US investment portfolio recorded strong growth during period

Having incurred a loss of $121 million for the first quarter of 2020, Investment outfit QWI has turned the tables recording strong profits for the first quarter of 2021, which ended on December 30, 2020.

For the period under review, QWI reported pre-tax profit of $116 million while at the same time increasing its net asset value per share by  6.5 per cent, moving from $1.08 at September 30, 2020 to $1.15 at December 31, 2020. During the last quarter, QWI took advantage of the favourable conditions in the American market, realising gains of $34.5 million.

In its just released latest quarterly results, the American investment portfolio produced an additional $33 million of unrealised gains while the Jamaican portfolio produced $64 million of unrealised gains. The total investment gain for the quarter was $132 million, which represents a $224 million swing from the $92 million of net unrealised losses in the year ago period.

The performance of the company’s American investment portfolio was a notable strength in the just ended quarter and produced a total return in US$ of 22.1 per cent, which was far better than the movements in either the S&P 500 or the MSCI World Index, which are QWI’s main benchmark.

QWI experienced unrealised exchange losses during the quarter under review of almost $11 million versus $21 million a year ago. Administration costs experienced little change at almost $11 million.

During the quarter, QWI, which is chaired by noted financial analyst, John Jackson, recognised a deferred tax charge of $22.5 million versus a deferred tax credit of $27.7 million a year ago. As such, the company ended the quarter with equity capital of $1.56 billion, up from $1.47 billion at the end of September 2020, as a result of the unrealised and realised gains reported during the quarter.

Strong equity positions in US and T&T

At the end of the December quarter, QWI held in excess of US$3 million in equities listed in the US and Trinidad and Tobago, including positions in several leading information technology and drug companies, retailers, defense contractors and payment processors. QWI’s total investments in local and overseas stocks amounted to $1.78 billion at the end of the quarter, of which 73.1 per cent of the investment portfolio is in stocks listed on the Jamaican market.

The vast majority of the balance is invested in the US market.

Jackson and director John Mahfood reported that, during the quarter, “the company continued to utilise a limited amount of borrowed funds in its investment activities. At the end of the period, borrowings amounted to $224 million compared with $195 million in September 2020.”

The company’s 10 largest Jamaica Stock Exchange listed holdings represent 71 per cent of  its local quoted investments. Shares are held in Access Financial Services, GraceKennedy, General Accident Insurance, Mail Pac Group, JMMB Group, Seprod, Scotia Group Jamaica, NCB Financial Group, Jamaican Teas, and Caribbean Cement Company. The company’s 10 largest US listed holdings represent 41 per cent of overseas quoted investments.

In addition, QWI continues to hold other US listed securities for short-term trading purposes. The directors report that, subsequent to year end, stock markets have, in general, shown favourable trends.

“In Jamaica, the continued re-opening of the tourism sector is encouraging, where the market is already seeing a number of companies reporting good results and raising additional share capital,” they reported.

“Over the long term, the prices of many securities will be heavily influenced by the continuing economic impact of COVID-19, and the ability of countries to recover from the current disruption to business.”