2012 Performance review and comments
Performance
2012 was a very good year for the blog portfolio. Overall performance 2012 including dividends and interest) was 37,4% vs 26.6 % for the Benchmark (50% Eurostoxx, 30% DAX, 20% MDAX), resulting in a relative outperformance of 10.4% for the year 2012.
Further details can be found in the following table:
| Bench | Portfolio | Perf BM | Perf. Portf. | Portf-BM | |
|---|---|---|---|---|---|
| 2010 | 6,394 | 100 | |||
| 2011 | 5,510 | 95.95 | -13.8% | -4.1% | 9.8% |
| Jan 12 | 5,972 | 99.27 | 8.4% | 3.5% | -4.9% |
| Feb 12 | 6,275 | 105.90 | 5.1% | 6.7% | 1.6% |
| Mrz 12 | 6,330 | 107.22 | 0.9% | 1.2% | 0.4% |
| Apr 12 | 6,168 | 108.02 | 0.8% | -2.6% | -3.3% |
| Mai 12 | 5,750 | 108.90 | -6.8% | 0.8% | 7.5% |
| Jun 12 | 5,969 | 110.17 | 3.8% | 1.2% | -2.6% |
| Jul 12 | 6,229 | 112.15 | 4.4% | 1.8% | -2.6% |
| Aug 12 | 6,428 | 119.48 | 3.2% | 6.5% | 3.3% |
| Sep 12 | 6,510 | 123.48 | 1.3% | 3.3% | 2.1% |
| Okt 12 | 6,672 | 125.32 | 2.5% | 1.5% | -1.0% |
| Nov 12 | 6,804 | 127.04 | 2.0% | 1.4% | -0.6% |
| Dez 12 | 6,973 | 131.81 | 2.5% | 3.8% | 1.3% |
| YTD 12 | 6,973 | 131.81 | 26.6% | 37.4% | 10.8% |
| Since inception | 6,973 | 131.81 | 9.1% | 31.8% | 22.7% |
The December 2012 outperformance is mainly a result of some significant year-end effects in some of the stocks like Total Produce, SIAS and Buzzi to name a few.
Also many of the stocks are rather “boring” low beta stocks. Therefore the 2012 outperformance should be viewed more as lucky timing of special situations than anything else. In a normal “bull year” like 2012 the portfolio should significantly underperform. In 2012 however, some of the special situations (esp. AIRE KgAA and Draegerwerke) catalysed unexpectedly early and let to this outperformance. From an overall strategy point of view, i would assume that my portfolio outperforms in bad years and underperforms in bull years.
To be honest, I don’t think that the current portfolio has an equal upside potential like in the beginning of last year, mostly due to the lack of really interesting special situation investments. For instance, the upside of athe Draeger Genußschein was much higher when it trades at ~2.5 times the pref shares than the current 4.5 times. On the other hand, I think the portfolio is well protected to the downside which should be the major concern of any (real) value investor.
Portfolio:
The only change in the portfolio in December was the purchase of some Sol Spa shares in the last few days, taking advantage of the significantly dropping share price.
| Name | Weight | Perf. Incl. Div |
|---|---|---|
| Hornbach Baumarkt | 4.5% | 6.9% |
| AS Creation Tapeten | 4.1% | 22.2% |
| BUZZI UNICEM SPA-RSP | 5.5% | 16.0% |
| WMF VZ | 3.4% | 42.6% |
| Tonnellerie Frere Paris | 4.9% | 31.5% |
| Vetropack | 4.5% | -2.3% |
| Total Produce | 6.2% | 53.3% |
| SIAS | 6.3% | 52.6% |
| Installux | 2.9% | -1.6% |
| Poujoulat | 0.9% | -2.8% |
| Dart Group | 3.8% | 83.7% |
| Cranswick | 5.0% | 2.7% |
| April SA | 3.5% | 33.0% |
| Bouygues | 3.1% | 15.2% |
| KAS Bank NV | 4.7% | 9.6% |
| Gronlandsbanken | 1.2% | 19.5% |
| SOL Spa | 1.7% | -0.7% |
| Drägerwerk Genüsse D | 9.2% | 96.5% |
| IVG Wandler | 4.9% | 11.6% |
| DEPFA LT2 2015 | 3.0% | 52.6% |
| HT1 Funding | 4.7% | 38.4% |
| EMAK SPA | 4.4% | 17.6% |
| Rhoen Klinikum | 2.4% | 2.4% |
| Short: Focus Media Group | -1.0% | -3.7% |
| Short: Prada | -1.2% | -17.3% |
| Short Lyxor Cac40 | -1.3% | -5.7% |
| Short Ishares FTSE MIB | -2.2% | -7.5% |
| Terminverkauf CHF EUR | 0.2% | 5.0% |
| Tagesgeldkonto 2% | 10.7% | |
| Value | 63.4% | |
| Opportunity | 28.6% | |
| Short+ Hedges | -5.5% | |
| Cash | 10.7% | |
| 97.2% |
The cash quota of ~10% is within my usual target range.
Outlook and comments:
If I would be in the “tactical” Asset allocation business, I would expect a rather strong start into the new year.(Edit: Is started writing this 2 days ago…) So many investors have watched the stock market from the outside and momentum looks quite strong. It looks like the fear of missing out another strong year is overcoming the fear of Euro crisis, fiscal cliff etc. or to quote Howard Marks: “when greed is stronger than fear”.
On the other hand, as a bottom up value investor one should be more cautious than ever. When greed is trumping fear, naturally for a value investor times get harder as under valuations are fewer and harder to find. The temptation rises to invest in “weak” stocks or turnarounds without much downside protection.
This goes together with the behavioural bias of “overconfidence” which usually is getting stronger after good years.
So the main focus for value investors will be to “stay the course” and not get lured into more risky and only superficially “cheap” stocks despite another period of potential underperformance against major stock indices.
The “harvest” will come when everyone is “on board” in the stock market and the next (inevitable) correction or contraction will come.
Gratulation zu2 guten Performance 2012, mmi!
Der Gedanke, wie man in einer Hausse ohne steigendes Risiko im Markt bleiben kann, ist mir noch unklar. Wenn man seine Aktien hält, sinkt mit steigenden Kursen die Sicherheitsmarge.
Wenn man andererseits in zurückgebliebene Werte umschichtet, ist damit meist ein anderes Risiko verbunden ( Illiquidität, Fremdwährung, Branchenmalus etc.)
#pantarhei,
vielen Dank. Deine Performance lässt sich wie immer ja auch durchaus sehen 😉
Guter Punkt, wobei für mich (und meinen Anlagestil) Illiquidität ein annhembares Risiko ist wenn es entsprechend bezahlt wird.
mmi
No it is not bad per se. Different strategies work for different people. For me personally, I just have to be careful not to jump into riskier situations only because in my “traditional” area, securities are not cheap anymore.
Hallo MMI,
Darf ich mal nachfragen, warum Du nun doch in Sol investiert hast? Was ist Deine These?
Hattest ja lange gegrübelt .
Gruß
Ich hatte ja gesagt, dass ich bei 3,50 kaufen wollte. In der Zwischenzeit hatte sich für Italien der Markt ja deutlich beruhigt, Sol ist aber zum Jahresened auf 4 EUR zurückgefallen.
Relativ zum Itlaienischen MArkt ist die Aktie deshalb für mich so attraktiv wie damals um 3,50 EUR.
MMI
Valuation of my portfolio is higher than at the start of 2012. I am more pessimistic now. How does this behavioral bias work?
I could also argue, after this performance, I can leave stock markets alone for years and would still have beaten inflation on an after tax basis, which is my primary aim. For now I reduce my significant exposure a little bit.
As valuations of safe assets have risen, I am more tempted to invest in risky assets. Last year’s bargain Greek equity (sold), Irish equity (still long total produce), this year Ukraine, China on radar.
I even like the fiscall cliff’s long-term implications because I think this will improve allocation of American assets. Euro crisis is more risky for bank equity, sovereign bonds than for your portfolio. Overall what’s the alternative to equity? Normally I don’t hold cash, but I will increase cash to 10%.
Good luck for 2013!
Martin,
thanks. The “overconfidence bias” works in a way that you feel more confident after a good run and start to invest in riskier stuff, which many times turns out as too risky ….
What you describe is a good example. After Greece worked, people might go into more risky stuff like Greman Chinese companies etc. This might even work for a while 😉
MMI
At least I have a certain position size in mind and don’t go all-in.
Buying almost debt-free companies with ultra-low pe in markets with high equity risk premium as an addition to my low beta equities works for me. Risk(=volatility) is not bad per se.