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Your returns in 2013


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BG2008 - can you provide some more details on your strategy/best and worst of 2013 and holdings?  Are you concentrated in less than 10 positions, etc.

 

MVP444300 - do your returns include cash or not and can you provide some more details on your strategy/best and worst of 2013 and holdings?  Are you concentrated in less than 10 positions, etc.  Did you suffer much of a decline in 2008?

 

Great returns BTW.

 

Packer

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Taxable account (before all tax liabilities):  71%

Roth IRA: 59%

 

For context, I manage a long-only, do-it-yourself, institutional-sized portfolio, with no third party money.  I am a full-time investor and my risk is managed with the recognition that my age makes large losses unrecoverable.  Or said another way, my portfolio is many times the size of what I could earn as an employee.

 

2013 Highlights:

 

FMCC Preferred +334%  small position but becoming more and more meaningful

BBSI                  +143%  a great business and shares are approaching a 10-bagger vs. my 2009 cost basis

MSFT                +136%  leverage through 20x LEAPS significantly enhanced the 40% movement of the underlying

BRK B                +122%  leverage through 70x LEAPS significantly enhanced the 32% movement of the underlying

RJET                  +116%  sold all shares at average of $12.25, and re-initiated a smaller position in the mid $9's recently

BAC                    +30%    hedging cost reduced by 4% the 34% return of the stock, large position.

WFC                    +33% 

WRB                    +12%

Non-correlated basket of 6-10 stocks approx. +10%

 

2013 Lowlights:

PRXI                    -57%  snatched defeat from the jaws of victory by not selling when I had a gain of over 50%

BBRY                  -17%  Doh!  Thought I could make a quick return based on Prem's public statements. 

 

 

All in a great year, and I owe many thanks to members of this board for their rich contributions, including Twacowcfa for his keen and timely insights, Ericopoly for his clear thinking, Kraven for his financial experience and killer sense of humor, Packer for setting the bar high for the rest of us mortals, and of course Sanjeev for this one-of-a-kind forum.  How lucky I am to be a part of it!

 

Best wishes to all in 2014!!

 

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Overall Results - +146.3%

 

I run a concentrated portfolio of value names.  This is my best year and I don't see it happening again.

 

Highlights

 

TVs (funded in part by sale of SALM and MGAM)

LIN    +520%

GTN  +167%

NXST  +128%

 

ALSK +106% (sale after jump up earlier this year)

 

ATSG +109%

AIQ +292%

 

BAC/BAC-WT +96% (thanks to ERICOPOLY kept common sold WTs)

COF-WT +56%

LNC-WT +173% (should have invested more)

KW-WT +128%

 

GM-WT +81%/+218% (from 7/2012)

 

Lowlights

 

EXC calls -100%

SD -30% (sold to buy a cheaper oil co.)

OIBR -5%

 

I happened to be fortunate to be in some hot areas in 2013.  Thanks to the folks on this board I had enough insight to purchase some of the financials and worked through the value destroying analysis of the PT/OIBR merger. 

 

Packer

 

 

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Compared to superstars like Packer and Eric my funds are pretty diversified as positions pretty much never exceed 15% anymore (once upon a time they could be 50%+). To be clear positions can be an enormous % of a particular account (like my or my wife's roth) but they don't generally exceed 15% of the overall pie -- at least to start.

 

Highlights (all appx) - in retirement and taxable accounts, and childrens' accounts. 

 

S  +70%.

AIG (was largest position coming into 2013) Overall +66% since purchased in 2012, +40%. Pared it down significantly at avg price of $51. Put a bunch of that cash into DEMBF.

ORI (was 2nd largest position coming into 2013) Purchased in Summer 2012 Overall + 78%, 2013 + appx 50%.  Sold a bit early at $15 +.

FIATY (This is an almost 7 figure position overall and my largest position ATM), Thx CoBF + 40% actually started buying at 5 and kept buying all the way up 7.30.

SHLD +50% What a LUCK BOX I am.

MRVL +80% this year, but overall more like 50% (bought in 2012). Luck Boxed extra money, by buying Marvell LEAPS over the span of a few days after Judge Fischer declined Marvell's appeals. I say luck boxed, b/c soon after that KKR was rumored to take a large position (now confirmed).

Various Arbitrage Opportunities that present themselves. This tacks on at least a few percentage pts yearly. So far I've never been burned by one in my life but I know it's gonna happen at some point no matter how much I research it).

 

Funny tidbit. I consider myself a novice at telecom.  While everyone was going gaga over ALSK I was buying GNCMA (based on Packers thread). I'm happy with owning GNCMA, but would not have minded the 100%+ move in ALSK. (Now I happily own both).

 

Lowlights

1) TEVA (More like a multiyear lowlight). Bought a large position between 35-37 in 2011 semi crash and saw it spike 30% within months from the Levin hire.  But it's been down 10% (not including dividends) since the spike in 2 years where the S&P has been roaring.

2) All small positions but JCP - 30%, VELT - 20% (great it was only 20% lol) , JAKK -25%.

4) Too much cash.

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Some incredible returns, based on this thread I take it no one had a bad year? 

 

I'll admit, I'm envious of how many of you guys invest.  I invest in a way that suits me, but man, I wish I could pick 10 stocks that would all do 50-100% year after year.  They say there are no crystal balls, but I'd be lying if I didn't think a few members on this board couldn't see the future clearly...dang!

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Some incredible returns, based on this thread I take it no one had a bad year? 

 

I'll admit, I'm envious of how many of you guys invest.  I invest in a way that suits me, but man, I wish I could pick 10 stocks that would all do 50-100% year after year.  They say there are no crystal balls, but I'd be lying if I didn't think a few members on this board couldn't see the future clearly...dang!

 

Nate, from reading your blog, I'm very impressed with your process. You have clearly identified an advantage that you have -- which is a combination of GREAT patience, strong analysis, and excellent experience/familiarity? with "oddball stocks" . You've identified a niche that clearly works for you. That's very impressive.

 

 

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Some incredible returns, based on this thread I take it no one had a bad year? 

 

I'll admit, I'm envious of how many of you guys invest.  I invest in a way that suits me, but man, I wish I could pick 10 stocks that would all do 50-100% year after year.  They say there are no crystal balls, but I'd be lying if I didn't think a few members on this board couldn't see the future clearly...dang!

 

Nate, from reading your blog, I'm very impressed with your process. You have clearly identified an advantage that you have -- which is a combination of GREAT patience, strong analysis, and excellent experience/familiarity? with "oddball stocks" . You've identified a niche that clearly works for you. That's very impressive.

 

Thanks, I agree that I've found my fit, it's really all I can do, what I know and am comfortable with.  I guess in reading the numbers on here I wish my fit would have been found in a higher performing strategy.

 

I for better or worse have always been worried about losing money.  I want to find cheap stocks that are safe from a total loss.  The strategy I've sensed from this board is cheap stocks with high upsides, but not often safe, and sometimes leveraged.  In aggregate you might have a few positions that blow up, but the rockets more than make up for it.  I in turn don't seem to blow up, but I just continually hit singles and doubles, no grand-slams.

 

To put this into football terms, since it's New Years.. I'm the team grinding out four and five yard runs repeatably.  Many teams on here have a few three and out series, then throw 80 yard passes for touchdowns.

 

I'm not envious as much as amazed, like watching a very talented athlete.  I am awed by the talent here, it's fascinating to see.

 

One other general thought, it seems most posters are retail investors, this thread just proves the advantage most of us have.  I think a few on here run funds, but you don't see guys running $500m or $2b with 50-100% returns.  There is a definite advantage to running a small amount of money!

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I'm not sure I agree. I think this year was a bit crazy due to (1) the market in general going up up up and (2) the special-ness of BAC warrants.

 

A good portion of most returns here were probably due to BAC and the 300+ page thread devoted to it, as well as Eric's insights regarding the cost of leverage between the common/warrants/options. This led to a lot of people moving into the options...hence the large upsides.

 

I think most of the time this board is focused on cheap stocks. Packer's posts are a great example of this. I don't think he's ever suggested something trading at a EBITDA multiple > 6  ;D

 

Finding cheap businesses and returning 20%/year during normal conditions is a skill more envious in my eyes than buying LEAPs during an awesome year for the market in general...just my 2 cents!

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I think each investor has his own style and has to feel comfortable with it.  I like the football analogy as oddball is the grind it out on the ground, I probably throw 20 to 30 yr passes and ERICOPOLY throws the bombs.  Each of has developed techniques to know when it is appropriate to apply the style and how to reduce risk so the style will not blow you up (at least for me and ERICOPOLY I think it would be hard for oddball to blow up).  I find it interesting to learn about how each style works and if you happen to run across a similar circumstance you can use it.

 

Packer

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38.5% with 33.5% cash. Never less than 25% cash. Approximately 100 positions. No leverage.

 

Like Oddball I am impressed with the results of many here. All I can do though is what is comfortable for me. Know thyself is the key to being successful in this game. As much as I want to be Gordon Gekko, I will always be Bud Fox.

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38.5% with 33.5% cash. Never less than 25% cash. Approximately 100 positions. No leverage.

 

Like Oddball I am impressed with the results of many here. All I can do though is what is comfortable for me. Know thyself is the key to being successful in this game. As much as I want to be Gordon Gekko, I will always be Bud Fox.

I personally find this result (and Nate's as well) just as impressive as the higher gains with the more concentrated portfolio's. With more positions there is a higher probability that skill instead of luck is the driving force behind the returns, and you have a lot less risk as well (especially with the cash position).

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Best year after 2010 for me with 81% before Tax in Taxable and IRA accounts combined.(IRR for past 6 years is 35%). I dont expect to repeat any of these results as i dont use any leverage and still didn't buy a single option except BAC warrants.

Good returns even with stupid speculation that i made with Velti which turned out be dud lucky just gambled with 4% but learned a valuble lesson. Thinking back all these good things are happened from my good bets at end of 2011 BAC, PCS and Leap.(Still hold all BAC and Leap stocks)

Both PCS and Leap worked out very well but should have just kept TMobile without selling and i would have been much better , After selling TMobile i couldn't find great stocks and started going down value ladder so far not great but will wait another 1 year to find out how new strategy works out.My current portfolio has lot more stocks then i ever had with 7 different new 3-5% positions after i soldout TMobile. I am currently with 25% cash(workout) and waiting for good opprotunities. Hopefully i will find atleast one good or continue adding 5% positions.

 

 

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You guys are all amazing. I'm only +9%

 

I had a pretty mediocre year as well, got crushed by the s&p.  I had way too much cash.

 

EDIT:  Thought I would add a little more detail since you are all showing your knickers:  I did 40.5% in my Roth, a much smaller account than some others I run.  Most of that was due to some great fortune with respect to timing on the SD leaps; I caught a triple on those things and got out.  Larger accounts I have/run managed only 12-16%, underperformance is attributable to holding too much cash 50%+.

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38.5% with 33.5% cash. Never less than 25% cash. Approximately 100 positions. No leverage.

 

Like Oddball I am impressed with the results of many here. All I can do though is what is comfortable for me. Know thyself is the key to being successful in this game. As much as I want to be Gordon Gekko, I will always be Bud Fox.

I personally find this result (and Nate's as well) just as impressive as the higher gains with the more concentrated portfolio's. With more positions there is a higher probability that skill instead of luck is the driving force behind the returns, and you have a lot less risk as well (especially with the cash position).

 

Agreed as well.  It's easy to calculate returns.  Without the context of risk though, returns can be very misleading in the short run.

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The more I think about it...when we talk about risk-adjusted returns...it's difficult to really standardize. Let's take Nate since he is the topic of conversation right now...I could never run a portfolio like his! For me, it just does not jive with how my mind works.

 

Let's say Nate and I ran the same portfolio, identical stocks, weightings, everything. I would consider his risk-adjusted returns much higher! He is more comfortable with this portfolio strategy. It is less risky to be in his hands than in mine. I might achieve the same results, but it would be much more risky.

 

I think my thoughts echo those who say that investing truly has to match each individual. Otherwise it is just too risky...and trying to standardize that number to compare between managers...maybe it can be done partially, but I don't think one percentage can ever really capture all the risks.

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So I am up 26.8% this year. Happy, but humbled to read the 50%+ returns on this board. I held a large cash position throughout this year, and didn't invest more in my best ideas. My new year's resolution is to change that.

 

Palantir, I know we've talked about this a bit in the past regarding your bullishness, but I'm a bit confused but why do you seem to be so bullish in some of the other threads if you have had such a large cash position? Sure the economy seems like it's improving but prices have gone up quite a bit, too. We're also 5 years into a bull market (I'll go on record here to say that I don't think we're in a new secular bull...though I know the market may prove me wrong, haha). Statistically speaking, it's getting long in the tooth. It might be different this time, but who knows.

 

As for myself, I'm still almost fully invested, but my cash cushion is a bit larger than normal based on selling some appreciated securities and having yet to invest them.

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38.5% with 33.5% cash. Never less than 25% cash. Approximately 100 positions. No leverage.

 

Like Oddball I am impressed with the results of many here. All I can do though is what is comfortable for me. Know thyself is the key to being successful in this game. As much as I want to be Gordon Gekko, I will always be Bud Fox.

I personally find this result (and Nate's as well) just as impressive as the higher gains with the more concentrated portfolio's. With more positions there is a higher probability that skill instead of luck is the driving force behind the returns, and you have a lot less risk as well (especially with the cash position).

 

Kraven and I have discussed "know thyself " on and offline.  Whenever I have tried the Graham/Schloss style of of investing I have blown up or at least lagged badly - I have a knack for backing up the truck for loads of crap.  So For now I stick to the style that works for me which is similar to Eric's.  Do you call it luck that I have held BAc for nearly 4 years, AIG for two, Seaspan for 5.  Maybe its luck or maybe its a bit of an intuitive understanding of market psychology.  I also tend to load up the winners.  IMO, there is a lot of soft skill involved in risk managing a concentrated portfolio. 

 

I am certainly adaptable and ready to try a different path, should that make sense.  At this point it doesn't.  I have had one down year in 10, and it was 2011, not 08, or 09.  And it was due to style drift.

 

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38.5% with 33.5% cash. Never less than 25% cash. Approximately 100 positions. No leverage.

 

Like Oddball I am impressed with the results of many here. All I can do though is what is comfortable for me. Know thyself is the key to being successful in this game. As much as I want to be Gordon Gekko, I will always be Bud Fox.

 

Very impressive, Kraven

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So I am up 26.8% this year. Happy, but humbled to read the 50%+ returns on this board. I held a large cash position throughout this year, and didn't invest more in my best ideas. My new year's resolution is to change that.

 

Palantir, I know we've talked about this a bit in the past regarding your bullishness, but I'm a bit confused but why do you seem to be so bullish in some of the other threads if you have had such a large cash position? Sure the economy seems like it's improving but prices have gone up quite a bit, too. We're also 5 years into a bull market (I'll go on record here to say that I don't think we're in a new secular bull...though I know the market may prove me wrong, haha). Statistically speaking, it's getting long in the tooth. It might be different this time, but who knows.

 

As for myself, I'm still almost fully invested, but my cash cushion is a bit larger than normal based on selling some appreciated securities and having yet to invest them.

 

Fair point. I am investing a small amount of money and I only buy a stock when I'm really psychologically comfortable with it, and I like to have dry powder, so that results in me holding 30-40% cash.

 

I'm curious to know what you mean when you say that the rally is reaching its expiry date, so to speak. Does that mean you broadly expect poor returns over the next few years? Or do you simply mean that there could be a correction this year? If the latter, I agree with you, there could well be a -10% decline in the markets, but it could still be a long term bull. Who knows, though, that is why we have bottom up value investing, to prevent worrying about the level of the market, and focus on finding undervalued securities!

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Some incredible returns, based on this thread I take it no one had a bad year?

 

*raises hand*

 

Lots of cash and precious metals equity.

 

A Hussman fan, like to believe looking (and feeling) like an idiot before the peak preferable to looking like an idiot after.

 

We'll see.

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