During the last four years I invested my money according to the value philosophy. This was pretty rewarding as the returns were an average 12.26% per year, totaling 58.8% from beginning 2010 to the end of 2013. Unfortunately is value investing a time consuming job. If you want to do it right, you should put a lot of time into reading about companies. Not only consistently reading about the companies you are already invested in, but also reading about their competitors or about companies you might want to invest in at a later stage. This, however, has become impossible for me to do as I entered the last stages of my studies law and business economics. Therefore I sold most positions.
Green Mountain Coffee Roasters
Before I will tell you about the positions I sold because of the above decision, I have to tell something about my put options on Green Mountain Coffee Roasters (GMCR), now known as Keurig Green Mountain. As you might remember did I buy put options worth 2.5% of the portfolio betting that the company will deteriorate or that fraudulent activities will be discovered before January 2016. Unfortunately, a deal with Coca-Cola was announced a few weeks later. Coca-Cola will invest money into GMCR in return for a partnership in the development of an at-home cold beverage system. This system should become available in 2015 but I expect that only after January 2016 people can tell whether it is a success or a failure. What is more is that because of Coca-Cola’s monetary injection the chance of the company’s deterioration is slimmer, while the association of Coca-Cola’s name with GMCR will increase expectations, and therefore the stock price, until it becomes clear whether this partnership will succeed or fail. Although my investment case didn’t really change, the company might still fail in time, the chance that it fails before January 2016 is not big enough to keep the put options. I therefore sold them a month after I bought them and realized a 47% loss on my investment. A costly adventure in ‘shorting’ stocks.
The other transaction for the last half year are as following:
- Ensco (ESV) sold on April 4 2014 for $50.71 and a 1.8% return per year since bought (January 2010).
- Fairfax Financial Holdings sold on April 4 2014 for C$482.59 and a 23.7% return per year since bought (November 2012).
- Leucadia National (LUK) sold on April 4 2014 for $25.41 and a .4% return per year since bought (April 2012).
- Wal-Mart Stores (WMT) sold on April 4 2014 for $79.85 and a 13.7% return per year since bought (March 2011).
The returns are all excluding dividends or spin-offs. For some of the companies were those dividends substantial.
My shares in Berkshire Hathaway (BRK-B) will stay in my portfolio for the foreseeable future. This accounts for nearly half of the portfolio. The other half I didn’t put in a savings account, but I put it in an investment fund with a value-based philosophy. The fund invests in companies they think are undervalued, under-researches and unpopular. This philosophy is similar to the one I used and therefore appeals to me.
I choose to invest my money in the Skagen Global fund that invests globally (surprise, surprise). The largest positions are Samsung Electronics (7.7% of the portfolio), Citigroup (5.2%) and AIG (3.3%). The top 10 positions total 31.3% of the portfolio. The returns of the fund are quite good, although they are, of course, no guarantee for future returns. In the last 10 years they returned 12.2% vs 6.2% for their benchmark (MSCI All Country World Index). In case you want more information, go to www.skagenfunds.com
Investing in this fund allows me to proceed investing according to the value philosophy without having to spent too much time reading about every investment I make or might want to make. The people of Skagen have to prove they are worth their money of course, but I am aware of the aspects of value investing. It is not a problem if they don’t beat their benchmarks over a few years, it is the long term that counts.
Quote of the day pic.twitter.com/mpUzMiPV5U
— Jaap van Duijn (@jsgvanduijn) July 14, 2014
Although I haven’t got the time to consistently read about companies, I do have time to read, and follow Charlie Munger’s advice (see quote above). I love to read and learn new things, although sometimes I read a book just for entertainment. In case you wonder what I am reading, or you are looking for a great book, take a look at my Goodreads page where you can find what I’m reading and what books I gave 4 or 5 out of 5 stars after reading it. A Goodreads widget is also inserted in the column on your right, showing the last five books I read.
Below the portfolio as of June 30, 2013 and the performance of the portfolio until June 30, 2013. To see the tables from December, click here.
Click on table for larger view.
The Portfolio (1) is denominated in Euros. Transaction costs, custody fees (bewaarloon) and dividends are when necessary included in the Annual Percentage Change. (Dividend tax is included in full years (2010 to 2013)).
The AEX (2) is a stock market index composed of Dutch companies that trade on Euronext Amsterdam. The Annual Percentage Change is calculated without taking the dividends of the current year in account.
The S&P 500 (3) is a stock market index based on the market capitalizations of 500 large companies whose common stock is publicly traded on the NYSE. The Annual Percentage Change is calculated without taking the dividends of the current year in account.
Since 14 May 2012 the currency risk isn’t hedged anymore. This means that currency fluctuations can significantly influence the performance in the short term. To show how the currency fluctuated during a certain period, an extra column is added with the fluctuations since 14 May 2012. A decline indicates that the US dollar has become stronger against the Euro and vice versa.