CoBF members 2018 returns

[gfp]

My returns ranged from -5% in the worst portfolio to +5.5% in the best performing one.  Most were right at +2.3%.  Personal returns were +2%.

 

Negative contributors were Fairfax Financial, Banks, SPB and THO towards the end of the year.

 

Positive contributors were Berkshire, Berkshire derivatives several times, MMAC, and things that were sold during the year.

[alwaysdrawing]

2018 was +31.4% pretax, although at one stage in Q3 I was up over 100% on the year and unfortunately Q4 had my largest position decline by over 50% as well as significant declines on most of the portfolio names.

 

Biggest winners were far out of the money SVXY puts during the February VIX spike, and TTD.  Biggest losers were small cap tech stocks and Tesla puts.

 

My current portfolio is very tail oriented, with heavy weights to fast growing tech businesses and also shorts/hedges/puts on bubble/fraud names and China (Tesla, MDXG, FXI, BABA, JD, others).

[Paarslaars]

2013: +8%

2014: +25%

2015: -20%

2016: +40%

2017: -26%

2018: -17%

 

To be honest I thought it was going to be worse... my portfolio is quite concentrated in oil since 2017 and I basically did not trade at all this year.

 

My 1y old was diagnosed with a severe case of epilepsy early in the year, we've been in and out of the hospital so many times that I just can't find the time for due dilligence.

I still believe in a come back of the oil market so I'm going to keep those shares but any new money added will go straight to BRK, seems like the safest bet to me.

[John Hjorth]

Parslaars,

 

That's really bad to read. My best wishes for the health & future of your child!

[JRH]

My 1y old was diagnosed with a severe case of epilepsy early in the year, we've been in and out of the hospital so many times that I just can't find the time for due dilligence.

I still believe in a come back of the oil market so I'm going to keep those shares but any new money added will go straight to BRK, seems like the safest bet to me.

 

 

My worst year relative to the benchmark was the year after my kid was born. I was stupid enough not to realize EITHER: 1) how much less time I was giving to important decisions, and 2) how poor my mental state and focus were when making decisions. I was like a drunk who doesn't know he can't drive. That one year negated several years of outperformance and just about capitulated me onto the indexing path.

[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.

 

 

2018: -14.1%

 

Driving factors continue to be the same. Still majorly overweight EM and International companies. Reduced some commodity producers through the year as oil rallied, but still have large positions there.

 

I was fortunate enough to take some gains in January, but not enough. Further, I rolled most of those profits back in by June so the subsequent investments still lost money by year-end. Relative value trades eased some pain some - evidenced by being down only 14% with 40+% of the portfolio in EM which was down ~20%.

 

Outside of being overweight non-dolllar assets, the other big killer for was FCAU which was held in options. These were a BIG winner for me in 2017. I trimmed the position when Fiat passed $20, but only by a little, and then the price collapsed. I re-added around $16-17, but the damage was done for the year with the price ending ~$15. This took 3-4% off of my annual return for the entire portfolio.

 

The smartest decision I made in 2018 was to not invest more. I moved across the country in November 2017 and purchased a car/condo/furniture to accomplish that. I had way more debt upfront than I was comfortable with so I spent 2018 reducing that number by about ~30k. Also, the condo is up in value judging by comparable sales so my overall networth did significantly better than the portfolio.

[muscleman]

My 1y old was diagnosed with a severe case of epilepsy early in the year, we've been in and out of the hospital so many times that I just can't find the time for due dilligence.

I still believe in a come back of the oil market so I'm going to keep those shares but any new money added will go straight to BRK, seems like the safest bet to me.

 

 

My worst year relative to the benchmark was the year after my kid was born. I was stupid enough not to realize EITHER: 1) how much less time I was giving to important decisions, and 2) how poor my mental state and focus were when making decisions. I was like a drunk who doesn't know he can't drive. That one year negated several years of outperformance and just about capitulated me onto the indexing path.

 

I had the same feeling in 2017 when my baby was born. I was sleeping 4 hours a night for many months and felt like a drunk. I have now switched to a technical heavy approach because in general it takes less time. I was lucky to make this decision around May, and was actively learning and liquidating all of my value positions, so I was not affected by the recent down turn. I ended up +10% this year mainly because of BXC and SMLR (4x and 3x).

[rolling]

My 1y old was diagnosed with a severe case of epilepsy early in the year, we've been in and out of the hospital so many times that I just can't find the time for due dilligence.

I still believe in a come back of the oil market so I'm going to keep those shares but any new money added will go straight to BRK, seems like the safest bet to me.

 

 

My worst year relative to the benchmark was the year after my kid was born. I was stupid enough not to realize EITHER: 1) how much less time I was giving to important decisions, and 2) how poor my mental state and focus were when making decisions. I was like a drunk who doesn't know he can't drive. That one year negated several years of outperformance and just about capitulated me onto the indexing path.

1) Paarslaars: hope things go well with your kid

2) while this has been the 1st year as a dad (and in the last months the addition of a second pregnancy over here significatively increased my share of the "burden", for bad but also for good ;D ;D ) and results have been quite a lot under previous years, I wouldn't feel ok with such attribution.

3) HOWEVER, I added very few totally new positions, and most of these were held for short periods. As such, I don't think this is long term sustainable: I have been mostly capitalizing previous efforts and only value trading previously researched stocks (while trying to remain up to date with them). That feels safe to me and I believe will end up giving me more than acceptable returns, but I am certainly fishing on a much smaller pound as a result.

 

[Graham Osborn]

Well the starting portfolio in 2017 was roughly 75k USD then factor in the taxes and you'll be at ~1/3rd of that number.

 

As for finding opportunities there's 2 ways to look at it. If I continue to fish around the same holes I've been doing then yes the capital becomes a drag. On the other hand now I have capital to fund a developer team to grab the market opportunity that many aren't seeing at the moment so now I become the market in a way. Blockchain infrastructure is unlocking new ways to do business and provide a better experience for the user, but you gotta find your spots.

 

There's always the traditional capital markets, but putting in the effort to get +7% alpha over the S&P500 index is horrible ROI on time invested when you consider the greenfield opportunity.

 

~700% for the year. 20% allocation in applications building on blockchain infrastructure knocked it out of the park. Not much alpha from stocks this year (3%).

 

LOL. Get me some of this.

 

That’s also after 12000% last year so is this year humbling after a year like that? The portfolio must be well over a $100m now. Is that making it harder to find opportunity?

 

Fat Pitch, I read all your posts.  It would seem that you started out as a garden variety value investor.  You were heavily long FNMA/ FMCC preferreds until sometime in 2017 at which you suddenly abandoned the faith and jumped on the cryptocurrency bandwagon.  Your first post on the crypto threads appears to be in November 2017.  Assuming you had gone 100% XRP with your 75K on Jan 1, 2017 and sold at the peak you would have booked a 3.40/ 0.006 = 556X gain.  But your posts on crypto suggest you believed cryptocurrency adoption to represent a secular shift, which implies to me that you would have held on rather than selling near the peak.  It seems like less than a year later you did a 360 a denounced the speculators - even though you yourself were one of them.

 

And now you are posting 700% for 2018 on "applications building on blockchain infrastructure." You also say you've hired your own developer team to build some sort of blockchain-related product.  Unless you had an exit in less than 12 months (either from your own startup or another startup you invested in), it seems a bit hard to see how you managed 8X in 2018.  And even if you did, cramming 30M of cash (which would imply a 300M+ pre) would imply the exit was for 2.4B.  Care to mention the name of the unicorn?  And since you must be worth about 250M by now, congrats on that too.

 

In summary, I call BS.  Show me the brokerage statements and I'll believe.  There's no shortage of traders on these threads who claim impeccable timing, but I've found most of them just don't have the data to back up their claims.

[SharperDingaan]

-33% TWR, all unrealized.

 

We are very concentrated, the portfolio is materially 'house money' funded, and we reduced cash in favour of additional equity over Q4. Large YoY change is inherent to our style, why we focus on 'outlay' versus return, and why we systematically take $ off the table when we 'win'. The majority of the portfolio is in o/g and commodities, and we will not need the money for many years yet.

 

'House money' means a position funded from cummulative position-to-date profit in the position; we have recovered our capital 'outlay', put it back into T-Bills/Canada's, and left our profit in shares at their average cost of purchase. We are not OPM, and hold all the professional designations that you might expect of an institutional portfolio manager.

 

We suck at trading, but suck less than -33% per round-trip. Going forward we will trade the opportunities presented.

Q4 additions are all up significantly since purchase.

 

SD

 

 

 

 

 

 

 

 

[bathtime]

2018: 53%

2017: -32%

2016: 362%

 

Feel good about these last three years of returns. I use a value/growth/special situations strategy. Styles aside my biggest strength is being a good researcher and synthesizing investment ideas from value investors in the field

 

This is my IRA so taxes are not a factor. Should have stayed in high cash levels once the market started to crack this year, but obviously I’m grateful overall.

 

Between 1998 and 2010 I averaged 20% returns a year in my non-retirement accounts. And then screwed that account up by making macro bets against the market. Hopefully I’ve learned some lessons over the years.

 

Biggest winner was Aimia. Biggest mistake was riding energy down in the last quarter.

[Guest longinvestor]

2018: 53%

2017: -32%

2016: 362%

 

Feel good about these last three years of returns. I use a value/growth/special situations strategy. Styles aside my biggest strength is being a good researcher and synthesizing investment ideas from value investors in the field

 

This is my IRA so taxes are not a factor. Should have stayed in high cash levels once the market started to crack this year, but obviously I’m grateful overall.

 

Between 1998 and 2010 I averaged 20% returns a year in my non-retirement accounts. And then screwed that account up by making macro bets against the market. Hopefully I’ve learned some lessons over the years.

 

Biggest winner was Aimia. Biggest mistake was riding energy down in the last quarter.

 

Ok I’ll bite. Did you go to zero with your macro bet between 2011 and 2015? Barring which, You should be knighted. Hat tip!

[NewbieD]

+7% in SEK. High point was ~20%. CAGR now 39% since 2011. Felt like hard work all year. Had some big losses in my high conviction bets for the first time in a long while (Storytel comes to mind).

 

Some winners were KV77 Pref, Aimia, MIPS, Xintela, Smart Eye. Decreased exposure pretty much throughout the year, now ~50%.

 

[Graham Osborn]

Erm - how is AIM.TO a winner?  Looks like the stock has performed horribly over the past 10 years.

 

How did you achieve 350%+ in 2016?

 

I guess maybe I am an annoyance here, but I am always a bit skeptical when I hear someone post 100%+ returns in a year.  People who do small caps can have maybe a 10-bagger in a year if something crazy happens.  So you invested $10 at the start of the year and wind up with $2*10+$8 = $28 or 180%.  That's a very outlier scenario.  So I tend to assume people who are doing 100%+ in a year are doing one or more of the following: (1) using a nominal % of their net worth as their "trading" account (2) taking huge concentrated positions (3) putting meaningful amounts of money in high risk/ high reward asset classes like bitcoin, venture capital, etc.

 

To me, it's far more impressive when someone with 1M in net worth goes to 2M than when someone with 10K in net worth goes to 1M (assuming a year for both).  Buffett never did much more than 100% even in the early years, but the magic of his career was he was still doing 20-30% even with huge amounts of capital (and in a very low risk way).  As Buffett says, it only takes one zero.  If the coin is heavily weighted, it takes many flips to realize the coin doesn't always come up heads.  Outcomes are not specific to process in investing.  I don't envy those who get rich quickly and thoughtlessly in finance, because either (1) once they've made the money they will correctly realize they don't have a repeatable process to protect that capital, so they migrate to something boring like real estate and stop earning attractive returns or (2) they assume they do have a repeatable process and wind up losing most of it or churning.  Process before outcomes - think of it as having a fiduciary responsibility to yourself.

[Gregmal]

Erm - how is AIM.TO a winner?  Looks like the stock has performed horribly over the past 10 years.

 

How did you achieve 350%+ in 2016?

 

I guess maybe I am an annoyance here, but I am always a bit skeptical when I hear someone post 100%+ returns in a year.  People who do small caps can have maybe a 10-bagger in a year if something crazy happens.  So you invested $10 at the start of the year and wind up with $2*10+$8 = $28 or 180%.  That's a very outlier scenario.  So I tend to assume people who are doing 100%+ in a year are doing one or more of the following: (1) using a nominal % of their net worth as their "trading" account (2) taking huge concentrated positions (3) putting meaningful amounts of money in high risk/ high reward asset classes like bitcoin, venture capital, etc.

 

To me, it's far more impressive when someone with 1M in net worth goes to 2M than when someone with 10K in net worth goes to 1M (assuming a year for both).  Buffett never did much more than 100% even in the early years, but the magic of his career was he was still doing 20-30% even with huge amounts of capital (and in a very low risk way).  As Buffett says, it only takes one zero.  If the coin is heavily weighted, it takes many flips to realize the coin doesn't always come up heads.  Outcomes are not specific to process in investing.  I don't envy those who get rich quickly and thoughtlessly in finance, because either (1) once they've made the money they will correctly realize they don't have a repeatable process to protect that capital, so they migrate to something boring like real estate and stop earning attractive returns or (2) they assume they do have a repeatable process and wind up losing most of it or churning.  Process before outcomes - think of it as having a fiduciary responsibility to yourself.

 

First, this is people posting their returns on the internet, who cares. And two, based on what's provided I'd gander a heavy concentration in high beta energy names. Lastly, agree with you entirely on the last piece.

[John Hjorth]

Graham,

 

Thank you for your latest edit of your last post. Please remember that there is no right of withdrawal of your original post, as it ends up in many CoBF members' inboxes via notifications.

[Graham Osborn]

Graham,

 

Thank you for your latest edit of your last post. Please remember that there is no right of withdrawal of your original post, as it ends up in many CoBF members' inboxes via notifications.

 

Hi John, that's fine.  I often edit my posts several times after I write them and I'm sure people end up seeing multiple versions.  I try not to offend anyone more than is necessary, although I do admit my sarcasm runneth over from time to time.

[SharperDingaan]

We might want to keep in mind that leverage isn't mentioned (margin, option),

and the very high likelihood that NOT everybody is calculating return the same way (ie: other than TWR).

 

To a novice, return is just ((end of year value (ie: $200) divided by start of year value (ie: $100)) - 1) x 100

In this example: (200/100 - 1) x 100 = 100%. Looks impressive, but might not be. If the novice just contributed $90 of new funds at the end of the year, the actual return is of course a very different number.

 

Also keep in mind that for many, voluntary posts merely serve as a learning vehicle.

There is no intent to brag about 'size'. Obviously if you do well 'good on you', but that's about it.

 

SD

 

 

 

[BG2008]

The thing about large returns on small amount of capital is that "returns are returns."  As long as you understand that you were taking on the risk, I think it's fine.  I think if you are under 30, can re-coop the capital over time, and have very high conviction (companies you own have diversified assets/businesses, good management team, high upside, low downside), I think it makes sense to back up the truck and buy with conviction. 

 

Heck, Ericopoly did it for over a decade.  But he has an uncanny ability to spot these crazy opportunities and he's been right for so many times in a row.  Ultimately, he realized that he may want to hedge his huuuge BoA position.  My take on concentrated returns is that if you've done the work and the business is stable (I wouldn't do it with O&G assets myself, unless midstream), it's okay while you're young.  I think if you are in your 50s and you are midway through your retirement and you are working with 6 to 7 digits of capital, you are taking on a too much risk.  Diversify yourself a bit (more than 5-7 names). 

[John Hjorth]

Graham,

 

Thank you for your latest edit of your last post. Please remember that there is no right of withdrawal of your original post, as it ends up in many CoBF members' inboxes via notifications.

 

Hi John, that's fine.  I often edit my posts several times after I write them and I'm sure people end up seeing multiple versions.  I try not to offend anyone more than is necessary, although I do admit my sarcasm runneth over from time to time.

 

Graham,

 

I see you read my reply to you exactly the way it was meant. [ : - ) ] Please just ditch and disregard mentally the posts in this topic, that you personally consider dishonest - A tiny test by supplementary questions does not hurt, and it's it: No reply is also a reply. [ : - ) ] - Simply waste of mental energy for your part. [i've been there, done that, got that shirt for prior years ... [i.e.: outstanding return relatively to CoBF average in an up year, combined with reported > 50% percent average cash position during the year, and no visible activity during the year here on CoBF on what that particular CoBF member has been up to during the year, - and no reply to my question.]

 

-Let it go!

[bathtime]

I feel happy when my returns are good but I’m not claiming to be a good investor. Although I do think I could add value to an investment enterprise because I like to think I am a very good explorer of ideas. It’s also helpful to know that life is not about money.

 

I’ve taken calculated risk, usually concentrated positions, watched them closely, and sometimes it has worked out and sometimes it hasn’t.

 

I wasn’t sure that posting good returns publicly here was a good idea as it invites hubris. But I did work my ass off, and struggled to get them, so it was a way to give myself a pat on the back since I don’t really have other people in my life I can talk to about this stuff.

 

I probably won’t post anything more about these returns as all things being equal I probably just got lucky in one form or another.

 

 

 

 

 

 

 

 

[Dynamic]

Despite all the reservations regarding asset-types, leverage (and the reverse of leverage - excess cash and equivalents), currencies, calculations etc, I think the anonymous poll itself has probably been answered with surprisingly high honesty as internet polls go in the last 3 years and any miscalculation by one person has probably largely cancelled out opposite miscalculation by someone else.

 

My own 2016 result should have been 1 bin higher than the bin I voted for, but it also receive a ludicrous 30% currency boost by virtue of the USD:GBP swing after the Brexit vote, a 11% penalty in 2017 and a 8% boost in 2018.

 

The range is reasonably closely centered pretty close to the S&P500TR returns for each year, which is quite a tough competitor, with a modest but substantial spread and group of outliers in each direction.

 

2018 CoBF results - SP500TR returned -4.38%. Currently (after 203 votes) the distribution is centered around a peak (mode) in the -5% to -10% bin, with the -5% to 0% bin a close second, and a very slight skew to the positive side of the distribution, which seems pretty close to what we'd expect.

 

2017 CoBF results - SP500TR returned 21.83%. Peak (mode) of distribution is in 10-20% bin, but with a slight skew towards higher returns in the tails of the distribution, possibly with mean average close to S&P return. Value Investors might expect to slightly lag bull markets and outperform bear markets, perhaps explaining why the mode was just below the 20-30% bin.

 

2016 CoBF results - SP500TR returned 11.96%. Peak (mode) of distribution is in 10-15% bin, but with a slight skew towards higher returns in the tails of the distribution so it looks like we slightly beat the index on average as a group. I think Berkshire's 2015 closing price probably helped quite a few of us. For a few of us currency effects were enormous (+30.0% benefit for my USD:GBP conversion, compared to -10.7% in 2017 and +7.8% in 2018).

 

 

I certainly agree about calculations and about reporting bias. We should be careful not to be envious and dispondent, nor smug and overconfident in comparison to other people reporting their returns on the internet (even if it is in a great place of self-reflection and honesty like CoBF, where biases are much more in check than most forums) nor to assign too much weight to the distribution that a poll like this provides, which does look like it is reasonably well centered around the S&P500 Total Return over the last 3 years, but with a fairly broad spread and a few outliers at the extremes.

 

And we should certainly be the masters of our own internal scorecard where we have our own goals and objectives and our own risk profiles which may differ wildly from others.

 

Indeed, for concentrated investors years might pass between one very high conviction idea and the next, but by allocating significant capital to them when they arrive, substantial out-performance may arise in the long term, despite regular under-performance from year to year.

 

Some may aim for safety above all else, some may risk a lot of their current capital in highly concentrated high conviction positions knowing they have many years of future savings to make up for any losses or simply being accepting of wild volatility in the style of Charlie Munger's early superinvestor career, some may insist on enough margin of safety to reduce risk of loss and simultaneously increase their prospects of outsized gains but on the flip-side they spend long periods in cash waiting for enough margin of safety. Some may have been exceptionally unlucky or lucky in the last year despite decent decision making considering in respect of long-term intrinsic value (in my alternative scenario I could have held AAPL and IBM as they went down over 20% and held onto WFC into the bear market, and didn't have the cash available to take advantage of the dip, so I feel I benefited from a lot of luck).

 

[Liberty]

Thanks for doing the math, Dynamic.

[John Hjorth]

I just added the poll. -Please take it! [ : - ) ]

 

- - - o 0 o - - -

 

Maximum votes per user: 1,

Run the poll for : 90 days,

Allow users to change vote: Yes,

Result visibility : Show the poll's results to anyone.

 

- - - o 0 o - - -

 

I hope I haven't screwed up anything here.

 

Bumping this up for informational purpose here - here, especially for Dynamic : You should be able to fine tune your vote - with an "Edit vote" button, if you feel inclined to do so. Also, I suppose - by logic - that option disappears within 90 days.

[Dynamic]

Yes, unfortunately, John my only minor error was in 2016 and its bite to late to change it to 50%+ (or for that matter to 20%+if I switched to USD currency)