Category Archives: Performance Review

Performance review 9M 2017

Perfomance 9M 2017:

In the first 9 months of 2017, the blog portfolio gained +18,1% +18,5% (including dividends, no taxes) against 15,1% for the Benchmark (Eurostoxx50 (Perf.Ind) (25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%)). Since inception, the score is now +178,2% 179,1% vs. 95,1% for the benchmark. The full details (and graph) as always on the performance page. (adjustments for TGV Partners final 30.09. valuation)

In the third quarter, the portfolio underperformed the benchmark significantly (+1,8% vs. +5,33%). Several of my larger positions did not very well in this quarter.

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Performance review 6M 2017 – Comment “Resisting the Siren’s songs”

Perfomance 6M 2017:

In the first 6 months of 2017, the blog portfolio gained +16,0% (including dividends, no taxes) against 9,28% for the Benchmark (Eurostoxx50 (Perf.Ind) (25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%)). Since inception, the score is now +174,6% vs. 89,4% for the benchmark. The full details (and graph) as always on the performance page.

Some other funds that I follow have performed as follows in 6M 2017:

Partners Fund TGV: +10,88% 
Profitlich/Schmidlin: +6,04%
Squad European Convictions +17,65%
Squad Aguja +9,48%

Ennismore European Smaller Cos 1,87% (in EUR)
Frankfurter Aktienfonds für Stiftungen +10,24%
Evermore Global Value +2,22%
Greiff Special Situation +8,55%

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Performance review 2016 – Comment “Active vs. Passive: The Story of Mr. Cool and Mr. Crap”

Performance 2016:

In 2016, the blog portfolio gained +12,42% (including dividends, no taxes) against 4,55% 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 2016:

Partners Fund TGV: +15,95%
Profitlich/Schmidlin: +3,13%
Squad European Convictions +18,51%
Ennismore European Smaller Cos -1,49% (in EUR)
Frankfurter Aktienfonds für Stiftungen +6,2%%
Evermore Global Value +21,5%
Greiff Special Situation +5,88%

Since inception (01.01.2011), this translates into +135,6% or +16,9% p.a. vs. 69,5% or 10,1% p.a. for the benchmark. Graphically this looks like this:

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Performance Q3 2016 – Random observations


In Q3 2016, the portfolio gained by +7,5% vs. +7,7% for the benchmark (25% Eurostoxx 50, 25% Eurostoxx small 200, 30% Dax, 20% MDAX).

YTD the score is +5,9% vs. -2,5%, since inception (01.01.2011) +121,8% vs.63,5%. As always Quarter & YTD numbers are very volatile and can easily fluctuate +/- 5% on relative basis in very short time.

The detailed month-by-month table, graph and links to all the reviews can be found on the performance page.

My subjective “Peer Group” has done like this YTD:

Partners Fund TGV: +6,9%
Profitlich/Schmidlin: +0,2%
Squad European Convictions +9,3%
Ennismore European Smaller Cos +13,3%
Frankfurter Aktienfonds für Stiftungen +3,5%

The best performing shares in the portfolio in Q3 were:

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Performance review June 2016 – Comment: “Brexit, Excuses and Risk Premiums”

Performance Q2 2016:

In the second quarter, the portfolio gained +0,6% against -3,5% for the Benchmark (25% EUR Stoxx 50, 25% EUR Stoxx small, 30% DAX, 20% MDAX). YTD the score is -1,4% for the portfolio against -9,5% for the Benchmark. On a rolling 1 year basis, its +1,0% for the portfolio and -8,4% for the bench.

Just for fun, here is the YTD/1 Year performance of some small funds that I follow and where I know the managers (I will track them in future reviews just to see how I am doing against the “Pros”, data from Bloomberg):

Partners Fund TGV: +1,71% / +7,20%
Profitlich/Schmidlin: -3,86% / -4,35%
Squad European Convictions -1,19% / +7,85%

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Performance review 2015 & 5 years 2011-2015

Performance 2015

2015 is now in the books. For the full year, the portfolio gained 14,13% (including dividends, excluding taxes) vs. 12,47% for my Benchmark (Eurostoxx50 (Perf.Ind) (25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%)). With +1,7% the relative performance was very small but nevertheless positive. However if we look at the monthly returns for 2015, we can clearly see that for most of the year I was trailing the benchmark:

perf 2015

After trailing the benchmark almost -9% in the beginning of the year, the pull back in autumn brought the portfolio back above the benchmark for the year, overall the outperformance for 2015 is clearly in the “not significant” range of outcomes.

The top performers in 2015 were (incl. dividends, in EUR):

TFF Group (+54,3%)
Miko (46,1%)
Admiral (43,3%)
NN Group (37,9%)
Gagfah (30,0%)
Van Lanschott (29,4%)
Bouvet (28,5%)
IGE & XAO (26,6%)

The major detractors were:

Romgaz (-16,7%)
Depfa TRY Zero (-16,7%)
Koc Group (-15,3%)
TGS Nopec (-13,9%)

If you had asked me end of 2014 which stocks would have been my favourites in 2015, only Admiral would have been in my list. I clearly did not expect Stocks like Miko and TFF perform so strongly. This is also one of the reasons why for me too much concentration wil lmost likely not be value enhancing.

The 2015 performance was OK, although compared to the overall performance of European small and Midcaps it was not spectacular. Actually for anyone investing in the European small and midcap area, 2015 was an extremely good year. The German MDAX increased around 23%, the SDAX around 27% and the tech oriented TecDax even 34%. Also the French CAC 90 small index gained 30% and the Italian Star index around +40%. So you will see some European funds posting spectacular results for 2015 if they invested mostly in those markets. However many of those markets are now very expensive, trading at trailing P/Es of high 20ies to high 30ies. It remains to be seen if they can hold those valuations in 2016, I am somehow sceptical. I think in those markets too much growth is priced in already into many of the stocks.

My “adventure” with Emerging markets clearly was negative for the 2015 performance. If I would have stuck to my “core competency”, European small and Midcaps, I would have certainly performed a lot better. In the long run however, I do think that there is a pretty good chance that this pays off as those markets will come back at some point in time. Es with the European stocks, I think it is very important to get familiar with those markets already when they go down. I do think it is unrealistic assuming to be able to enter any such market at the bottom. There will always be some pain in the beginning when you extend your circle of competence.

Portfolio transactions in 2015:

The current portfolio can be found as always on the portfolio page of the blog.

Stocks bought in 2015:

Lloyds Banking Group
Greenlight Re
Partners Fund

Stocks sold in 2015

Kas Bank
Depfa LT2 (maturity)

Interestingly, 4 out of 6 new stocks were special situations and one of my new value picks was a fund. So I only found one “core value” stock in 2015. Of the sold ones, Cranswick was clearly a mistake. Though it now looks very expensive, I clearly should have captured more of the positive momentum as the stock increased another +40% since I sold it. This has cost me around 2% of portfolio performance.

5 year performance review 2011-2015

Bench Portfolio Perf BM Perf. Portf. Portf-BM
2010 6.394 100      
2011 5.510 95,95 -13,8% -4,1% 9,8%
2012 6.973 131,81 26,6% 37,4% 10,8%
2013 9.017 175,04 29,3% 32,8% 3,5%
2014 9.214 183,60 2,2% 4,9% 2,7%
2015 10.363 209,53 12,5% 14,1% 1,7%
Since inception   209,53 62,1% 109,5% 47,5%
CAGR     10,1% 15,9%

So 2015 was the fifth year with a outperformance in a row although a very insignificant one. Since inception, the portfolio now has more than doubled. The annualized return has been a healthy 15,9% compared to 10,1% for the benchmark. Looking at the performance graph one can already see that this has been achieved with less volatility compared to the benchmark:

5 jahres perf

For statistic freaks a few maybe interesting stats for the 5 year period:

– there were 24 months with negative performance. On average the portfolio participated only with 67% of the negative performance
– there were 36 months with positive performance. On average the portfolio participated with 115% of the positive performance
– The Sharpe Ratio for the 5 year period is 1,53
– the highest monhtly loss for the benchmark was -15,1% in August 2011, but only -7,4% for the portfolio in the same month
– The highest monhtly gain for the benchmark was +14,9% in July 2011, however for the portfolio the best month was January 2013 with +8,6%
– in relative terms the worst month for the portfolio was July 2011 with a -11,0% underperformance
– in relative terms the best month was June 2011 with +9,2% outperformance

As I have mentioned several times, the portfolio does show some time lag. In months with very strong benchmark returns, the portfolio sometimes underperforms significantly but then manages to catch up. I think this is very typical for less liquid and out of favor stocks in general, they are not leading any market advances.

How to explain the 5 year performance

First and foremost I think the start of the blog and the portfolio was lucky in regard to timing. In 2011, there were many “casualties” from the finanical crisis available, both on the “special situation” side as well as within “normal” value stocks. A relatively risk free bond like the 2015 Depfa LT2 which matured a few weeks ago could be bought with a yield to maturity of 20%. Even in 2012 solid UK companies like Dart Group could be bought at incredibly low prices at a 5x trailing P/E.

Then the “Euro crisis” in 2012/2013 offered a further chance to buy very cheaply into Italian and French quality stocks at very low prices like SIAS or G. Perrier at low single digit P/Es.

Besides lucky timing of starting the blog and the portfolio, I think the main reason for the relatively good performance was not what I did but what I didn’t do. Some examples for this:

– I didn’t try to time the market
– avoided most stories, trends and “Fads” like “Real assets”, “Chinese consumer”, BRICs forever etc.
– stayed away from optically “falling knifes” with structural problems
– stopped selling short when I found out that I am not good at it

My biggest achievements within those 5 years were that I manage to hold my winners longer and that i corrected my mistakes usually quite fast.

Outlook & Strategy 2016-2020

I think the probability is high that the next 5 years will be not as good as the last five years, both in absolute terms as well as in relative terms for my portfolio. “Value” in the areas of my core competency (boring European small caps) has become extremely rare. Maybe my shift to larger cap companies and Emerging market related stocks will work out, maybe not. On the other hand, if someone would have asked me five years ago if I would more than double the portfolio within 5 years I would have clearly said “no way”.

As my readers know, I don’t make predictions about future stock prices. I do think that there is some value out there but mostly in areas where I am not an expert. So one of my tasks will be to learn more in areas where I only have very superficial knowledge such as Emerging markets, commodities and energy.

Will there be a big crash at the stock market in the next 5 years ? I don’t know and I wouldn’t bet on it. Market timing for me is something which clearly doesn’t add value and spending too much time on macro economic issues is also not time well spent.

So for me the strategy will remain the same as for the past 5 years: Analyze company by company, buy if they are cheap, sell when they become to expensive. Maybe the companies that I analyze wil become a little bit more exotic.

My “slow investing” philosophy so far has clearly not directly improved my returns but my nerves. So I will stick to the maximum of 1 transaction per month. The only thing I might change is that I will maybe allow myself to exchange one position per month. Otherwise I will have some indirect market timing if I sell first, then go in cash and invest again with a 1 month time lag.

Performance review Q2 2015 – Comment “Great ideas vs. great execution”

Performance Q2 2015 / YTD

Compared to the first quarter, the second quarter was in relative terms much better than the first quarter. The Benchmark (Eurostoxx50 (25%), Eurostoxx small 200 (25%), DAX (30%),MDAX (20%)) actually lost -5,8% in the second quarter, whereas the portfolio remained almost unchanged with -0,1%. YTD the score is now 13,2% for the benchmark vs. 11,4% for the portfolio.

For me, the second quarter is a good feedback that the portfolio strategy is working. I expect to underperform in a strong bull market like we had in the first quarter, but then to outperform in weak or sideways markets. The monthly returns show clearly that the portfolio is less volatile and only relatively loosely correlated to the benchmarks:

Start Bench Portfolio Perf BM Perf Portf. Delta
Jan 15 9.977,26 189,81 8,3% 3,4% -4,9%
Feb 15 10.696,03 200,55 7,2% 5,7% -1,5%
Mrz 15 11.078,60 204,69 3,6% 2,1% -1,5%
Apr 15 10.847,76 206,98 -2,1% 1,1% 3,2%
Mai 15 10.871,99 208,60 0,2% 0,8% 0,6%
Jun 15 10.434,47 204,44 -4,0% -2,0% 2,0%

As I have mentioned before, time lags play a role here as well, especially for the lower liquidity small caps. Since inception, the portfolio is up 104,4% vs. 63,2% against the benchmark. Graphically, this looks like this:

vop performance

Within the quarter, outperformers were Van Lanschot (+24,1%), Citizen’s (+13,1%). Lloyds Banking (+8,9%). Losers (not adjusted for dividend) were G. Perrier (-8,6%), Thermador (-7,9%) and Draeger (-6,9%).

Portfolio and transactions

I am actually quite proud of sticking to my 1 transaction per month goal in the second quarter. Overall I did 3 transactions:

The purchase of Lloyd’s Banking, the BMPS “trade” and finally Gagfah a few days ago.

The current portfolio can be found as always if you click the current portfolio page. Most noteworthy “aggregate” changes is that “opportunity investments” went up from 22% to 28% of the portfolio and “pure cash” went down from 15,5% to around 11%.

Comment: “Great ideas vs. great execution”

One of the most remarkable stories for me in the last 3 months was the following: In April, “Bond King” Bill Gross came out with a call that the 10 Year Bund Future is the short of a life time. A day or so later the Bund Future started to drop significantly and Bill’s call should have played played out wonderfully. But then something strange happened: The value of Bill Gross’ fund actually fell and he had to admit that he did not actually implement a simple short but a more complex strategy which backfired and he actually lost money.

So let’s take a step back and look at what has happened here: The best bond investor of all times has a great idea and even has timing right but fails to implement it in order to profit from it.

So clearly, just having a great idea does not automatically lead to great results. In addition, one has to implement it well. Other examples of bad execution: John Hussman with his market timing strategy who suddenly changed the strategy in 2009 and did not go back into stocks again, or Michael Burry, the guy from “The Big Short” who was right on subprime but who couldn’t convince his investors to keep their money in his fund.

These days I often hear from fellow investors: I don’t have any great ideas at the moment. If you look around in financial media and service providers, very often the focus is on idea generation. The more ideas the better. There is a lot less literature etc. on how to execute ideas.

If you look at Warren Buffett, it is clear that he is the master of implementation and execution. His success in my opinion relies to a large extent on only two factors:

1. Buy and hold
2. Permanent capital / safe leverage

Especially now in his later years, he is not the great genius stock picker anymore that he was in the past but he has structured Berkshire in the way that he still creates a lot of value even by buying “mediocre” assets like wind farms or solar power plants.

So why I am telling this ? In my opinion, just having great ideas is not enough. Implementation is maybe even more important. I would even argue that average ideas and great implementation works better over time than great ideas and mediocre implementation. As a private investor, it is clearly not possible to set up a reinsurance company but on the other hand there are a lot of simple things one can do to better implement ideas:

1. Don’t act (too) emotionally or spontaneous
2. Try to come up with a strategy or “game plan” for each investment, containing among others:
– target holding period
– targets when to buy more or sell down (based on fundamental data, ratios and/or stock prices)
3. Try to come up with a strategy for your portfolio: What do you want to achieve and especially HOW do you want to achieve it ?
4. Make sure the money you invest in risky assets is as permanent as possible. Do have a personal financial plan and buffers to make sure that you are never forced to sell

Since I started the blog, I made many mistakes and bad execution is clearly one of them.

Some good ideas in my blog which I didn’t implement well were for instance:

– Prada short: Too early, not patient enough
– G. Perrrier long: Started with a half position did not manage to increase position
– Sberbank: Did not cope with volatility, sold out at the worst time
– generally selling to early, not recognizing that fundamentals have improved (example Dart Group)

In other cases, good implementation saved me from an otherwise bad idea for instance when I got out of Praktiker bonds pretty early before the real xxxx hit the fan because I had predefined the condition where I would sell.

Just by chance i came across this article which wants to point out how the Apple watch will “revolutionize” investing. The “1 million dollar” quote is this one:

Another key area of focus is cutting the distance or time between investment research and action.

Vaed described the challenge of remembering a stock after reading an article or watching CNN. “But if you have a plug-in available on your browser that lets you act right away, that’s valuable.”

And that’s why E-Trade created such a browser trading tool on Google Chrome, after discovering it was the browser of choice among its clients.

I don’t want to sound arrogant but this is clearly a recipe for very very bad implementation. I actually do think that a longer period of time between research and action is benefitial for almost any investor. . For a value investor I don’t see any benefit of a mobile value investing app or similar bxxxsxxx.

So as a summary my advice would be: Although it doesn’t look as sexy as generating new ideas, the management of existing ideas or the “execution” is at least equally important. Try to take your time and work on this especially in a time right now where new ideas are harder to find. I think now is a good time to build the “foundation” for good execution.

Performance review March 2015 – Comment “Should an active investor give money to a money manager ?”

Just a quick reminder: this will be the last monthly update, from now on I will switch to quarterly updates.


In March, the portfolio gained +2,1% against +3,6% for the Benchmark (Eurostoxx50 (25%), Eurostoxx small 200 (25%), DAX (30%),MDAX (20%)). Year to date, the score is +11,5% against +20,2% for the benchmark. Since inception, the portfolio is up 104,3% vs. 73,3%.

Major winners were TFF (+19,6%), Drager (+8,4%), Hornbach (+6,5%) and Thermador (+6,0%). Losers were Ashmore (-7,1%), Van Lanschot (-6,4%) and TGS (-4,3%).

Overall, performance was again behind the benchmark but with around (2,1/3,6)= 58% of the upside fully in line with the current allocation of the portfolio with regard to cash and beta of the investments.

Portfolio transactions

In line with my self-prescribed “slowness” I only made one position change this month: The full sale of my KAS Bank position in mid march. Within my existing positions, I added to my Romgaz stake following the good results.

Cash and “cash similar” positions are now at around 27%, a pretty high percentage but maybe not too bad going forward. So far of course, the conservative approach has cost me a lot of performance, but the year is not over yet. The current portfolio, as always can be found under the respective portfolio page.

Comment “Should an active investor give money to a money manager ?”

I am currently preparing my first investment into a fund actively managed by someone else. For me, as an active investor, this is quite unusual, so far I have only invested in ETFs in order to gain exposure to sectors or directly into stocks and bonds. The big question here is of course: Why should I pay management fees for someone doing the same stuff that I actually enjoy doing myself ? So for myself a tried to rationalize the decision a little bit and came up with 5 criteria which are important to me for trusting my hard-earned money with someone else:

1. The manager has to be trust worthy
2. The manager should have most of or even better all his money in the fund
3. the manager has a different skill set than oneself or just better skills or access to different assets
4. The manager should still be “hungry”
5. The fund manager is not only in for the money
6. The investment vehicle should be a “fair” structure

Interestingly, those criteria are not that different from investing into a stock, but let’s look at them one by one:

1. The manager has to be trust worthy

This sounds more easy than it is. In order to know if someone is trust worthy, you either know someone really well or there is a long track record of this person proving that she/he will always act what in German we would call “in Treu und Glauben” or in English as a true Fiduciary of one’s money. In a standard asset management organisation, this cannot be taken for granted. In many large asset management companies, the main target is not performance but management fees and not the performance of the money invested.

One of the worst cases would be investing into someone where you know that this guy is “bending the rules” somewhere and hoping that still everything would be ok with your money. With Bernie Madoff for instance, many people thought that he was making the nice and easy money in his “hedge fund” by scalping and front running his customers on the trading side of his business and thy were OK with it. Without accusing him in any way, Bill Ackman for me would be also a questionable character. Both, with Herbalife and Valeant he is “bending” the rules to his advantage, how do you know that he will never does the same within his investment vehicles ? I think this is clearly the area where one should never make the slightest compromise.

2. The manager should have most of or even better all his money in the fund

This is something which is especially important if there is a performance component in the fee structure. A performance fee is essentially an option and the value of any option increases with volatility. If a portfolio manager however has invested all his money in the fund, he will think twice about maximizing only the option value…..

3. the manager has a different skill set than oneself or just better skills or access to different assets and the investment process is transparent

Sounds pretty obvious but is still worth thinking about. If I invest in a value investing strategy, this only makes sense if I am sure that the manager does have skills that I don’t have. This could be either very deep research and a concentrated long-term portfolio or access to markets/assets which I don’t have as a private investor. in any case this requires that the manager is transparent on what he is doing at that an investor understands the investment process. Fundholder letters or even better “manuals” are a big plus here.

4. The manager should still be “hungry”

The typical story in investment management goes like this: Manager starts small fund, has great returns, nobody is interested at first. After 3-5 years of great returns, fund gets onto the radar screen of large investors and grows quickly. Performance drops as investment style cannot easily be scaled up and/or investment manager cares more for his Ferrari collection. In any case, I think it is more interesting to invest in the early phase than in the later phase despite a potentially higher fee percentage.

5. The fund manager is not only in for the money

That sounds strange at first, why should a money manager not be in for the money ? What I mean here is that there are a lot of people in the investment management business who see this as the fastest way to make a lot of money. In my experience, those people are generally not good money managers in the long-term. The really good ones are those who actually like what they are doing and do it because its their passion. Those guys will go the extra mile and read annual reports on week ends and in their vacation because they don’t consider it as work.

6. The investment vehicle should be a “fair” structure

As I am an individual investor I would for instance have a problem with a structure where I pay upfront commissions or custody fees that an institutional investor would not pay. Also, if I plan to invest long-term, I would not want to invest in a structure where other investors could hurt my returns by either putting in a lot of money on a daily basis or pulling their investments at any time. As a long-term investor, I would need to be sure that also the others are in for the long-term and no “hot money” can disturb the investment success.

It makes also a lot of sense to look at other investors in a fund vehicle. It is an advantage if other investors are known and reliable.

Those are the 6 criteria which are important for me for trusting my money to someone else. Of course this is no guarantee that the investment will perform well, but at least the risk to the downside is limited to a certain extent if all criteria are met.

More on the specific fund investment will come in a later post this month.

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