EUR was designed to
strengthen and the JPY was designed to
weaken. Sometimes, as experience has
shown us, following the crowd can be a bad
thing. We do take a long term view on this
position.
On the bond site we have added more to our
position on short term variable bonds, and
taken home good profit on some of our
corporate and short term mortgage bond
portfolio as part of our laddering strategy. A
part of this revenue we reinvested and
bought new corporate bonds with a high
yield to boost the average yield. on the bond
portfolio.
“Chart showing the EURJPY
from 2000 to present”
from the opening assets under manage-
ment for the year. Why? Because then
the client knows exactly, what he or she
is going to have to pay for their money
under management for that twelve
month period. Also, AlphaCapita is not
having just to make the bottom line by
trading, meaning that trades are only
made when they are of use to our clients
portfolio. Also we believe in liquidity. If
we need to realise any part of a portfolio,
we want to be able to do it for our clients
on any business day without penalties
attached. How refreshing?
Security of Assets
When we started we listened to what
our clients wishes were. One of the
biggest in this market was “security of
funds” We answered these questions by
segregated accounts. Please see article
on page 2 “Modern asset security”
Can you remember when wealth manage-
ment was a personal and rewarding
experience? These days banking has
changed dramatically, it's all about the
bottom line and hard sales. It's about the
bank and not so much the client. In the
last few years banks and large financial
organisation have been under a lot of
pressure to keep their business viable.
Turnover and volume are words that are
synonymous in these institutions, which
in our minds has lead to increasing cost
and ever decreasing service to the clients.
AlphaCapita wants to revert to the old
times when a wealth management client
was a V.I.P and treated in a manner that
reflects this. it's not about volume to us,
it's about good old fashioned service.
Striving to get the best for our clients and
to protect and make his or her assets
grow in a stable and reliable way. Alpha-
Capita was built round understanding this
fundamental problem in banking.
Commissions or management
fee?
In regards to this
matter, we reckon, it’s
a “no brainer”. If your
bank or wealth man-
ager is charging com-
missions only, why
then are you indeed
surprised when they
phone you yet again
to recommend their
next greatest fund?
No doubt because of
this funds greatness, it
has a rather large
premium attached?
No doubt an upfront
fee? plus a yearly
management fee?
Even, dare we say it,
an early withdrawal fee?
Here at AlphaCapita, we want to make
things so transparent, so clear. We do not
believe in heavy commissions, but
prefer a management fee that is taken
Disclaimer
None of the information contained herein constitute an offer to purchase or sell a financial instrument, or to make any investments. AlphaCapita (Switzerland) SA does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability to the accuracy or completeness of the information nor for any loss arising from any investment based on a recommendation, forecast or other information supplied from any employee of AlphaCapita (Switzerland) SA, third party, or otherwise. All expressions of opinion are subject to change without notice. Any opinions made may be personal to the author and may not reflect the opinions of AlphaCapita (Switzerland) SA.
Why AlphaCapita? AlphaCapita (Switzerland) SA
Chlewigenring 4
6064 Kerns
Switzerland
Phone: +41 795 610 145
E-mail: [email protected]
web : www.alphacapita.com
AlphaCapita (Switzerland) SA
Flexibility
On the matter of flexibility we find that
large financial institutions by definition
are big, but big does not necessarily make
them great. Moreover it makes them
rather rigid, like an old truck, difficult to
manoeuvre, slow and rather costly. The
flexibility of AlphaCapita makes it stand
apart from its larger competitors. We are
not tied to certain products or organisa-
tion. In fact we have the whole market to
find our clients the best deals around.
Not only that, having the flexibility to
satisfy most apetite’s, creating "tailor
made" products and solutions to our
clients request, from hedging oil exposure
to creating specific “thematic” bonds.
“AlphaCapita views on the transparency not only
allows the client to see the process, but with online
access to real time positioning and NAV, allows the
client to have a “window” into their portfolio”
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