A spotlight on Courtiers’ private client performance

Shorting gold and playing seagull options have been profitable calls for Gary Reynolds, director & chief investment officer of Courtiers.

Positioning

Seagull options provided a boost to Courtiers Balanced Strategy Delta Adjusted portfolio last autumn, with a particularly stellar call paying off for Reynolds in December.

‘The real star trade in that regard was one in December, where we shorted the S&P at 1,320, longed a 1,080 put and shorted a 960 put. We got paid a premium of $4.50 per position and then we sold it off at $21.70 per position – a total return of $26.20 per position with no upfront cost,’ he said.

Reynolds also found zero dividend performance shares were a ‘good place to be over the last year’, and he has been increasing exposure to the US large cap sector by buying futures on the S&P 500.

Performance

Running counter to market sentiment over the last year, Reynolds had another ‘star trade’ in the call to short gold.

‘We made a really good amount with shorting gold in October. That was a star trade, if you like. We paid $2.80 for puts on gold at $1,200 and sold them for $12.20, a 335% profit.

‘Gold started to fall about and come tumbling back down when everybody became concerned about volatility,’ he said. ‘Volatility shot up and high volatility affects option prices so that was a good trade.’

Going long Latin America ‘wasn’t so nice’ for Reynolds, while having sell puts on the FTSE was also tricky.

‘We have sell puts on the FTSE and then we ran into August. We had to work hard to unravel those positions. We got out without getting killed on it.’

Outlook

Structured notes – while a tricky proposition to handle – may well be on Reynolds’ hit list this year.

‘There are good opportunities in structured notes markets but you have to do your homework,’ he said. ‘Some of the collateral is with building societies’ short-term bonds.

‘You need to analyse it very carefully but if you do that and you turn a few stones, you do find some gems.’

In keeping with the adage that what you avoid is often as good as what you play, Reynolds will not be going buying sovereign bonds, and will remain cautious about Europe.

‘If Greece exits the euro in a messy fashion it’s going to have an effect on eurozone banks. It will hit the UK banks too, but no way as much as it will affect the French and German banks.’