Performance review 9M 2018 – Comment “Anti Buffett or Beyond Buffett ?”
Performance 9M 2018:
In the first 6 months of 2018, the Value & Opportunity portfolio gained +3,38% (including dividends, no taxes) against -2,2% for the Benchmark (Eurostoxx50 (Perf.Ind) (25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%)).
Some other funds that I follow have performed as follows in Q1 2018:
Partners Fund TGV: +6,95%
Squad European Convictions +1,97%
Ennismore European Smaller Cos +2,16% (in EUR)
Frankfurter Aktienfonds für Stiftungen -4,42%
Evermore Global Value -1,59% (in USD)
Greiff Special Situation -1.91%
Squad Aguja Special Situation -3,86%
Paladin One +1,5%
The top 3 performers on a weighted basis were for 9M 2018 were:
|Weight 12/17||Perf ytd||Attr|
|Tonnellerie Frere Paris||9.8%||8.2%||0.8%|
The worst 3 performers for 9M were:
|Weight 12/17||Perf ytd||Attr|
Clearly this year my direct Oil exposure via TGS and the indirect one (Bouvet, Norway) has helped the portfolio. However more important is that around 2/3 of my positions are positive, so the performance itself is driven not only by a few winner but by the majority of the portfolio,
Looking at he monthly returns YTD, it is interesting to see that as in the past, the outperformance is generated in “down months” whereas durung “Up months” the portfolio generally lags significantly:
|Perf BM||Perf Portf.||Delta|
As mentioned before, there is some time-lag in play but alos the rather defensive character of the portfolio.
In Q3, I sold my Metro shares, unfortunately a little bit to early. If I would have waited a week or so I could have gotten 1 EUR more per share. Still the Metro loss did hurt. I also tendered 40% of my DOM Security shares for 75 EUR/share. The only purchase was to increase Paul Hartmann from 2% to 3%. As a result, my cash allocation has now reached 19% which is the highest since starting the blog almost 8 years ago.
The current portfolio, as always can be seen under the dedicated portfolio page.
My average holding period now has reached 3,3 years (ex cash) which I find very satisfying.
For the friends of details: I have re-arranged the “Buckets” of my portfolio a little bit. Instead of separating between Contrarian and Special situations, I combined these into an opportunistic” bucket.
The others (Boring, Different, Buffett/Munger) stay the same.
Comment: “Anti Buffett or Beyond Buffett”
In my last post on FitBit, one commentator mentioned that FitBit as an Investment would be “Anti Buffett”.
I think this comment implies 2 important parts that I here often within the “Value Investing” community:
- Only “Buffett” like investments are good investments
- Only “Value investing” is good investing
Personally and over time I get more and more annoyed and also bored with this kind of quasi-religious behaviour. I honestly do not understand why one should spend most of his time reading and re-reading Buffett’s annual letters or even deeply analyzing his investments from many decades ago.
Yes, there is a lot of interesting stuff in there but personally I think it makes much more sense to understand the underlying philosophy which in my opinion is relatively simple:
It’s all about long-term and “business like” investing.
Also I think there is no “Buffett-like” investment as such. Buffett has changed his style more than once and I am pretty sure that a lot of what he does these days is the result of size. He did a lot of net-net in the beginning plus special situations and then moving slowly with the help of Charlie Munger into “quality growth”.
For instance for decades he didn’t like airlines and many of his followers didn’t like them either until….suddenly he liked them. Another example: Instead of laying “all eggs into one basket” he hired Ted and Todd who now run their own portfolio with very different positions than his own. I would call this move “diversification”…..
So what’s the alternative ? Although many “value investors” would wrinkle their nose at them, I do think that especially (good) Venture Capital investors do think much more long-term and business like than most value investors that I know. An early stage VC is stuck with his investments for at least 7-10 years and normally has no chance to trade out of an investment. There are no historical numbers, only the people who run the venture. This makes investing very forward-looking.
Clearly, in the VC world there are many “spray and pray” investors as well but therefore it is really important trying to learn from the “Good guys”. And there is a lot to learn.
I find it for instance very interesting that Buffett and especially Munger never got Software companies. Buffett always stresses that he doesn’t understand “technology” but Software as such is not really technology but quite predictable “Moaty” companies with often absurdly high ROCEs. Whenever they tried their luck with “technology” they stuck to old school, hardware based companies (e.g. IBM or now Apple).
Or take newspapers for instance: Buffett loved the business model of a dominating local newspaper but he clearly didn’t see the fundamental change coming and doesn’t know himself what to do.
So reading in Buffett’s 1963 Partnership letter will most likely not help you in understanding Software companies or finding out which industry will be seriously disrupted next. Reading stuff from guys like Paul Graham and Fred Wilson however does give you some insight where change is happening. Personally, I do think that we are currently seeing a major “tectonic” shift in all financial services as well in the mobility sector.
But just to be clear: I do not recommend to go and invest in technology companies NOW. There is a lot of hype and too much money in technology, so now is not the time to go big time into the sector. But as I have written almost exactly one year ago, I recommend every “value investor” to take some time and read also stuff from some of the great VC guys instead of rereading Buffett’s 1966 partnership letter for the seventh time.