Hawking Portfolio Review: 1 November, 2024

“Punting” down the River Cam, St. John’s College, Cambridge, England

It has been three months since I last reviewed the Hawking Portfolio and it has continued to churn out over $1,000 per month in dividends/distributions. The portfolio is essentially a Buy-and-Hold portfolio, although some actions might be taken that could benefit the performance of the portfolio (see below for an example).

Current holdings in the portfolio look like this:

with no new additions/adjustments since the last review. As can be seen from the above screenshot the estimated distribution yield from this portfolio is ~12%.

Performance to date looks like this:

with the portfolio outperforming the benchmark AOR Fund by ~$12,000 over the (almost) 4 years since inception. Total returns (including the 2022 downturn) are running at ~31% (average 8% annual) since inception compared with less than 20% for the AOR benchmark. This year, to date, has been particularly strong with the portfolio generating ~20% returns.

Because I have been a little pre-occupied with other things over the past few months the portfolio is currently holding almost $5,000 in Cash from the monthly distribution payments. In order to generate geometric growth I need to re-invest this Cash (since I do not need to withdraw money at this time) and I shall do this once the elections are over.

I mentioned above that little action is required with these “Income” portfolios – however, there was an action that I missed in September when Advent Convertible & Income Fund (AVK) made a “Rights” offering to sell new shares at less than the Net Asset Value (NAV) of the Fund. This is not uncommon in the Closed-End-Fund markets as Funds try to raise more Cash with which to invest, and often (usually) results in a drop in the market price of the shares (due to an anticipated dilution in share value). This is exactly what happened to AVK:

where share price has dropped from about $12.20 in September to the current level of ~$11.20. The final subscription price for new shares was $11.28 (90% of NAV at expiration of the Rights offering). What I should have done was to sell my share holding in AVK in September and then been ready to use those proceeds to buy more shares (at the lower price of $11.20) now that the offer has expired. I missed the notification on this one so I lost an opportunity to add alpha – but the fund still pays an annual distribution of 12.6% so it still isn’t disasterous and stays in my portolio in expectation of a price recovery going forward now that the dilution has been taken.