2017 results thread

[TwoCitiesCapital]

2015: ~(20)%

2016: 24.7%

2017: 25.9%

 

The driving factor behind the performance over the last 3-years has largely been my large allocations to EM and commodity producing companies.

 

Also helping results in 2017 was FNMAJ, SAN/BSBR/BSMX relative value trades, EXO, SBRCY, and leveraged exposure to FCAU.

 

Also, while no individual name was a big contributor to the annual returns, all of the retail names I picked up in Q2/Q3 have done well. Most are up 15-50% in less than 6-months, though the bounce happened so quick that I didn't get full positions in any. Roughly 4-5% of the portfolio was spread across a basket of retail brands.

 

The big OUCH for me was selling puts on Valeant earlier in the year. It worked well for the end of 2016 and early 2017, but I chose to cover in April to limit my losses as it approached it's lows of $8/share in April....right before it bounced to 12 weeks later. The loss from the last position was enough to wipe out all prior gains AND reduce portfolio performance by 1-2%.

[giofranchi]

The equity of my company was up +16.85% in 2017.

10% from retained earnings + 6.85% from investments.

 

The EUR ended the year up +13.5% against the USD, therefore my investments have performed roughly in line with the general market.

 

This of course is irrelevant and I must acknowledge another year of poor performance.

 

In 2018 I expect the operations of my company to perform in line with 2017, while I don’t know what to expect from my investments. The market is clearly overheated, a correction of 20% or more is plausible, I don’t short, I don’t hold investments that are uncorrelated with the general market... If I had to guess, 2018 is very much shaping like another year of disappointment.

 

Cheers,

 

Gio

[Spekulatius]

My return was a paltry 7%, mostly due to a large cash position and underperformance in MLPs and pipeline and real estate stocks (WMB, KMI etc). Biggest loser was BWP and GE. Biggest winner was BRK.B (go figure)

[CorpRaider]

• B of A Warrants. I sold out within a week of the Trump election in November of 2016 opining that the temporary euphoria would wear down and I’d be able to buy back more a few weeks down the road. WRONG! That decision ended up costing me big-time. My position on the warrants was sufficiently big that if I’d have held on to half of my position, my overall would have exceeded 20%.

 

Yeah, I sold down my warrants over the course of the year selling the biggest slug, which was like 50% of my discretionary account,before this year end run up.  I planned to transition from the warrants to the common and let it ride but it took off without me and I probably missed another 50% in gains.

 

W/R/T the Crypto millionaire:  I remember back in the 90s I bought some Aspect Development, which was like B2B inventory management software.  I can't remember the specialized BS acronym Silicon Valley placed on this niche back then.  I caught like a 500% move and then it was acquired by I2 technologies which was a big "B2B" bubble stock.  I think I ended up with a 50 bagger or so.  I was in college so it was a small initial investment that grew to maybe enough to buy a house (not a beach house). Rolled all that profit into...Lucent Technologies (after a 50% drawdown, but before the remaining 99%). 

 

Sort of wish I bought the house; or rolled it into CCL or even Wachovia, which I had requested and received as gifts on my 8th and 10th (I think) birthdays respectively.  Or maybe been smart enough to buy some BRK after the first (or even the third) Buffett book that I read.

 

These public companies slapping bitcoin or blockchain in their name and getting bumps really reminds me of the .com and B2B B2C bullshit from that time.  Blockchain also kind of reminds me of TCP/IP and related technological advances that ended up reaping bupkiss economically.  Netscape and AOL were great for a while.

[rolling]

Mistakes to avoid in the future - If you've been sleep deprived for a week due to the birth of your son, don't buy anything.  As time goes on, I have a longer list of "don'ts" on my wall.   

 

Congratulations! Also, I am guilty as charged, in 2017.  :P

Thank you both for the advice. My wife asked me yesterday if I it was wise to be "investing right now" 1st kid is in his 3rd week). Since I was only selling to pay last year taxes I guess I had to do it...

 

I'll post later my discution (when I have the time). IRR (pre dividend and capital gains taxes but post all other costs) have been approximately:

2ndhalf 2011 and 2012:  20%

2013: 30%

2014: 50%

2015: less 5%

2016: 50%

2017: 160-170%

 

Since I kept adding cash until late 2017 it is hard to know exact numbers.

All stock (and a little cash at times) portfolio.

Signature says it all

2017 could have been much better if I learnt from december 2012 mistakes (which killed my 2013 results which could have been similar to 2017)

 

Edit: returns in Euro

 

[SlowAppreciation]

Up about 26%

 

Winners (outperformed S&P): AAPL, BAC, AXP, BRK.B, COST, PLOW, V

Losers (underperformed S&P): SRG, WFC, AC, SBGI

[DeepSouth]

2013: +37.9%

2014: +4.8%

2015: -12.5%

2016: +35.2%

2017: +51.0%

 

blend of taxable and tax exempt/deferred accounts: post-dividends, pretax (realized very little taxable gains)

Core GOOG, AMZN, JD, BRKB positions performed. Banks did well and were mostly realized. Coal reorgs generated strong returns very quickly and were mostly realized. Housing related book SHW, CLWY, SITE (realized) did very well. Perfect hit rate on special sits. Short vol (long vmin, long xiv, short uvxy) ripped pretty much all year. Microcap book and Cable names generated positive returns but less than market. Realized losses on two healthcare positions. Stars pretty much aligned with high beta to a great market return plus nice alpha component. Much less confident in outlook/positioning going forward and have sizable cash component after pounding the table heading into 2016/17.

[Broeb22]

22%, held 15-20% cash throughout the year.

 

Contributors: AMOT, EPAM, ALLY, TEVA, MKL

Losers: NYRT, POST

 

 

[TheAiGuy]

2017:  34.37%

2016:  12.36%

2015:  -2.71%

 

(2012-2015 was around when I started doing this for real, so my returns prior to 2015 match a typical target date fund, which is more or less how it was invested. )

 

First good year, with JD as my biggest winner, followed by AAPL, MA, V & RYCEY.

 

Losers were: Selling out of BAC too soon(!) and SBUX. LBRDA nicely kept up with the market.

 

-----

Edit: losers should ~really~ include passing on SQ in 2016. Also, I lost like, $50 on Etherium and Litecoin before deciding it was dumb.

[enoch01]

-7.5%

 

Sears and CBI competed for the biggest negative contributions.  Should have gone levered crypto!

[maverick]

Thanks to all for posting their inspirational returns.

 

Should folks be also posting a range of AUM in addition to the returns? It's easier to generate higher returns with smaller AUM and one could easily make extremely concentrated bets. However, it's harder to make those concentrated bets with larger AUM.

[rb]

I think your AUM starts to become a problem once you cross the billion dollar mark

[DanielGMask]

Thanks to all for posting their inspirational returns.

 

Should folks be also posting a range of AUM in addition to the returns? It's easier to generate higher returns with smaller AUM and one could easily make extremely concentrated bets. However, it's harder to make those concentrated bets with larger AUM.

 

I think your AUM starts to become a problem once you cross the billion dollar mark

 

I don’t think it necessary to have 1B to think different. It’s not the same to invest 1,000 than 100,000 when it’s your own hard earned money. I get the point!

[rb]

Thanks to all for posting their inspirational returns.

 

Should folks be also posting a range of AUM in addition to the returns? It's easier to generate higher returns with smaller AUM and one could easily make extremely concentrated bets. However, it's harder to make those concentrated bets with larger AUM.

 

I think your AUM starts to become a problem once you cross the billion dollar mark

 

I don’t think it necessary to have 1B to think different. It’s not the same to invest 1,000 than 100,000 when it’s your own hard earned money. I get the point!

Maybe I'm misinterpreting what you are trying to say. If I do I apologize.

 

I think that the original premise is that size restricts the investment universe. My thoughts and reply was that while a lot of people on this board are very successful, in most cases their AUM still doesn't rise to the level where it would actually restrict the investment universe.

 

I think that your premise is regarding risk aversion related to investments. From that point of view views may differ but I can give you mine. I am always more risk averse with my clients' money than I am with my own savings. If I take a flyer with my money and loose... oh well. But I loathe having to sit down with clients and explain that I lost some of their hard earned savings because I had a good feeling about something and I took a flyer. This is despite the fact that I'm authorized to do just that.

[writser]

I think your AUM starts to become a problem once you cross the billion dollar mark

 

Depends on your style I guess, but for me personally I'd have to disagree. If you look at, for example, the ideas Nonamestocks is posting, liquidity is already problematic if you want to invest $10k+. Some of his ideas are super interesting but already too illiquid for me. This is maybe an extreme example but over the past few years I have invested a lot in attractive OTC / foreign illiquid situations where it is very hard to build up a decent position at decent prices even if you are working with <$1m.

 

Also, in stocks like that there is the occasional 'odd trade' where somebody jams through the order book or when there is a relatively big seller on a given day. If you can pick up, for example, a few hundred shares of Webco industries or Conduril at or below the bid then that can significantly boost your results if you manage <$100k but it doesn't really affect the needle if you are worth >$1m.

 

Another example where a small portfolio really is an advantage is the 'odd lot' provisions in certain tender offers / mergers. A few years ago there was the Norilsk Nickel trade where you could basically make ~50% "risk free" on a notional amount of up to $20k. That is a 10% return on a $100k portfolio.

 

Thanks to all for posting their inspirational returns.

 

Even more thanks to those brave enough to post their 'less than inspirational' returns. Bragging about your results in a bull market is easy and this thread is close to becoming a giant circle-jerk :) .

[benhacker]

+1 to everything Writser just said.  At $10m I feel hamstrung a lot.  Perhaps half of that is psychology, but I've had the market run away from me on 3-4 names in the last two years after placing *starter* size orders.

 

My 2017 was +14.5%.  Too hedged, too cautious.

[racemize]

+16% on ~$6m, ~20% compounding since 2010 (although not so much the last 4 years).  Sold a few things too early, plus took some hits on the hurricanes (fair amount of insurance).  Getting increasingly cautious and safe on ideas.

[kh812000]

+51.5% for yr.  Missed the crypto craze except for the tiny bit of free BTC I got from Coinbase in 2014 now worth $90....

 

Biggest winners:  DXC, JD, RDWR, HPE. WYNN, FCAU

Biggest losers:    BH 

 

 

 

[SharperDingaan]

AUM.

 

There are very real differences between retail/institutional behaviour, and retail that does/does not use a financial adviser. It's also useful to think of a pyramid, where height is a function of financial sophistication, and width is a proxy for % of population 'universe'.

 

For most people the $ invested in savings (equity) competes against a $ invested in either debt repayment, or living costs. Initially we borrow/invest simultaneously, in the hope that our investment upon disposition will have earned more than the total interest paid on the debt. We borrow to go to university to get a 'sheepskin' and a job that pays enough for us to retire our debt. We borrow to buy a house to live in, that we pay off over a 25 year amortization. Per Clason's The Richest Man In Babylon; after-tax cash flow should be allocated to 10% investment, 20% debt repayment, and 70% cost of living.

 

It's pretty hard to justify continued participation in an investment, when the unrealized gain is larger than your mortgage. You could sell tomorrow, pay off that mortgage, and reinvest the net proceeds in a zero risk T-Bill - BOTH earning interest AND saving on the mortgage payment every month. The solution is either 1) a bigger house, & a bigger mortgage (the unrealized gain isn't big enough yet - so stay invested), or 2) reduce the AUM that were available to make the investment (you've ALREADY taken $ off the table to repay your debts). The difference is risk management.

 

Bankers will typically lend up to 3x after-tax income when buying a house. If you've already paid off your debt, this suggests that an equity should start to be sold off when its value exceeds 3x after tax income. Ignoring tax, and simplifying; if portfolio income is 100K/yr, XYZ equity should start selling off when the value of the position exceeds $300K - with the proceeds going to T-Bills. The portfolio continues to grow over time, but T-Bills make up a larger & larger portion of it - reducing portfolio return.

 

The easiest way to raise portfolio return is to remove the T-Bills, & spend the proceeds on something else (new businesses, real estate, etc). Simplifying it means a portfolio has an optimal size, and its biased towards the smaller end. When it's getting too big, you need to return capital.

 

Same as you read in the textbooks.

 

SD

 

 

 

[John Hjorth]

Somehow - finally - I've managed to get somewhere near the CoBF median - with about 13 percent pre tax [all nitpicking still not completed].

 

Largest positions during the year - here year end positions:

 

Berkshire Hathaway B [bRK.B] [ size ~22 percent, up 22 percent over the year in local currency - bought some during the year]

Cash [All in DKK, size 17 percent]

Novo Nordisk A/S B [here, the Danish stock NOVO B.CPH, else US ADR NVO][ size ~ 12 percent, up 29 percent in local currency]

Banco Santander SA [uS ADR] [sAN] [ size ~ 6 percent, up ~23 percent over the year  in local currency]

Schouw & Co. A/S [sCHO.CPH][ size ~5 percent, up ~12 percent in local currency - bought some during the year, not much].

- - - o 0 o - - -

Like other European CoBF members, I've been hit by currency headwinds on the EUR/USD relation, mentioned by kab60 and other fellow board members earlier in this topic to be about 12 percent.

Still my best year ever. The tides have been going in, though.

- - - o 0 o - - -

Congratulations to fellow board members on some awesome 2017 results!

[benchmark]

AUM.

 

There are very real differences between retail/institutional behaviour, and retail that does/does not use a financial adviser. It's also useful to think of a pyramid, where height is a function of financial sophistication, and width is a proxy for % of population 'universe'.

 

For most people the $ invested in savings (equity) competes against a $ invested in either debt repayment, or living costs. Initially we borrow/invest simultaneously, in the hope that our investment upon disposition will have earned more than the total interest paid on the debt. We borrow to go to university to get a 'sheepskin' and a job that pays enough for us to retire our debt. We borrow to buy a house to live in, that we pay off over a 25 year amortization. Per Clason's The Richest Man In Babylon; after-tax cash flow should be allocated to 10% investment, 20% debt repayment, and 70% cost of living.

 

It's pretty hard to justify continued participation in an investment, when the unrealized gain is larger than your mortgage. You could sell tomorrow, pay off that mortgage, and reinvest the net proceeds in a zero risk T-Bill - BOTH earning interest AND saving on the mortgage payment every month. The solution is either 1) a bigger house, & a bigger mortgage (the unrealized gain isn't big enough yet - so stay invested), or 2) reduce the AUM that were available to make the investment (you've ALREADY taken $ off the table to repay you debts). The difference is risk management.

 

Bankers will typically lend up to 3x after-tax income when buying a house. If you've already paid off your debt, this suggests that an equity should start to be sold off when its value exceeds 3x after tax income. Ignoring tax, and simplifying; if portfolio income is 100K/yr, XYZ equity should start selling off when the value of the position exceeds $300K - with the proceeds going to T-Bills. The portfolio continues to grow over time, but T-Bills make up a larger & larger portion of it - reducing portfolio return.

 

The easiest way to raise portfolio return is to remove the T-Bills, & spend the proceeds on something else (new businesses, real estate, etc). Simplifying it means a portfolio has an optimal size, and its biased towards the smaller end. When it's getting too big, you need to return capital.

 

Same as you read in the textbooks.

 

SD

 

Interesting view. I have never thought it this way -- figuring that with a 3% mortgage, I can get better returns in the market and avoid the tax penalty. Is that not the right way to think about this?

[rb]

Interesting view. I have never thought it this way -- figuring that with a 3% mortgage, I can get better returns in the market and avoid the tax penalty. Is that not the right way to think about this?

I think it depends on what the goals are.

 

SD's view is not bad. But the goal there is to have balance. Work, save, invest, not too much risk even if it degrades performance, use expenditures to maximize life experiences and comfort. It's really not a bad way to go about it. However if you want to try to maximize long term wealth your way is better.

 

There can be other goals besides wealth maximization. Such as leaving a chunk to your children so they don't have to start from zero like you did. This may involve some financial engineering. It may involve reduced consumption and forgoing some life comforts - like having a bigger house - that you may afford. Or a combination of both.

 

A lot of people on the board are very focused on beating the index and that's a worthy and legitimate goal for investment managers. But in real life that doesn't matter all that much. In real life in a successful investment strategy is one that meets the goals it was setup to achieve.

[Dynamic]

A lot of people on the board are very focused on beating the index and that's a worthy and legitimate goal for investment managers. But in real life that doesn't matter all that much. In real life in a successful investment strategy is one that meets the goals it was setup to achieve.

 

I agree that meeting the goals is important, but measuring whether in the long run you can outperform a strategy of putting 100% of new cash added immediately into cheap passive indexing, either in absolute returns or in some long term risk adjusted measure (over a whole economic cycle), is a helpful sanity check for whether or not you're right to be an active investor.

 

You can feel great about your investment returns like me in the last couple of years thinking you're way ahead then find that after accounting for new cash added and currency windfalls you only beat the S&P500 Total Return Index by a few percent each year, far less outperformance then you'd have guessed from how well each decision turned out.

 

I suspect it has a lot to do with riding BRK down to $124 in my case before going in even heavier at the market low, and seeing the whole market rise alongside it. So I made some great decisions but only affecting 15-25% of my portfolio and each only being a modest amount better than a decision to buy the index would have been.

[SharperDingaan]

Some clarifications ...

 

We would would not mortgage a house paying 'X' % on the mortgage, to buy an investment with a higher cash yield and the possibility of a gain. We raised the point .. because until your mortgage is paid off, this IS what you are doing. If your 10% going to saving is expected to earn less than you're paying on your mortgage - it should be going to debt repayment.

 

With concentrated portfolios, the initial investment in 'XYZ' equity is often > annual income; in these instances the sale point is 3x the value of the house you live in. In most cases it will give the equity significant room to run, and it will force the conversion of 'paper' wealth into 'money in the bank' on a systematic basis. Paper wealth is nice, but it's typically not liquid; partnership interests, and restricted shares being prime examples.

 

$ today (for spending) are worth more than $ tomorrow (for wealth). Family that are house rich but cash poor, aren't going to be producing grand kids or moving forward anytime soon. But use an estate to buy a % of the house for cash that repays the mortgage, tie that equity to grand kid inheritance, and require that 100% of the saving go into additional investment; and it will materially, and permanently, change the equation. You will also optimize the 'opportunities' of wealth, and significantly reduce the current tax bill.

 

Ultimately it comes down to what you see 'wealth' as, and its purpose.

Just different strokes for different folks.

 

SD

 

 

[NewbieD]

Strong finish led to +42% in SEK, about +55% USD. CAGR is about 43% since 2011.

 

Could have been a huge year if I hadn't sold my 4% BTC position in May. Now I only have ETH and some small . Still happy though. Some of the larger wins were DDM, Stillfront, FNMA, Catena Media.