Portfolio Performance Overview
The Consumer Brands Portfolio returned a mixed performance this week, with standout gains in Coty (+19.8%) and Acushnet (+9.1%), while Swatch (-2.7%) and Hugo Boss (-1.2%) dragged. The portfolio remains focused on global consumer compounders with strong brand moats.
Key Moves: Closing Coty and Swatch
Coty (COTY): We are closing Coty after a rapid 19.8% rally. The stock now trades at over 30x forward earnings, well above its historical average. With slowing revenue growth in mass beauty and rising competition, we believe the risk/reward is unfavorable.
Swatch (SWGAY): Swatch continues to face headwinds from weak Chinese demand and a strong Swiss franc. The stock is down 2.7% and recent earnings missed estimates. We see better opportunities in other luxury names like Hermès and LVMH.
Top Performers
- Coty (COTY): +19.8% – Driven by strong fragrance sales and margin expansion.
- Acushnet (GOLF): +9.1% – Benefiting from strong golf equipment demand.
- Shiseido (SSDOY): +4.9% – Supported by recovery in Japanese tourism.
- EssilorLuxottica (ESLOY): +4.6% – Steady eyewear demand.
Underperformers
- Swatch (SWGAY): -2.7% – Weak China demand and currency headwinds.
- Hugo Boss (BOSSY): -1.2% – Slowing luxury spending in Europe.
- Church & Dwight (CHD): -1.0% – Temporary weakness in consumer staples.
Portfolio Positioning
The portfolio remains diversified across 30+ holdings, with exposure to beverages, apparel, luxury goods, and personal care. We maintain a long-term focus on compounders with pricing power and global reach.
What to Watch
- Q2 earnings reports from PepsiCo, LVMH, and Estée Lauder.
- Consumer spending data in the US and China.
- Currency movements, especially EUR/USD and CHF/USD.
Risk Disclaimer: This is not investment advice. Past performance is not indicative of future results. All investments carry risk, including loss of principal. Consult a financial advisor before making investment decisions.