Last week was not particularly eventful neither for equities as whole nor for luxury stocks specifically. The only remarkable piece of news recorded was once again to be found within the US market where the S&P 500 managed to close for the first time above the 3000 threshold.
Overall US stocks closed slightly positive while on the other hand their European counterparts declined slightly for the week. Overall performances were fairly muted among luxury stocks, as you can see the YTD hierarchy in our basket stayed all but unchanged. Obviously no trend keep going indefinitely without weeks marked by profit taking and higher volatility, all in all though once again luxury stocks scored better performances than the general market. Many, although not all, of the weaker names were once again beneficiaries of a positive rotation.
The current phase is indeed one marked by a decreasing dispersion of returns, a process helped also by valuations that are not exactly compelling. It is nonetheless quite encouraging investors feel ebullient enough to venture into what was until not long go uncharted territory. When it comes to what we call the core of our portfolio, a cluster of names where some of the largest and most exclusive luxury companies can be found, the ongoing developments could be correctly classified as a transitional time. Or in sell-side financial institutions lingo such luxury companies are now a hold.
By that we mean it is probably still too early to liquidate positions as they’re not overtly in bubble territory, at the same time it is quite likely preferable not to initiate new ones in this niche. We are also going through a phase of low volatility, that would offer the chance to partially hedge our portfolio by acquiring additional exposure to financial products that are long vol.
|Estee Lauder||43.59%||New York||up|
|Ralph Lauren||8.70%||New York||up|
|Capri/Michael Kors||-3.82%||New York||up|