On several occasions I wrote that I have trouble finding new bargains. In the beginning of 2014 however I found something different. Namely a way to gain when the share price of Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR, later in the article: Green Mountain) will have declined: buying Jan 2016 put options. In this article I want to answer the question why I want to ‘short’ Green Mountain.
Green Mountain Coffee Roasters Inc.
Green Mountain produces and sells single-cup coffee makers and produces and sells K-Cups (the cups to put into those coffee makers or brewers), this is comparable to the in the Netherlands more familiair Senseo machine. The K-Cups Green Mountain sells can contain their own coffee brands but they also have several license agreements with for example Starbucks and Dunkin’ Donuts.
2013 was a great investment year. The S&P 500 increased almost 30% and the AEX 17%. My portfolio, after two years of outperformance, didn’t outperform the markets in 2013 (+16%). The graphic below explains for a big part the reason why.
Although the graph doesn’t exactly grasp 2013, it clearly shows that none of my stocks outperformed the S&P 500 and Ensco even declined during the year. As I told you after the years when I did outperform the market, is one year of out- or underperformance not a big deal. Even after four years of investing there might be a problem to reach a conclusion based on the results. The reason of this is that we haven’t had a real bear market since 2009. The only way the market went was up and this is shown in the valuations of the stock market. Some of the businesses in my portfolio are also valued near fair value. Therefore, you shouldn’t be surprised if I will sell some stocks if the market advances further. This will, on the other hand, have the effect that it will be even less likely to outperform the market on the way to its top. But that is not the objective. The objective is to gain on the long run.
In other news, my broker again didn’t give me a present at year’s end. Probably because they didn’t make a lot of money of me in 2013, only two transactions were made:
Fairfax Financial Holdings (FFH): bought in November 2012
Berkshire Hathaway Inc. (BRK.B): bought in January and April 2012
Ensco PLC (ESV): bought in January 2010
Wal-Mart Stores, Inc. (WMT): bought in December 2012
News in Q4:
If you want to know more about what happened to my businesses during 2013, please read the Investment reviews of 2013.
Below the portfolio as of December 31, 2013 and the performance of the portfolio until December 31, 2013. To see the table from last quarter, 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 2012)).
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 (and 2013) 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 (and 2013) 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.
Economic history: A Keynes for all seasons | The Economist http://t.co/kipJZyjWgK
— Jaap van Duijn (@jsgvanduijn) November 27, 2013
Interview of former CEO Capital Cities/ABC (now part of Disney) Tom Murphy about his career and the company http://t.co/eHSdV9L6GT
— Jaap van Duijn (@jsgvanduijn) December 4, 2013
Remembering economic historian: Charles P. Kindleberger http://t.co/PWF5JH9Y4C
— Jan Doxrud (@JanDoxrud) December 6, 2013