Model Performance Updates May-2026
The Australian Model 20 had a great month. The Global models were up modestly but were behind their benchmarks due to a wild surge in AI infrastructure and semiconductor stocks.
This month our performance updates will be brief, as no new changes are planned to any of the model strategies. Our last rebalance was effective 31-Mar-2026 across all strategies. We reprise that update here, to keep folks informed, and give month to date performance for all four strategies.
Australian 20 Stock Model Portfolio
USA 20 Stock Model Portfolio
International (non-USA) 20 Stock Model Portfolio
Global Best Ideas 25 Stock Model Portfolio
This omnibus report aims to be more succinct.
Australian 20 Stock Model Portfolio
The month of May-2026 just ended was one of best, with the mode portfolio surging by 2.88% in a good month for the benchmark S&P/ASX 200 which was up 1.15%. The positive alpha of 1.73% was a welcome return to form after two negative months.
The relative performance was driven by our sector bets. We are heavily underweight the banks and overweight resources. This paid off with the interest rate climate and the Budget 2026 tax change to housing weighing on the financials.
The pattern of stock contributions was skewed to resources up and financials down, but Woodside Energy took a breather and Lend Lease is running into heavy selling from the tax loss harvesting behavior that is commonplace in June.
The current portfolio is fairly balanced, although the move in BHP Group XASX: BHP has taken it above 10% of portfolio. The benchmark is 11.92%! Normally I only hold stocks at an overweight, but we hold Rio Tinto XASX: RIO at 1.81% overweight.
I am okay with letting this portfolio run for now. The only problem stock is property group Lend Lease XASX: LLC, which the market hates right now. If we wanted to sell this month is not good, due to heavy tax loss selling. I will do a deep dive over the next few weeks and look to exit in the post-tax-year-end bounce or add to it.
Just be alert that this time of year sees a lot of losing stocks get dumped.
In Australia, June of every year is the best time to get set in value turnarounds.
However, it never pays to try and catch a falling knife. What I do is spend some time making up my mind if I should shoot the lame, the wounded and the terminal.
These are stocks. They are not your children.
You can let go when you need to!
USA 20 Stock Model Portfolio
The 31-May-2026 performance of the USA 20 Stock Model was flat at +0.02%, while the S&P 500 raced ahead at +5.26%. Objectively, it was a bad month for us with the single month negative alpha print of -5.24%. When things like that happen, I worry, but what a look at carefully, is the spread of winners versus losers.
You can see that the market was clearly chasing some other dog, not our pooches. Here is the one-month performance of computer maker Dell XNYSE: DELL.
Memory maker Micron XNAS: MU, also surged over 100% on the month.
I will not tell a lie. If you had done something other than own the stocks we picked for the month of May-2026 you would have done a lot better than stay flat.
This happened across global markets, especially in the USA and in the cyclical heavy Asian markets like South Korea. Is it a bubble? Time will tell. If not now, soon.
The one good thing we did was to pick Moog XNYS: MOG.A.
It was up 20%, which is only 80% behind the high flyers.
No excuses, it was a month for trading, and these models don’t do that. The current model portfolio is shown below. Our long-term bets in technology remain Alphabet XNAS: GOOG, Microsoft XNAS: MSFT and Nvidia XNAS: NVDA. These are boring.
In my defense, I will say that we have salted away a few sidebets on the infrastructure associated with the data center capex rush. Amphenol XNYS: APH is a high-quality manufacture of Radio Frequency (RF) and optical connectors.
NextEra Energy XNYS: NEE is a well-diversified US Electricity Utility operating in Florida and other key West Coast markets. They do both nuclear power and renewables.
Quanta Services XNYS: PWR does power related infrastructure build.
The sleeper we added at the end of March was Boeing XNYS: BA.
I have little much to add, other than to flag the need to do a trading survey of market action. I was active in the 1995 to 2002 tech boom and bust. Like old times again!
International (non-USA) 20 Stock Model Portfolio
The 31-May-2026 performance of the International 20 Stock Model was much better at 3.63%, only 0.95% behind the FTSE Global All Cap Index at +4.58%. The reason for the difference was our bets on Lithium-Ion Batteries via CATL, and copper, through holdings in BHP Group XASX: BHP and Sumitomo XTSE: 8053.T, in Japan.
Few Australian investors track Japanese or Hong Kong listed stocks for exposure to the key minerals used in EV and electronics supply chains. That is a mistake.
I do not propose any changes this month. The stocks to watch are underperformers, like BYD XHKG: 1211.HK, Petrobras XNYSE: PBR and Swiss Re XSWX: SREN.SW. When markets run hot, in a narrow sense, other areas lag. Our position sizing in these is modest to small, and so we are unlikely to get too badly hurt.
Rather than switch names in and out, I like to have some names ready to accept top up capital when we decide to take profits in those names that have run hard.
Global markets are trading narrowly around perceived AI winners right now. I do like a punt, but this is not a punting strategy. We will take our punt on raising the laggards. Now is not the appropriate time, as the market looks set to get crazier.
Global Best Ideas 25 Stock Model Portfolio
The 31-May-2026 performance of the Global 25 Stock Model was predictably in the middle of the US 20 and International 20. The model was up 2.86% in USD, but the FTSE Global All Cap Index was up +4.58%, so we lagged by 1.71%. Ordinarily, the return of 2.86% would be a good month. Welcome to manic times!
There are no changes mooted for this month.
The takeaway message for this month is that there is wild trading action taking place in the heartland of the AI technology theme. We are happy that we have holdings in core names. For completeness, I will do a survey of trading action.
In market conditions like this, I like to observe trading action closely and think about what is being left behind to fund the FOMO positions. With SpaceX and Anthropic floats coming up, there will be some manic selling to fund speculative bets.
Do not expect our models to do well over the next month or so.
However, do be alert to what the market is selling to put it all on black.
We do not know if this is a bubble, but it is starting to act like one.
There is fast money to be made, but there are also quality stocks being sold. This is the place I am inclined to do the most research, as it is likely to be more reliable.
Conclusion
There is a lot that happened last month, and I will be working this coming week on making sure we have something sensible to say about it. I think the furor over CGT and negative gearing changes is understandable, but I think the moves will likely be positive overall. However, it will take time to sort out. I will write on that next.
On the trading side, there is fast money to be made for those who punt.
I will dissect some of the global price action to better surface themes.
You know they are AI related, but there is nuance.
Until then, happy investing!