2022…Post-Pandemic Hangover

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Alphabet, annual review, balance sheet, crypto, Donegal Investment Group, KR1, KR1 plc, multi-bagger, owner-operators, portfolio allocation, portfolio performance, Record plc, Saga Furs, Tetragon Financial Group, VinaCapital Vietnam Opportunity Fund

Seems like everyone on Twitter (if they didn’t just disappear already) scrambled to post their 2022 returns this year, either to bury a horrific result in the New Year’s rush, or because they’re one of the few who can boast a minor loss (or even a gain!) last year. As always, especially if you’re nursing your own portfolio (& pride) after an excruciating year, you should take all of this with a grain of salt…because, alas, it’s Twitter’s job to surface the outliers & the blowhards, so #FinTwit is definitely NOT a good (or even accurate) benchmark to reference as an investor in good years, let alone bad.

But as always, I’m here with a genuine/auditable portfolio, where all changes (if any) to my disclosed holdings have been tracked here & on Twitter on a real-time basis, for over a decade now. [Seriously, if you’re a new reader, take a peep: There’s countless posts on old & current portfolio holdings, plus my entire investing philosophy & approach…some of which may even be useful & interesting today!] And this year, my main (selfless) purpose is to make you feel better about your own performance. ‘Cos yeah, you probably did much better than me…and if you didn’t, maybe you should question your investing choices!? And I want to remind you: a) it could be worse, there’s plenty of bad ‘investors’ out there who’ve been trapped in a savage bear market for two years now (since Q1-2021), and b) once again that, esp. noting the past year, nobody knows anything…

So let’s jump right in, here’s the damage in benchmark terms – my FY-2022 Benchmark Return is still* a simple average of the four main indices which best represent my portfolio, which produced a benchmark (11.8)% loss:

[*NB: As I flagged this time last year, I adopted the STOXX Euro 600 as my new European index in 2022.]

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2021…Wow, Another Crazy (Good) Year!

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Alphabet, annual review, balance sheet, bubble thesis, crypto, Donegal Investment Group, inflation, KR1, KR1 plc, multi-bagger, owner-operators, portfolio allocation, portfolio performance, Record plc, Saga Furs, Tetragon Financial Group, VinaCapital Vietnam Opportunity Fund

At this point, maybe you’re done with 2021 – right?!

But face it, we gotta look back to figure out how we arrived…in this mess today! And hopefully recall & reinforce any lessons learned. ‘Cos sure, there’s plenty of good & bad luck involved, but outcomes for both nations & investors are ultimately a result of our (cumulative) decisions & actions, often stretching back years. And last year, as the pandemic dragged on, our drinking problem got a wee bit out of control & we enjoyed that punchbowl just a little too long. And now it feels like the inevitable hangover’s finally starting to kick in.

Well, except for those who started early…God love ’em, how many punters have been trapped in a savage bear market for almost a year now?!

But for the rest of us, last year’s market was the pandemic silver lining. As always, the US led the way with a 26.9% gain in the S&P 500. [The Nasdaq still clocked up a magnificent 21.4% gain, despite some sectors being deep in bear market territory]. Europe was nearly as magnificent, with the Bloomberg Euro 500 clocking a 19.7% gain. And Ireland & the UK brought up the rear, but still delivered higher than average returns, with a 14.5% gain for the ISEQ & a 14.3% gain for the FTSE 100. [On both sides of the Atlantic, the FTSE 250 & the Russell 2000 enjoyed similar 14% gains, whereas a risk-off/stonk bear market reduced the AIM All-Share to a mere 5.2% gain]. Notably, despite H2 price reversals & increasing volatility, all major indices – with the exception of the ISEQ – climbed steadily & closed out the year near annual/all-time highs.

My FY-2021 Benchmark Return remains* a simple average of the four main indices which best represent my portfolio…overall, they produced a benchmark 18.8% gain:

Soooo, 2020…What A Crazy Year!?

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Alphabet, annual review, Applegreen, COVID, CPL Resources, crypto, KR1, KR1 plc, owner-operators, portfolio allocation, portfolio performance, Record plc, staking, VinaCapital Vietnam Opportunity Fund

‘It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way – in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.’

A Happy (& Safe) New Year to my readers & fellow investors!

This time last year – or even last April – we had little/no idea of the #COVID challenge still ahead, but we’ve made it this far…and doubtless, after surviving 2020, we can surely look forward (America willing) to a far better 2021! If not, perhaps, in terms of superlative returns…but hey, that’s a hedge I think we can all accept.

Let’s try skip the #pandemic itself – I leave that to countless articles (‘The Plague Year‘) & a library of books to come – but obviously its consequences will reverberate here (& for us all). I must say though: I’ve been awed & inspired by the incredible effort & sacrifice humanity’s made to save lives, help those directly & indirectly impacted by COVID & come up with multiple vaccines at such an accelerated pace. But equally saddened – by comparison – to reflect on the fraction of preparation, effort, ingenuity & most of all expense that was perhaps required to prevent the worst ravages of COVID, let alone reduce or even eliminate some of the major health & social issues we endure (or scarcely even notice) today. Above all, great investors will focus on the character of management…it’s time we realize we need to assess the character of countries & their leaders too. And in both cases:

‘Luck is what happens when preparation meets opportunity.’

Or not…

So let’s dive in – as a reminder, here’s a mid-year snapshot of my benchmark:

H1-2020 Wexboy Portfolio Performance

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Alphabet, Applegreen, Asia, bubble thesis, coronavirus, COVID, crypto, financial strength, floating world, KR1 plc, owner-operators, portfolio allocation, portfolio performance, property, QEInfinity, Saga Furs

So yeah…quite the bloody year, eh?!

I hope you & yours have kept safe & well during this #COVIDcrisis – even if you’re not exactly sheltering-in-place anymore, I presume you’re still a conscientious mask-wearer (as needed) in public? All else being equal, it’s disappointing the weather (apparently) isn’t a sure-fire virus-killer – remember when we all assumed, at worst, the summer would offer a welcome & effective respite? You know, meeting people, I used to joke investing was simply the ‘job’ I invented to keep me off the mean streets…I never imagined it would literally turn out like this!?

Anyway, let’s survey the carnage…

As usual, my H1-2020 Benchmark Return is a simple average of the four main indices which best represent the majority of my portfolio:

A (13.2)% benchmark loss is grim…though apologies to my puzzled American readers, who are wondering what carnage? [Apparently 100% of US investors now practice 0% global diversification!?]. If you didn’t know better – i.e. had avoided the media’s water-boarding over the last six months – you’d surely think a (4.0)% loss in the S&P was nothing more than some random market oscillation. Nothing to see here…

But in reality, lots of (US) investors now lean into technology stocks…and the Nasdaq didn’t disappoint, delivering a spectacular COVID-driven +12.1% gain! [C’mon, I tweeted ‘Nasdaq 10,000’ enough in the last year!] Of course, there’s a flip-side, with travel & hospitality being the most obvious sectors to experience devastating (& sustained) share price declines. We see a far more realistic ex-technology US performance in the Russell 2000, which recorded a (13.6)% loss in H1.

Applegreen – Just Grab & Go!

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APGN:ID, APGN:LN, Applegreen plc, Bob Etchingham, convenience store, fresh food, gas stations, Irish value investing, Joe Barrett, maintenance free cash flow, owner-operators, petrol forecourt retailing, petrol stations, retail float, retail growth story, Topaz Energy

And yes, with the blog turning six this year & a tsunami of retail apocalypse headlines recently, it’s ironic I’m only now posting my first retail investment thesis ever! But rest assured, this isn’t some soggy chewed-up cigar butt. Nor some story stock priced & pitched for perfection. Though, almost inevitably, the retail sector only seems to come in those two flavours nowadays… Whereas Applegreen plc (APGN:ID, APGN:LN) is that rarest of beasts:

A bona fide long-term retail growth story trading for a value price. 

And since it’s a retailer, first let’s focus on Applegreen’s story – its history, its people, its offering, its prospects – we’ll home in on the numbers later. If you’re a story person, I hope you enjoy the videos along the way. As for the numbers people…I definitely encourage you to circle back & watch ’em later! Let’s begin:

Applegreen is a major Irish petrol forecourt* retailer, with a significant & growing presence in the UK, and an emerging footprint in the US Northeast. [*As the Irish would say, a fillin’ station. To translate: A gas station, gasoline stand, gasbar, petrol station, petrol garage, petrol pump, service station, servo, etc….selling petrol, gas, or gasoline (& diesel)]. Bob Etchingham (CEO) founded the business as (Petrogas) in 1992, after working at Esso for 10 years, and was joined a year later by Joe Barrett (COO) (ex-Tesco & John West Foods). They’ve been described as ‘chalk & cheese’, and it’s obvious they play to their respective strengths & personalities in their roles. Growth was gradual at first, but from the outset management focused on developing its retail proposition & establishing a quality food offering. Which led to the launch of the Applegreen brand in 2005, heralding a distinctive retail-led proposition for customers built on a ‘Low Fuel Prices, Always’ price promise, ‘Better Value Always’ convenience shopping, and high quality own brand/international food & beverage offerings.

Love That Record…Give It A Spin!

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Alpha FX Group plc, alternative asset manager, Brexit, currency manager, forward rate bias, FX hedging, FX market, James Wood-Collins, Neil Record, owner-operators, REC:LN, Record plc, volatility

Record plc (REC:LN) is the world’s largest independent currency manager. Based in Windsor, it was founded in 1983 by Neil Record, winning the world’s first stand-alone currency overlay mandate two years later. Record is still majority-owned by its directors/employees, with no proprietary business of its own – it focuses solely on being a ‘trusted advisor’ to an institutional client base (pension funds & foundations), providing (bespoke) passive & dynamic currency hedging and currency for return strategies, with AUME now at $58.2 billion (£46.6 billion). [Record only manages currency risk, so AUM is notional – i.e. it doesn’t manage underlying client assets – therefore, it uses the term Assets Under Management Equivalents]. This (old) video is still worth your time watching:

But unfortunately, after listing at 160p a share (a £354 million market cap) in Nov-2007, its long-term chart is none too pretty:

Ouch…

By early 2012, investors were so convinced Record’s AUME & business were heading to zero, its shares had collapsed 94% & were trading for net cash. [Which was pretty irrational, as Record’s operating margin was bottoming out at 32% at the same time!] Any investor brave enough to buy it sub-10p has a tasty four-bagger at today’s 43p share price (a £93 million market cap). [As did Jeroen Bos, see the final chapter of his book]. Even buyers six months ago have a near-60% return. But noting an average share price of 31p over the last 5 years, gains have been limited for most investors, while long-term shareholders continue to nurse big losses.

Maybe the financials look better?