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Up 10%.

 

What worked:

Shorts: NFLX, CRM (shorted it 3x), LULU, FOSL, VXX, MGM, WGO, BC, RST.

 

Longs:

Started the year heavily in FFH (which I look at as cash) and bought a very meaningful position in MKL at $355, Visa at $71, VRSK, VRX.  In November, initiated a 5% position in MBI-February $10 calls after reading the 3Q11 CC and hearing Jay Brown pretty much hint at big announcements. 

 

Selling Puts:  Sold a lot of puts on Dell at $14, MBI at $7, Visa at $70, $72.50 and recently with RIMM at $12.

 

Getting Lucky:

About 20% of the portfolio was in WMT and MSFT, with covered calls at $55 and $25, respectively.  In July, I was called out and with an unexpected August drop in the markets, it worked out.

This year, I sold puts on SHLD 3x, at $75 (collected $3, bought back at $0.78), at $67.5 (collected $1.35, expired), and at $60 (collected $2.20, bought back at $.55).  Backed off from selling puts on SHLD in July as I feared that he would be less likely to repurchase shares given the fixed charge coverage limitations.  I definitely got lucky with this one.  But I'm back to selling puts on SHLD starting last Wed.

 

What didn't work:

Long: a 20% position in BAC at $8.50, resulted in 10% damage to the portfolio. I don't think I made a lot of mistakes with understanding the situation, because I know BAC was hit twice for reasons that I could never foresee:

1.  The $5 fee PR fiasco.

2.  Systems outage.

 

Shorts: I was short some REIT's PSA/SPG/VNO.  The trade worked successfully, closed it.  Euro bailout, they rally, re-short and didn't work.  The dividend headwind also limits upside.  Still think most REIT's are WAY overvalued, but in a 0% interest world, people have to chase yields somewhere. 

Shorted CMG $320, that didn't work.

 

Over trading:

Bought GOOG at $495, sold it two weeks later at $522.  I sold because I only purchase 1/8 of what I wanted.

Bought MA at $305, sold it at $315, same story as GOOG and not being able to build a full position.

 

Selling Puts: Wanted to own AAP, got cute with it and sold puts instead at $55, next thing I know the stock was at $63.

 

All in all, probably looking at 150% turnover in 2011, going to be A LOT less in 2012 as my core holdings in FFH, V, MKL, VRSK, VRX, Y are about 85% of the portfolio and I plan to hold them for a very long time, RBA/CHK/MBI/LVS/ARCO the rest.  I will sell 1/5th of my remaining FFH position post dividend as my industry exposure to insurance with the addition of MKL/Y and less so with VRSK is high.  I have a lot of friends that still work in the insurance industry and I don't think I have any other group of friends that are as excited/optimistic. 

 

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Up 10%.

 

What worked:

Shorts: NFLX, CRM (shorted it 3x), LULU, FOSL, VXX, MGM, WGO, BC, RST.

 

Longs:

Started the year heavily in FFH (which I look at as cash) and bought a very meaningful position in MKL at $355, Visa at $71, VRSK, VRX.  In November, initiated a 5% position in MBI-February $10 calls after reading the 3Q11 CC and hearing Jay Brown pretty much hint at big announcements. 

 

Selling Puts:  Sold a lot of puts on Dell at $14, MBI at $7, Visa at $70, $72.50 and recently with RIMM at $12.

 

Getting Lucky:

About 20% of the portfolio was in WMT and MSFT, with covered calls at $55 and $25, respectively.  In July, I was called out and with an unexpected August drop in the markets, it worked out.

This year, I sold puts on SHLD 3x, at $75 (collected $3, bought back at $0.78), at $67.5 (collected $1.35, expired), and at $60 (collected $2.20, bought back at $.55).  Backed off from selling puts on SHLD in July as I feared that he would be less likely to repurchase shares given the fixed charge coverage limitations.  I definitely got lucky with this one.  But I'm back to selling puts on SHLD starting last Wed.

 

What didn't work:

Long: a 20% position in BAC at $8.50, resulted in 10% damage to the portfolio. I don't think I made a lot of mistakes with understanding the situation, because I know BAC was hit twice for reasons that I could never foresee:

1.  The $5 fee PR fiasco.

2.  Systems outage.

 

Shorts: I was short some REIT's PSA/SPG/VNO.  The trade worked successfully, closed it.  Euro bailout, they rally, re-short and didn't work.  The dividend headwind also limits upside.  Still think most REIT's are WAY overvalued, but in a 0% interest world, people have to chase yields somewhere. 

Shorted CMG $320, that didn't work.

 

Over trading:

Bought GOOG at $495, sold it two weeks later at $522.  I sold because I only purchase 1/8 of what I wanted.

Bought MA at $305, sold it at $315, same story as GOOG and not being able to build a full position.

 

Selling Puts: Wanted to own AAP, got cute with it and sold puts instead at $55, next thing I know the stock was at $63.

 

All in all, probably looking at 150% turnover in 2011, going to be A LOT less in 2012 as my core holdings in FFH, V, MKL, VRSK, VRX, Y are about 85% of the portfolio and I plan to hold them for a very long time, RBA/CHK/MBI/LVS/ARCO the rest.  I will sell 1/5th of my remaining FFH position post dividend as my industry exposure to insurance with the addition of MKL/Y and less so with VRSK is high.  I have a lot of friends that still work in the insurance industry and I don't think I have any other group of friends that are as excited/optimistic.

 

Interesting post.

 

I was/am short a basket of REIT's too (as well as Rosetta Stone), although lower quality REIT's in my opinion. Unlike frauds or obsolscence, even overvalued REIT's do produce some economic value, which comes in the form of a dividend which is a headwind as you mention.

 

But the yield chasing is ridiculous, and risk is getting thrown out the window on many names. It's been my experience that people investing for dividends are generally less sophisticated anyways. I could list a half dozen names who are just selling stock and using some or all of it to just raise the dividend, and are seeing their share prices soar.

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This year down 34%

 

7 yr. Cagr: 26%

 

The bad: rimm leaps, GE leaps, BAC leaps, BAC common, wfc warrants, bby leaps, ssw, mfc, slf, other small positions of small caps.  Obviously the leverage of leaps has worked against me this year.

 

The neutral: ssw- bought a whack more to arbitrage after proxy came out, mtl, pd, rbs preferreds, ylo preferreds, Cfx, sfk

 

Positives: ffh, Bce,

 

Present position - most leaps have been significantly reduced in value.  The bets are now all asymetric, except rim which I sold out.  I.e. A 10% drop of the underlying common will not cost me a further 10 % on leap positions, where a 10 % increase will result in an overall gain of 30-50%. 

 

Ffh is well - my better than cash position and I won't be parting with the position below 800/ share. 

 

Planning to tender some ssw next week to solidify the arbitrage. 

 

Glad to see the back end of 2012.  - plan to trade alot less and take more time putting on new positions. 

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After being up about 60% at the peak this year and averaging being up 35% for most of the year, I lost about 1 to 1.5% for every trading day in December to finish up only 10%. 

 

Biggest gainers:

- Gold bullion

- Options on Silver and selling 30 to 40 percent at the peak in April/May

 

Small gains:

- After holding for a couple years, sold KO near peak (to acquire Berkshire Hathaway shares near book value)

 

Options on silver miners and silver and generally churning my hedges on the market cost me a lot this year without great payoff.

 

 

 

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Up 2%

 

The bad: Regional airlines, where I way underestimated how severely the market can punish these stocks.

 

The good: Uncorrelated special situations stocks GRYO, MMPIQ, COF.H, and PRXI.  BBSI, a small cap PEO approaching a triple from its 2009 low.  WRB, up 30% and has become one of my largest positions.

 

Lucky:  60% gain in one month on shares of RRBG, due to activist catalyst

 

Lessons learned:  Be more patient.  Resist the urge to buy in early; the market often offers attractive entry points when information is lacking between quarterly earnings releases.

 

To do: Look for opportunities to run a more concentrated portfolio.  Read Fortunes Formula.

 

Congratulations to all those with double digit returns, very impressive performance!

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Up 5%

 

The good: (1) Volatility hedging under leveraged conditions saved our butt. (2) Ongoing focus on risk reduction.

 

The bad: (3) Not periodically re-evaluating an investments premise (FBK).

 

The lucky: (4) Withdrew 45% of the chips in May just ahead of the more extreme Euroland volatilty. We would have had negative returns if we were still working with this capital.

 

Lessons learned:

(5) Annual returns for the next few years will not reflect the declining risk in the underlying portfolio. We hold sizeable weightings in (mostly) high quality equities (MFC, PD, NEM, FBK/ABH) at cost bases well below market, & funded with a growing portion of house money. Going forward, Year-on-Year return will be primarily a measure of how well we are recovering our initial investment.

(6) Its OK to let equity weightings grow downwards by redeploying recovered investment to T-Bills/Margin reduction.

 

SD

 

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Up 4% versus index that's down 75%. (I decided to index myself to RIMM)

 

So my relative performance has been truly outstanding.

BRILLIANT!!!!!

 

 

 

 

 

I was down 1/2 of 1% for the year, a strong December helped.

 

-Crip

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What tax rate did you pay? at least you can use your losses this year for the next few years!

 

Actually, in Canada we can use the capital losses against past years capital gains at the same rate of taxation.  I don't know if that is the same in the US for individuals.  Anyways, I will get cash back from 2010, and possibly some of 2009s back as well.  A dubious benefit of sorts.  Best to use the losses up as fast as possible.  Governments sometimes change the rules suddenly -  advice from a friend.

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What tax rate did you pay? at least you can use your losses this year for the next few years!

 

Actually, in Canada we can use the capital losses against past years capital gains at the same rate of taxation.  I don't know if that is the same in the US for individuals. 

 

We can't, unfortunately.

 

You can make a big fortune one year, pay a lot of tax, lose it the next and you are left with nothing -> the government keeps your tax even though you have no gain.  You can carry the tax loss forward to future years but you may never use it up if you've lost a fortune and are broke.

 

-25%.

 

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Ucc,

 

Congrats, that's a great 7 year return after tax. I am not surprised.

 

As a Canadian investor in US equities, I use the S&P 500 returns in $CND as a benchmark which, due to the rise of the $CND over the last decade, has done worse than the S&P 500 as normally measured in $US. So I figure your relative returns are even better than you suggest.

 

(My main account is a registered tax-free one where my 11 year returns are around 24 to 25% - but this is before f/x fees where I have gotten killed except in the last year or so as they have just introduced a $US settlement option.)

 

In any case, congratulations.

 

 

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What do you guys use to calculate your annual returns? Excel? Is there any good automated system out there? I tried using Morningstar, but it is really buggy (it randomly says i own thousands of shares of certain companies).

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What do you guys use to calculate your annual returns? Excel? Is there any good automated system out there? I tried using Morningstar, but it is really buggy (it randomly says i own thousands of shares of certain companies).

 

You should take a look into wiki invest. They use your brokerage information and calculate your track record. Check if your brokerage is supported. If not you have to create your own in excel.

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Up over 40% overall,  thanks to our huge overweight in LRE, including long term, nonrecourse, total return derrivatives.  The remainder of the portfolio is down about 7%.  :(  Outperformance eventually regresses, often with great force.  :(

 

This is most likely to be true. Things could go either way. Staying humble is key to better investment return.

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