Performence review April 2012 & comments

April 2012 was a relatively good month for the Portfolio. Against a Benchmark Performance in April of -2.6%, the portfolio showed a gain of +1.2%. YTD, the portfolio is now up 12.6%% against 11.9% of the Benchmark.

Performance overview:

Bench Portfolio Perf BM Perf. Portf. Portf-BM
2010 6394 100      
2011 5509.87 95.95 -13.8% -4.1% 9.8%
           
Jan 12 5972.48 99.27 8.4% 3.5% -4.9%
Feb 12 6275.00 105.90 5.1% 6.7% 1.6%
Mrz 12 6329.66 107.22 0.9% 1.2% 0.4%
Apr 12 6168.20 108.02 -2.6% 0.8% -3.8%
 
YTD 12 6168.20 108.02 11.9% 12.6% 0.6%
 
Since inception 6168.20 108.02 -3.5% 8.0% 11.6%

The outperformance in April was mostly triggered by the jump in the share price of AIRE KGaA, which went up from around 11 EUR to 17 EUR at month end. Luckily, I only sold a very small amount after the 10% tender offer from the company itself (~1000 stocks) before the AIG offer of EUR 17 was announced on Monday April 30th.

The relatively weak performance of my Italian positions (EMAK, Buzzi, Piquadro, SIAS) was partly off set by the gain in the FTSE MIB short position.

Other notable outperformers in April were WMF and AS Creation.

Portfolio Changes April:

Nestle: fully sold
Piquadro: 0.5% added at around 1.43 EUR (50% hedged with FTSE MIB short)
AIRE KGAA As discussed above, I sold 1.060 stocks at 13.52 EUR (25% of trading volume) before the announcement on Friday April 30th with a gain of 54.50%. On Friday April 30th, the volume was so high, that I sold 22.952 stocks (position down to 5%) at 17 EUR with a gain of 94.26%, almost a double.
Installux: Beginning on April 30th, the first 55 shares were bought. This will be a long way to establish a position…

Portfolio composition April 30th

Name Weight Perf. Incl. Div
Hornbach Baumarkt 5.1% 4.92%
Fortum OYJ 4.4% -14.56%
AS Creation Tapeten 4.0% -4.02%
BUZZI UNICEM SPA-RSP 5.1% -12.75%
EVN 2.8% -13.72%
Walmart 3.9% 18.75%
WMF VZ 4.2% 44.32%
Tonnellerie Frere Paris 4.9% 7.07%
Vetropack 4.6% -2.99%
Total Produce 5.0% 15.98%
OMV AG 2.2% -14.99%
Piquadro 1.6% 8.78%
SIAS 2.4% -6.40%
Installux 0.1% 0.00%
     
Drägerwerk Genüsse D 8.9% 44.61%
IVG Wandler 2.2% 7.70%
WESTLB 6.9% 5.6% 35.25%
DEPFA LT2 2015 3.1% 29.04%
AIRE 4.8% 96.72%
HT1 Funding 4.7% 5.92%
EMAK SPA 4.8% 0.96%
DJE Real Estate 4.2% -3.18%
Praktiker 2016 2.5% 0.75%
     
     
Short: Kabel Deutschland -2.2% -23.07%
Short: Green Mountain -1.6% 14.30%
Short Ishares FTSE MIB -2.4% 3.74%
Terminverkauf CHF EUR 0.2% 4.43%
     
Tagesgeldkonto 2% 14.9% 0.00%
     
Summe 100.0%  
     
Value 50.1%  
Opportunity 40.8%  
Short -6.0%  
Cash 14.9%

Outlook & Strategy:

As a contrarian investor at heart, current times are quite exciting. There are a lot of industries and entire countries (PIIGS, utilities, financials) which trade at very cheap valuations. Of course there are a lot of macro risks on the horizon. As a value oriented contrarian investor one should howver focus on the long run. The “This time is different” argument should also be applied on the positive side, meaning that the world will not end, people will still need bank accounts, electricity or want to travel in the future.

So the focus should be less on guessing and interpreting daily Central Bank actions or election outcomes but on analyzing cheap companies with lasting business models, no matter where they are located.

Greed and fear are the two worst investment advisors available. Because of this, one should not fear investing in currently depressed businesses if they are deemed to be lasting, on the other hand one should try to avoid chasing expensive past “winners” like consumer stocks, flats in Munich etc.

However this is often easier said than done, especially if one takes the daily news “tsunami” too serious. My personal technique is to read a historical finance book from time to time in order to get the “right perspective” and that current problems are nothing new. At the moment I am reading “Lombard Street” from Walter Bagehot, I hope I can post a rview soon.

10 comments

  • I hope ASTM added today SIAS shares… volume is huge… they better buy more SIAS than Impregilo ….

  • two donwgrades to target price 6,50 Euro …. question is why!?

  • interesting activity today in SIAS !!!

  • Hi,

    Congratulations for the weight of your global portfolio if 55 installux represents 0.1% of it.
    More Seriously could you check direct TV? Huge repurchase of their stock even by borrowing money, and growth in latin america, Berkshire and East Coast Asset management are holdings a position.
    I would like another view on this stock if you have a couple of minutes to check the numbers.

    Thanks

    • #julestot,

      the Blog Portfolio is a “model portfolio” with 10 mn EUR virtual money.

      My “real portfolio” is slightly smaller 😉

      Re DirectTV: For me, the stock is not really interesting due to the following reasons:

      – market cap too large
      – already too well known, if Buffet is already in, then why bother ?
      – i don’t really like LatAm exposure.

      So to make it short: I have a certain Filter and if companies do not pass this filter, i skip to save time for other ideas.

      At the moment I am more looking for PIIGS small caps, utilities, financials.

      Sorry,
      MMI

  • Hi,

    You said you bought 55 shares of installux that represents 0.1% of your portfolio. Congratulations for the weight of your global portfolio.

    As I respect your advice, could you take a look at the following stock. direct tv in the US?
    Berkshire Hathaway has a position and also East Coast Asset Management. If you check the figures, you will see that the last 2 years they repurchase for 5 billions each year of their stock and that they intend to do the same in 2012. Moreover even if direct tv is flat in the us market, the growth in latin america is impressive. I bought a first position today, but I would like an advice of a specialist to confirm or to don’t agree with my analyse.

    Thanks

  • Congratulations to the solid performance of your portfolio. Very useful to also read your regular updates and comments to the various portfolio positions. Interestingly the bigger pie of the positive performance currently appears to be contributed by your “opportunity” based investments in the high yield bond and hybrid sector rather than by the “value” driven picks. What are your thoughts about this ? Quite impressive also that 3 out of 9 positions in this portfolio segment enjoyed very attractive tender offers in the last six months (HT1, Dräger, AIRE) but clearly these are not the only performance drivers. Not surprising therefore that as a regular reader of your blog I always find your comments on special situations/investment opportunities particularly interesting.

    • Shortguy,

      thank you for the comment. I think a lot of the very positive performance of the “special situation” can be attributed to “pure luck”. I didn’t expect a tender offer for AIRE for instance.

      For me, the special situations help to stabilize the portfolio in difficult times as the risks are mostly very security specific. However, idea genereation in this area is not always easy, as you can’t really use screeners etc. for the really interesting cases.

      In general, I would like to have something between 25-50% “special situations” in the Portfolio. IK would not want to have a “full” special situation portfolio, as this is too much work and i still believe (long term) in the “value” of traditional value stocks.

      MMI

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