2012 Year in review

Reviewing the performance of something that contains a lot of luck and variance is always difficult. Evaluating your capabilities as a poker player based on just 10,000 hands is not going to tell you a whole lot, and the same can be said about looking at investment results with a one year time frame. But at the same time you can’t ignore results. If you are losing a lot of money it’s probably time to rethink what you are doing, and if you are making money it’s a bit more likely you are doing something right.

That’s probably all you can conclude when looking at investment results. As a poker player you can calculate a confidence interval around the realized win rate reasonable accurate assuming a normal distribution. When looking at a small sample size you find that the interval is huge, but at least you know how much uncertainty there is in your results. The same can not be said about investment results. You don’t know the underlying distribution of the stock market, you don’t know what the variance is and you don’t know how many ‘independent’ bets you really made. Getting good results when you invest in ten different companies in ten different countries and ten different industries is way more relevant than getting good results when investing in ten Italian banks (to name something random).

So keep the above in mind when looking at the 2012 results of my value picks:

TickerPurchase DateEntry*Sell DateDividendExit**Return
TLI.LNov 21, 201242.5047.7512.35%
CDU.LSSep 27, 201222.0022.000.00%
AIGSep 10, 201233.2635.306.13%
RELLA.COJuly 19, 201232.2037.2015.53%
ORGN.PKMay 10, 20121.45Aug 28, 20120.381.4526.1%
CNRD.PKMar 29, 201216.502.0018.5024.24%
SODI.OBMar 26, 20123.093.4511.65%
DSWLMar 6, 20122.110.272.4026.54%
SALMFeb 21, 20122.650.145.46111.32%
IAM.TOJan 24, 20120.590.050.48-10.17%
ARGO.LJan 3, 201214.691.3012.50-6,06%
URB-A.TONov 28, 20110.89Oct 25, 20120.901.12%
0684.HKNov 16, 20112.070.152.2616.43%
ASFINov 7, 20117.980.149.5120.93%
Average18.87%

* Entry price or closing price 2011
** Exit price or closing price 2012

Think it’s obvious that I can be pretty happy with 2012. The stocks listed above aren’t my complete portfolio nor do I buy equal weighted positions. Thanks to various special situations that mostly worked out favorable the real result is actually a little bit higher despite an undisclosed position that managed to lose ~80% of market value.

While the short-term results are nice I think it’s way more important that I can look back at some of my older write-ups, and spot multiple mistakes. I learned a lot last year, and that counts for way more than the realized performance. Hopefully next year I will be able to look back at my more recent write-ups and say almost the same. I would like to see a declining trend in the frequency and the significance of my mistakes :). It’s my intention to do at least once a year a thorough review of my positions, so you can expect some fresh write-ups on my older positions in the near future. If possible I try to do this after the company released their latest annual or quarterly report so in practice it might be a bit earlier or later than a year after the initiation of my position.

Disclosure

Long everything in the above list, except the positions marked as sold.

7 thoughts on “2012 Year in review

    1. Alpha Vulture Post author

      What do you mean exactly? Obviously taking a simple average does have some flaws, but would think that not accounting for the timing of the cash flows would be the biggest issue.

      Reply
  1. eric

    Sorry for the sloppy question.

    How are they weighted in the portfolio?
    What was the weighted performance of the portfolio?

    Reply
    1. Alpha Vulture Post author

      I can’t answer that question. I do track the performance of my complete portfolio, but I don’track how the stocks written up on this blog perform as a portfolio. Would be a lot of work without any gain for me. I do publish when I buy my stocks, at what price I buy and how good I think the risk/reward ratio is. That should be enough imo.

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *