“Investing is where you find a few great companies and then sit on your ass.” Charlie Munger
Last year I did an entire write-up on my 2012 portfolio review going over how well or poorly all the companies I wrote articles on did after I wrote those articles. I wrote 15 total articles last year and the companies I bought led the portfolios I manage to a gain of 26.20% last year. I thought it was a pretty good first year after truly dedicating myself to value investing but I knew I could do better after eliminating some of the many mistakes I made in that year and purging the few remaining companies I still owned in those portfolios from when I bought into them when I didn’t know what I was doing.
With the help of the rising market, eliminating some of my mistakes, doing a lot of other stuff instead of investing, and getting some tips from other value investors on companies to buy, the portfolios that I manage have gained 71.93% this year as of today.
|% Gain YTD|
|Core Molding Technologies (CMT)||88.67%|
|Paradise Inc (PARF)||42.86%|
|Calloway Nursery (CLWY)||100%|
|Brazil Fast Food Company (BOBS)||112.63%|
|Strattec Security (STRT)||75%|
Core Molding Technologies – I bought into this company too early last year when I gave into my impatience after months of not being able to find a company to buy into. At the end of last year I as sitting on an 8% point loss on my investment. With the rising market and good continued developments at the company this year it gained 88.67% I still own CMT.
Vivendi – At year’s end last year I was sitting on a 27% gain. This year with all the spin offs/sales at the company YTD it has gained another 12.39%. I still plan to hold onto this company while it continues its transition to a purely media driven company.
Paradise Inc – I bought this company in March (one of only two companies I bought this year) and in that time it has had almost no news either positive or negative so I guess this companies gains of 42.86% are chalked up to the overall rise in the market. I still own Paradise Inc.
Calloway Nursery – The other company I bought in the calendar year of 2013. Originally I saw other value investors like OTC Adventures writing about the company and paid no mind to it. Luckily after talking with Jeff from the Ragnar is a Pirate blog, DTEJD1997, them sharing some information about how much the companies properties were worth, and doing my own research into the company, I decided to buy into them and I am glad that I finally paid attention to these other investors. I have sold out of most of my position in this company at an exact double of 100%. So far it has taken me four months to sell out of that position and it will likely take another two to sell out of the rest of it. I still like this company and if the price goes back down substantially, all else remaining the same, I may buy back into it again.
Brazil Fast Food Company – I bought into this company last December after Red from the Red Corner Blog recommend that I take a look into them. Again, I am thankful that Red mentioned them to me. After a year where the company was gaining a lot after continued good results, the companies owners wanted to take it private at a ridiculous offer, which was then voted down, and the company has continued to rise after that. The company YTD has gained 112.63%, I still own them, and plan to hold them for the long-term.
Strattec Security Corp – Another company I bought into last December. This company had very good continued results, had some new positive developments, the stock went up very quickly and I sold out of the entire position up 75% in May. Since then the company’s stock price has hovered around where I sold it. Like Calloway, if STRT drops substantially, all else remaining the same, I will buy back into them because I think they are an excellent company.
Last years 26.20% gain + this years 71.93% gain means that the portfolios that I manage have cumulatively gained 98.13% (49.06% on an annual basis) in two years since I started to take this seriously. The portfolios I manage were in 40%-55% cash the entire year and are at the higher end of that range now. Frankly I was shocked when I saw this years gain and the two-year cumulative gain since I only do an entire portfolio review once a year.
What Does The Above Mean To Me?
Not much honestly. A two-year track record doesn’t mean much to me since I am a long-term investor. I was also helped a lot by two recommended companies from other value investors and the overall rise in the market. Am I glad and excited about this great start yes, but I still have a lot of work to do and at this point I think that I am only an average to above average stock picker as I have a lot of room to improve and was helped a lot by short term luck of the stock market rising a lot.
Some of the Lessons Learned This Year
- My extreme patience and discipline gained from dealing with my health issues helps greatly as a long-term, very strict value investor. I did a lot of stuff not directly related to investing this year because I could only find two companies that I could buy into all year.
- You need to keep a record of what you do. This was such a long year filled with great and not so great things for me that I have recently been telling everyone I only bought one company this year. I completely forgot about the PARF and BABB articles I wrote at the beginning of this year and that I actually bought into PARF back in March along with CLWY. Memories are not always what they seem to be.
- Sometimes it pays to “steal” investing ideas from others, but you still must do your own research into the company.
- Turn over as many rocks as possible. While I only invested in two companies this year I have researched hundreds if not thousands of other companies and have built up a watch list of around 20 companies. When those companies stock prices go down I will be ready to potentially buy some of them with the cash I have built up and the knowledge I have gained of those companies.
- Starting a business is very hard. This is my biggest failure of the year by far and one that I hope to rectify at some point in the future. The business my brother and I started was a complete failure from the point of gaining customers and revenue. At this point we are not doing anything at all with the company as we overestimated the demand in our area for our product. We learned a lot of lessons from this and we hope to start a successful business in the future.
- Writing a book is very hard. Most of my year (the better part of 10 months) was spent writing, editing, researching, etc for the book. It was well worth it as it has provided some for my family, for two needy families Christmas presents, I learned an enormous amount, and it has hopefully helped newer investors learn this craft faster.
- It obviously pays to buy into a few great companies and then sit on your ass and be patient.
Goals For This Year
- Continue to learn something every day.
- Improve in some way every day.
- Turn over more rocks.
- Read more.
- Write more.
I hope you all had a great year, thank you all so much for all the conversations, reading this blog, buying my book, and I look forward to talking with you all more and getting back to writing more articles for the blog in this coming new year.