Tuesday, January 6, 2015

Portfolio overview - December 2014

My top (>2%) positions in no particular order: FRFHF, JPM, LMCA, MHNC, SPND, BKLN, MKL, DRAGF, BRKB.
In:
Out: MGDDY, WDC, CF, GLW, AXS, RE - sold

Fixed income: ~16%
Cash: ~28%

Sectors (kinda):
Insurance (including BRKB and FRFHF): 20%, Malone/media: 10%, Banks: 6%, Cars and parts: 1%, Oil 9%, Agri 1%, Tech 3%

New positions: GDWN.L, KRSL, SFY bonds, BFCF, BBX, ISIG, DNR, PWE
Positions increased: GTE, TESB.BE, BRKB, FRFHF
Positions reduced: PGN, BKLN, MSFT
Positions eliminated: STX, MDT, DVDCY, HYH, ANTM, CF, DNB, DE, AXS, EBAY, GLW, MGDDY, RGA, SMTUF, WDC, WU, TPCA, RGA, OVLY, GS, FMBL, 7399:JP, RE, BBBY
Flip-flop: TLM

Note that some trades were made before my decision to cut active investing.

My current plan is to put most of the money into FRFHF. Since I can't stand concentrated portfolio, there will be "forever" positions in some other stocks, probably BRKB, perhaps some Malone stocks. This is work in progress.

I will keep oil stock positions and may even buy more if oil continues to drop. I believe that some of these positions may double or more in the future. Some may go to zero though.

Going to my buys/sells:

Oil: sold some PGN since it may face default and bankruptcy. Bought GTE, PWE, DNR stocks and SFY bonds. Flip flopped TLM for one day gain.

Sold - pretty much everything in "positions eliminated" category is somewhat attractive, feel free to consider them as long ideas. :) MSFT leftover is in taxable account and is waiting until it hits long-term taxable point.

Bought:
GDWN.L - family operated UK firm with good earnings history. Somewhat cheap, but energy industry exposed.
KRSL - activist investor and unhappy director. Company tried to pay off with $3 divvie. The story might not be finished, but less attractive here.
BFCF/BBX - sum-of-parts investment presented on SI and other places couple times.
ISIG - Mr. Big from BH retaliated against activist investors trying to proxy fight BH by buying positions in companies where these investors held substantial positions. So now ISIG has two activist investors in it - bring the popcorn!

Thursday, January 1, 2015

Preliminary 2014 Investment Results

Results are preliminary, since Quicken has not updated some of the 12/31 trades and distributions. These should not be large enough to affect much. Also Fidelity does not have their calculation of yearly results yet and won't have them for couple weeks at least.

Other caveats: rates are from Quicken/IRR which I still believe is buggy/not reliable. Couple positions are wide spread micro caps that trade on appointment, so their prices are sometimes misprinted and therefore misaccounted. Couple positions are foreign stocks that may have incorrect final prices. Some results include 401(k) accounts where I cannot invest into my selection of stocks and ESPP accounts where return accounting by Quicken is suspect. So reader beware.

Executive summary: 8.7% return which underperformed market. I am selling my investment portfolios and winding down active investing.

Longer version: Total IRR across all accounts is 8.05%. After removing ESPP and 401(k) accounts, the return is 8.7%. Both of these undeperformed market a lot (benchmarking against SP500 13.7% return). These returns are even worse considering that BRK stock return was 28% and Fairfax return was 31%. Both of these were positions in my portfolios.

Even considering ~16% cash position and ~16% fixed income position, the results are bad. The fact that other active managers did not do well this year is of little solace.

As an aside 401(k) portfolios underperformed SP500 because of: 30%+ bond fund allocation, 30%+ international allocation (VTIAX and FDIKX are both negative for year) and some small cap allocation.

So my plan is to liquidate my investing portfolios in orderly fashion and convert to mostly passive investing. I have some concern that funds that I passively allocated performed worse than my active investments last year. However, there are two solutions to this: 1. Passively invest in BRK/FRFHF/etc. mix. 2. Longer term the non-ideal allocation might even out.