A Decade In The Making…a 10-Bagger & a 26.0% pa Investment Track Record

Tags

Alphabet, annual review, benchmarking, buy and hold, COVID, crypto, Donegal Investment Group, GARP investing, growth vs. value, KR1, multi-bagger, portfolio allocation, portfolio performance, track record, Universe Group, VinaCapital Vietnam Opportunity Fund

Looking back, I must admit I never imagined reaching this kind of anniversary…but yeah, the Wexboy blog turned 10 years-old earlier this month! A journey that kicked off with this Sirius Real Estate buy (at an astonishing 0.31 P/B!) in Nov-2011. Which was obviously a stock-picking tour de force – noting SRE‘s been a 7-BAGGER+ since. Well, except I somehow managed to distract/scare myself out of the position two years later…for a mere double-digit gain! And maybe that’s where this post should abruptly end, because:

The one BIG lesson most investors still need to learn is how to HODL!

But let me be clear up-front – this is not intended to be some lessons-learned victory-lap post. As investors, we never really know what’s coming down the road…next year could be a celebration, or a total humiliation. And we all make dumb mistakes, we repeat them, we live with them & we finally move on – great investors just make less mistakes. And we can’t afford to get disheartened, or to rest on our laurels – great investors (should) never stop learning & adapting ’til the day they finally exit this great game. To assume/pretend otherwise is to tempt the gods, which makes investing such a uniquely weird mix of confidence…and humility.

That said, this year & last year have been an accelerated learning experience for me – as is presumably true for all investors (& everyone we know). And yes, I know I’ve promised to write about this – and hopefully share some positive learnings & useful advice – particularly in light of my actual FY-2020 & YTD-2021 performance. But I gotta admit, I keep putting it off…because now I desperately want & need it to be a final epitaph for this (Zero-) COVID hell we’re still stuck in. [Despite most of the world getting vaxxed since!?] So yeah, that’s obviously something I gotta work on…

But meanwhile, I’m thrilled I’ve actually managed to deliver that unique & rarest of beasts…a public/auditable 10-year investment track record via the blog (& my Twitter account). I obviously don’t disclose the actual euros/cents of my portfolio, albeit my long-abandoned career & my family’s security/future clearly rely on it – which means return of principal is just as important to me as return on principal, in true family-office style – but readers & followers have always been able to assess my level of conviction/risk tolerance via my specific % allocation in (disclosed) stocks, and via (essentially real-time) tracking of my (rare) incremental buys/sells in those stocks.

And in return, I’m far more interested right now in seeing readers draw (& even share) their own conclusions – privately, or publicly – from my stock-picking & investment track record to date. To facilitate that, here’s my annual returns…complete with links to my annual performance review & actual stock-picks/investment write-ups for each year.

Advertisement

Smokin’ the S&P…H1-2015 Wexboy Portfolio Performance!

Tags

Alternative Asset Opportunities, Argo Group, Bloomberg Euro 500, Donegal Investment Group, EIIB, FTSE 100, ISEQ, KWG Kommunale Wohnen, Newmark Security, NTR plc, One51, portfolio performance, S&P 500, takeover offers, Universe Group, value investing, Zamano

Oh Lord, where did July go..?! I’d hoped to publish my H1-2015 portfolio performance report a week/ten days ago, but I guess the days kinda slipped away – who can fault a bit of fun in the sun, esp. when my portfolio holdings are slowly but surely marching higher (despite all the China volatility & the fact the US market’s totally sucking wind this year).

Now, if you’re a regular reader, I recently detailed my (still) developing bubble thesis (Parts I to IV), suggesting an increased focus on large cap stocks (a new global Nifty Fifty) might be more profitable. [Though I’m also v conscious of certain small/micro cap successes in the past 12-18 months – a bar-bell strategy, in terms of market cap, may ultimately prove more compelling]. But in terms of immediate portfolio changes, I hastened to add: ‘I don’t believe there’s any great rush here, necessarily’. Well, that being said…let’s first kick off with some (end-June) portfolio changes!

Portfolio Sales:

Alternative Asset Opportunities (TLI:LN):  TLI had a great H2-2014 run – gaining over 22% (inc. a 2p return of capital), making it my top holding at year-end (at 11.1%). Since then, the insured have enjoyed a real stroke of luck, with just one maturity announced. Not surprisingly, the shares are off YTD in sympathy (reducing my holding, in % terms). But I’d focus on TLI’s portfolio instead – adjusting for minor FX unfavourability, and an additional 2p ret. of capital, TLI’s underlying NAV decline was limited to just 3%.

And I see no change in prospects: We’re at the end of a long & painful life expectancy adjustment process (in fact, June NAV inc. a meaningful positive LE impact), and the insured are now 91.5 yrs old on average – maturities will inevitably accelerate (peaking in 2019-20). There’s little financial risk (with an available credit facility, zero debt & cash on hand), and TLI’s focused on regular returns of capital. Sure, we can debate valuations, but shouldn’t lose sight of the big picture – as per the latest results, the portfolio now consists of $132 million in death benefits vs. a current carrying value of $45 million.

But owning such a defensive & uncorrelated investment isn’t as compelling a requirement for me today, and I see equally attractive (albeit, more correlated) opportunities elsewhere. I’ve reduced my shareholding accordingly, from 9.1% to 7.0%. [NB: I normally don’t add to individual holdings beyond a 7.5% limit – TLI remains a substantial position for me].

The Obligatory Top Tips For 2015!

Tags

Alternative Asset Opportunities, Argo Group, Donegal Investment Group, European Islamic Investment Bank, favourite stock, Fortress Investment Group, KWG Kommunale Wohnen, NTR plc, portfolio allocation, stock tips, Universe Group, value investing, VinaCapital Vietnam Opportunity Fund, Zamano

I get asked for stock tips…a lot! So much so, occasionally I’ll pinch myself & check I’m (also) the author of an investment blog – one with dozens of investment write-ups & hundreds of posts at this point, all lovingly hand-typed & all for free. You really have to smile & wonder if they’ve ever actually read an entire post?!

But this is human nature, people always want that little something special, that easy shortcut: Go on, just this once, just for me… I mean, why wade through dozens of posts & tens of thousands of words, when all they crave is a single sure-fire winner of a stock! [Yeah, don’t we all, mate… 😦 ] It’s like ringing an online dating firm’s customer service, to politely explain you don’t want to swipe left or right, let alone trawl through hundreds of profiles – ‘cos all you really want is your soul-mate, just the one, preferably right now & for free. C’mon, surely that’s not so much to ask?!

Unfortunately, there’s pretty much zero upside to doling out tips here & there. If you’re the ‘designated’ stock picker in your family, on your street, in your office, you know exactly what I mean… Your winning tips are quickly & seamlessly appropriated as worthy examples of the tippee’s own natural genius – whereas losers rebound & somehow become your personal responsibility, of which you will be bitterly reminded for months & even years to come. And the only thing worse than this burden of blame is the sometimes inevitable bout of self-flagellation over your appalling dereliction of duty! But rest assured, you’re not at fault – those occasional feelings of guilt simply mean you’re too good for this world… 😉

However, there’s plenty of hacks out there who can’t even spell ‘guilty conscience’, let alone experience such a thing! And this time of year the financial media loves to wheel out its prognosticators & talking heads to opine on the macros, the markets & the best stocks for the coming year. I could describe it as an exercise in arrogance, but just as often it’s a shameless pandering to the cupidity & gullibility of a great many investors.

Universe Group – Some Fresh Perspective(s)

Tags

activist investor, Downing LLP, growth investor, HTEC, Jeremy Lewis, Kalibrate Technologies, Robert Goddard, Stephen McLeod, UNG, Universe Group, value investor

I first published a write-up on Universe Group (UNG:LN) almost 2 years ago: A Universe of Stocks… This was back when the shares were trading at GBP 2.375p, after a long & relentless 9 year decline. At that point, despite the scary chart, I believed the company had finally reached an inflection point…

This perception wasn’t just built on hope value:  The core HTEC division was an obvious jewel in the crown, a new management team was already delivering on its promises, and (if necessary) the shareholder register promised potential activist intervention. The company’s substantial undervaluation was obvious – and its evolution from manufacturing & product sales to a software/transaction solutions provider, focused on increasing recurring revenues, promised significant intrinsic value upside potential in the future. Based on the company’s metrics at the time (adjusted for somewhat excessive debt), I pegged Fair Value at 8.4p per share. I also predicted its loss-making CEM unit would be closed down, or sold – contingent on that, I suggested a Secondary Fair Value of 11.0p per share was also possible.

Just 2 weeks later, the story took a big step forward. Universe announced a placing & a GBP 0.2 million loan issuance – initially for debt reduction, which I was pleased to see. Unfortunately, the resulting enhancement of intrinsic value was relatively small (in my opinion), whereas the dilution impact was substantial: UNG’s undervalued share price/market cap meant a colossal 63% increase in outstanding shares was required to raise just GBP 1.7 M of equity funding. Which knocked my Fair Value targets back to 5.1p & 6.8p per share, respectively. However, management also stated they were ‘exploring a range of options’ for the CEM business – which I took as confirmation it would soon be shut down/sold off, so I was happy to merge/average my price targets into a new Fair Value of 5.9p per share. Despite the dilution, this still offered a highly attractive 164% upside potential! Fast forward two years, the company’s made steady progress…

As expected, the CEM unit was sold in Dec-2012, followed by two strategic bolt-on acquisitions (Indigo & RST) in 2013. A new & updated product offering was completed in 2012 & enjoyed a very successful 2013 customer roll-out. Revenue reached a H2-2013 run-rate of GBP 18.6 M, vs. continuing ops. revenue of 10.5 M in 2011. And with the turn-around complete, the CEO Stephen McLeod departed in Sep-2013 to pursue other projects (Robert Goddard remains as Chairman) – to be replaced by Jeremy Lewis, an ex-investment banker & a technology/software company CFO/CEO for the past 15 years. The share price has also lived up to its potential – it’s now trading in excess of my price target, at 6.125p – that’s a 158% gain vs. my original write-up at 2.375p per share! In fact, the shares almost reached my original 8.4p fair value target, with a Nov-2013 high of 8.25p per share. Which begs the obvious question – what’s an appropriate fair value target for UNG now?!

Heading Into 2013…

Tags

Alternative Asset Opportunities, Argo Group, Asta Funding, Avangardco, correlation, EIIB, FBD Holdings, Fortress Investment Group, JPMorgan Russian Securities, KWG Kommunale Wohnen, Livermore Investments, Margin of Safety, Petroneft Resources, portfolio allocation, portfolio performance, Richland Resources, shareholder activism, Sirius Real Estate, Total Produce, Trinity Biotech, Universe Group, Vietnam Opportunity Fund

There was a gratifyingly large surge of page views yesterday checking in on my 2012 Portfolio Performance! I’m suitably humbled by the attention – gulp, makes me wonder what challenges 2013 will throw up?! Hopefully the blog’s sparked a few decent ideas & stock picks for you in the last year or so, and you’re pleased with the progress of your own portfolio in 2012. It’s certainly been rewarding for me – most obviously in terms of improving my investment focus & analysis, but also in terms of the constant stream of questions, challenges, feedback, gossip, ideas, etc. from blog readers.

As a result, I now feel somewhat honour-bound to cough up some kind of 2013 Portfolio. I should immediately flag that some of you may find this a bit of a cop-out… 😦 But, in my defence, let me say:

– The start of a new year really means little to me, I don’t suddenly discover I have whole new batches of stocks to buy & sell!

– I rarely write about stocks I don’t own. This is pretty deliberate – my intention was never to simply fill up blank space with an idea each day/each week. I think people can really only judge your level of analysis & conviction against whether you actually own a stock – and, of course, by how much stock you own!

– I also don’t write about stocks I track, or discard, very much. First, mostly because they’re far too numerous! Second, I’m not sure I’d always manage a proper (in-depth) write-up about such stock(s). And third, I’ve sometimes tracked stocks every single day for literally years on end before buying – how often do you want to hear about them?!

Argo – Escape from an Evil State!

Tags

% of AUM, activist investors, alternative assets, AREO, ARGO, Argo Group, Argo Real Estate Opportunities Fund, Colony Financial, distressed assets, emerging markets, European sovereign debt crisis, Fortress Investment Group, intrinsic value, Investor Relations, Kyriakos Rialas, Livermore Investments, Mello Central, Price/Cash, Rialas brothers, share buyback, special situations, sub-advisory, The Argo Fund, Universe Group

OK, sorry to disappoint… This definitely isn’t a review of Ben Affleck’s new movie ‘Argo’! [I haven’t seen it yet, but it’s on my list – the reviews are uniformly good, and Affleck displayed a sure hand with ‘The Town’.]

No, this post is about Argo Group Ltd. (ARGO:LN), whose share price is also trapped in a rather evil state… Specifically, the price has steadily declined 35% in recent months to GBP 10.125p – when the company is profitable & has net cash/investments on hand of GBP 20.9p per share! Operational execution & performance ultimately offer the best escape route for Argo. [I’m delighted to see Argo has now launched a new liquid emerging market debt fund. This offers attractive exposure, I’m sure it will clock up a good performance, but real success will come down to the level of fund-raising that’s achieved.] But there a number of additional actions & strategies that may offer considerable assistance in making this escape. Here’s a copy of a recent letter I sent to Kyriakos Rialas, CEO of Argo:

‘November 07, 2012

FAO:    Kyriakos Rialas, CEO

Cc:       Andreas Rialas, CIO

Cc:       Michael Kloter, Chairman

Argo Group Limited

33-37 Athol Street

Douglas

Isle of Man

IM1 1LB

Universe Group – So, Where Does This Place Us?

Tags

Brookwell Ltd, Brulines Group, dilution, Ennismore, HTEC, Jewel in the Crown, Margin of Safety, placing, Universe Group, Vianet Group

I posted last w/e about Universe Group (UNG:LN), having first used it as a bit of a blind stock valuation challenge. If you’re ever bored waiting for some news on a stock, just write a blog post – all too often, news will pop within days..! In this case, a Placing was announced just two (working) days after my post, wow! Which reminds me – note to self:

I Must Remember:   If you find yourself saying something like ‘I can’t imagine management would do X…‘, you can be reasonably sure they’ll actually do X¹!

I Must Remember:   Most management are agents, not owner-operators – they (always) believe in raising/utilizing cash to expand the business².

I Must Remember:   Management’s compensation is usually far more rewarding than the impact of a rising/falling share price – again, they’re not owner-operators. Their compensation also generally grows with the business… Therefore, expansion at all costs is usually far more important than share price, or intrinsic value per share.

A Universe of Stocks…

Tags

activist investors, Amberley Group, blind stock valuation, Brookwell Ltd, Brulines Group, catalyst, Ennismore, GemPAY, HTEC, Jewel in the Crown, P/S Ratio, Progressive Asset Mgmnt, Robert Goddard, segment/divisional reporting, Stephen McLeod, Universe Group, Vianet Group

Continued from here, and here. So, from a whole universe of stocks, what’s my bloody blind stock? Universe. No, seriously mate, what is it..? Universe! OK, you’re taking the piss, what the hell’s your blind stock?! Universe..! It’s Universe Group plc (UNG:LN) 🙂

Its core operating sub. (HTEC) has over 30 yrs of experience in providing Loyalty, Payment & Forecourt Technology Solutions to petrol retailers, primarily in the UK & Ireland. This is a specialized & attractive niche, with many of the major oil companies & UK supermarkets as customers. Universe reports in three functional segments: i) Petrol Forecourt Solutions (PFS): POS & payment systems, business analytics, and automatic number plate recognition (APNR) software, ii) Universe Data Services (UDS): Loyalty schemes, and APNR software, and iii) Contract Electronic Manufacturing (CEM): Contract design, development, manufacturing & repair services. Let’s jump straight into some total company figures¹ (for 2007-10):