value and opportunity

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.