IRON Incertus Portfolio

We liquidated our positions in Alibaba Group (Ticker: BABA) and iShares MSCI Global Metals & Mining Producers ETF (Ticker: PICK). The liquidation proceeds increased cash to 2.58% of the portfolio. 

Alibaba Group (BABA)

We liquidated our position in Alibaba Group (BABA) due to mounting delisting pressures. Recent actions by both the Chinese and United States governments signal that the company might be delisted from the US exchanges. China prohibits foreign direct investments in what it deems “strategic” tech companies. To avoid such restrictions, Chinese firms use the variable interest entity structure (VIE), which helps them to raise capital and indirectly gain admission to the US capital markets. However, the Chinese government has shown preference towards securities being listed on the Hong Kong exchange.

Further, the US government is also pushing for Chinese companies to meet US reporting requirements and could force firms using the VIE structure to be delisted from domestic exchanges, unless such requirements are met. While in the past, the possibility of such an event happening has been extremely low, the increased hostilities between China and the US signal that the tides may be turning. We will continue to monitor the regulatory situation as our fundamental view on the company itself remains bullish.

iShares MSCI Global Metals & Mining Producers ETF (PICK)

We also liquidated our position in iShares MSCI Global Metals & Mining Producers ETF (PICK). This trade was executed for the same reason as the recently liquidated position, SPDR® S&P Metals and Mining ETF (Ticker: XME).

Jerome Powell and the Federal Reserve recently admitted that inflation might not be transitory, which could pave the way for rate hikes. This comes at a precarious time, as the new Covid-19 variant and a recent spike in cases are pushing some countries back towards lockdowns. Further, there are some signs of economic slowdown. PICK was one of the more economically sensitive positions in the portfolio, so this trade also takes some risk off the table. 

As always, please don't hesitate to reach out with any questions. 

Your IRON Financial Contact
Howard Nixon, CEO & Co-Founder | 847-721-4766

This material is not intended to be relied upon as a forecast, research, or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of this email and may change without notice. The information and opinions are derived from proprietary and non-proprietary sources deemed by IRON Financial to be reliable, are not necessarily all-inclusive, and their accuracy is not guaranteed. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions is accepted by IRON Financial, its officers, employees, or agents. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader.
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