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Biggest Losers 2017


doughishere
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What are some of your biggest losers in 2017? For anyone brave enough to admit to them.

 

Edit: I should clarify....doesn't have to be exact or anything. Just something that hasn't worked in 2017 that is still in your portfolio or was in there for a large part of 2017. Doesn't even need to be a single one....lets hear all of your losers.

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Company: Impact on my 2017 performance (not including opportunity cost)

 

Rentech: -850 bps [permanent loss] -- too many analytical mistakes to list here; I've given them their own post in one of the Rentech threads

Fortress Paper:  -380 bps  [remains to be seen]

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DEST: ~20% loss on a large position

Aimia preferreds: ~30% loss on a small position

MND.TO: ~50% loss on a small position (haven't closed it yet)

 

Learned a lot from these losses. In hindsight, all of them outside the circle of competence, but coat-tailing others.

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ESSX rental corp - nanocap based on asset liquidation value.    Bought at ~75 cents a share;  company was eventually sold for ~20-25 cents per share (depending on amount of escrow to be paid).

 

Primary Lesson:  Incentives are critical.  Management incentives were not aligned with shareholders - simple as that. 

Secondary Lesson:  Over-reliance on 3rd party appraisals of asset values outside of circle of competence. 

 

Posting this as a reminder to myself mostly - financially I lucked out and bought a bunch when it dipped down to .10-.13 cents for a few days, but the investment itself was lazy and a reminder of how important incentives are. 

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criteo , reasonable big holding and big drop towards last quarter caused 3% hit to performance. Average cost over time was around 40.

 

This is a classic case of disruption possibly upending the business model. Should have built a meaningful goog and fb position instead. Still have a small position to track how they are going to address this.

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Noranda Income Fund (NIF-U.TO) and Prairie Provident (PPR.TO)

 

I still like both.

 

I thought net assets would act as lower bound for NIF following the end of a long-term contract with Glencore but I was wrong when combined with the dividend elimination and labour strike. Still trading below net assets and well below book value. The strike is now over and zinc prices are hitting 10 year highs. We'll have a better idea of earnings power soon but Glencore controls the manager and might have an interest in keeping earnings suppressed. I have heard some rumblings of activist involvement which might come to fruition before the next AGM.

 

As for PPR, it's a cheap oil and gas stock, trading at a third of reserve value while having two potentially giant catalysts relating to its Quebec shale gas assets (resolution of law suit + legalization of drilling).

 

Both appear to have high margin of safety with decent upside.

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I had a very lucky year again with a very concentrated portfolio (and my two 25%+ positions each beat the S&P500), though not as lucky as 2016 where I was able to buy quite a few things very cheaply in the first half year, which all did well by year end.

Not sure I can expect the same next year and I've had some huge blunders (and compounded my mistakes) in the past.

 

I only made one trade all year, buying more BRK.B at about $196 in mid December with all remaining cash.

 

Only lost on one position: -9.5% on IBM (a tiny 1% position), which trails the S&P500 by about 28-29%.

 

Cash position (GBP) was between 5-11% until mid December, which trailed the S&P500 by about 10% in constant currency.

 

I also had a GBP:USD currency headwind that cost me a further 10% in my native GBP against my USD gains.

 

Another apparent error judging by market valuation change, and more costly, was in having sold Agilent in early 2016 to buy what's now a 4% weighting in Wells Fargo, the former having risen by 34% more than the latter over about 18 months, though WFC rose by 10% in 2017 and paid dividends too (but still trailed the S&P500 and basically went nowhere when converted to GBP). Then again I wouldn't be happy holding Agilent at these prices, while I am happy holding WFC.

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Shorting Canadian financials.  Cost me 12%, and related short CAD/USD cost 7%.

 

Was very profitable until BRK helped save HCG, which I think was months away from running out of cash, and then the short squeeze was on.

 

It would seem that a short here isn't that risky when you have a risky lender like CWB, that hasn't earned a ROE above 10% in a few years, trading at 1.5x book.  Or a mortgage insurer, MIC, with no reserves trading at 1.1x book when house prices in its biggest market are down 17% from the peak. 

 

My view hasn't changed.

 

I have been very early in this trade (a couple years) and the wait for the Canadian credit cycle to turn has been painful. 

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CBI (buy@19.50, sold@16.50). Revlon (buy@28, sold@22.5). Aimia.pref (buy@12, sold@8). Revlon I coattailed too much, which was a mistake. I think the other two were good bets with of upside, not so much downside. Which was probably true, but all three were down almost 50 pct. at one time (I think Aimia was in one day), so lots of downwards volatility which was handled by sitting on my ass doing nothing before taking a (lower) loss later on. I'm pretty concentrated (around 7-10 pct positions I think), so it was a decent test which I think I passed, but going forward I'm refocusing towards stocks where I'll me more inclined to ADD when it gets dumped. Which means I need a preferbly boring and simple business, aligned management and good capital allocation.

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ESSX rental corp - nanocap based on asset liquidation value.    Bought at ~75 cents a share;  company was eventually sold for ~20-25 cents per share (depending on amount of escrow to be paid).

 

Primary Lesson:  Incentives are critical.  Management incentives were not aligned with shareholders - simple as that. 

Secondary Lesson:  Over-reliance on 3rd party appraisals of asset values outside of circle of competence. 

 

Posting this as a reminder to myself mostly - financially I lucked out and bought a bunch when it dipped down to .10-.13 cents for a few days, but the investment itself was lazy and a reminder of how important incentives are.

Funny. ESSX was actually one of my positions that performed pretty well during the year. But only bought it when liquidation was in end stage, and the selling price for the coast crane subsidiary was known.

 

My biggest loser was by far Destination Maternity (minus 308bps), but too be honest I don't see that as a big mistake or a big deal. It was a merger arb deal with a big spread and good upside, and I thought it would probably be completed. I turned out to be wrong. It happens. Doesn't make it a mistake.

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Ciber Inc liquidation, a total disaster

I got smoked in CBRI too.

I doubled down at .006 and blew it out the last few days (averaged .022 on sales) to cut my loss in half - still lost a bunch though on initial position of 9 cent stock.

I will reload if it gets back down to .005. I feel this will trade speculatively for years as they wind up the estate.

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Largest realized loss was PG&E (-18%).  I broke a lot of rules buying this one thinking I could make up for it with it being in my circle of competence.  I sold as soon as they cut the dividend and I realized I had no idea what was going on.

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