Performance review Q1 2019

In the first Quarter 2019, the Value & Opportunity portfolio gained 8,3% (including dividends, no taxes) against 11.9% for the Benchmark (Eurostoxx50 (Perf.Ind) (25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%)).

Links to previous Performance reviews can be found on the Performance Page of the blog.

Some other funds that I follow have performed as follows in Q1 2019:

Partners Fund TGV: 10.63% *

Profitlich/Schmidlin: +8,45%
Squad European Convictions +6,44%
Ennismore European Smaller Cos +6.09% (in EUR)
Frankfurter Aktienfonds für Stiftungen +0,37%
Evermore Global Value  +6,54% (USD)
Greiff Special Situation +2,56%
Squad Aguja Special Situation +6,56%

*Since inception (01.01.2011), this translates into +173,2% vs. 86,4%  for the Benchmark.

Q1 2019 transactions

Q1 was relatively calm. I entered into two new special situations: April SA in January  and KAS Bank in March, With Zur Rose AG, the Buffett/Munger/growth bucket got a new entry in March. There were no sales, only Vostok New Ventures distributed their special dividend which reduced the position by a 1/3.

February/March also included a “surprise” payment from MAN Preferred shares that I owned in 2014/2015 and where some sort of compensation was paid out.

The current portfolio, as always can be seen on the portfolio page. The average holding period is now 3,7 years which is inside my 3-5 year target. However I will most likely clean up some legacy positions in Q2.

Performance review:

Being behind the benchmark by almost 4% is not great but part of my investment strategy. Also, compared to my “peer group”, the performance is OK.

Negative impacts clearly came from Majestic, however Record did even worse YTD. Also my remaining banking stocks, Handelsbanken and Van Lanschot were slightly negative or flat. Some of my oldest stocks are also going nowhere like Draeger, Installux and Miko. The only real outperformers were Bouvet and Vostok New Ventures, although the Vostok position is tiny. My two US stocks, Cars.com and Expedia also underperformed the US indices. In Q2 I really need to look into my portfolio in order to check if it makes sense to keep all of these stocks.

Comment/Outlook

From the risks that I mentioned in my 2018 performance review (BBB- debt, inflation, Brexit, Tariffs) so far nothing seems to have an impact or, put it another way, everything has already been priced in.

Even the slow down in the global economy seems to have no impact at all on general stock price levels. German industry order intake for instance has dropped significantly, especially from the all important Chinese market.

In contrast, we are seeing an IPO bonanza with companies like Zoom, Lyft and many more heading public and the UK market is up more than 10% this year.

Part of that equity rally can be attributed to a drop in interest rates. 10 year Bunds are again negative. Nevertheless, investors seem to be quite optimistic that all the issues are temporary.

As always, I do not have an opinion where stocks will go, and I don’t think that one should panic, but at this stage I remain cautious.

in very cautious.

 

 

 

 

 

 

3 comments

  • Good post & thanks for sharing.

    Agree with many comments. Cautious approach seems much advised. And a bit of rotation of some stocks, that may have run out of fuel…

    If I am not wrong, some investor professionals studied the cycle of high performing stocks, and found an avg around 7 years “of glory” in equity markets, before fading (nb. this seems sensible, also as an avg time for competitors to replicate business models, competitive advantages, or canibalize products). Of course there will be many exceptions, but those 7 years may also provide an indicative guide of fuel span (when to rotate portfolio). Again very case-dependent.

    My portfolio performance was reasonable/good to the point that made me also very cautious / hesitant. I feel like any time an avalanche may set off (yet I see no apparent reason immediately… beyond the brexit bad comedy).

    Another point is that the last 10 years were very anomalous, as market performance was reasonably good & smooth… and maybe we got too used to that good life. Probably we should get more used to turbulent waters & rollercoasters… 😉

  • Would be nice to have your feedback on the recent developments at Majestic. Thank you

  • Good performance. Shouldn’t be the asterisk at your performance, not Partners Fund?

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