With June behind us it’s once again time to see how my portfolio has been performing so far this year. It’s getting repetitive, but there is little I can complain about given the double digit return and the solid outperformance compared to the MSCI ACWI. With global equity markets going up year after year, I started investing at a very favorable moment, and I absolutely don’t expect that I’ll be able to keep generating performance numbers like this in the future. At some point some negative return numbers are probably going to be mixed in the list, and that would evaporate a (potentially large) part of the current compound annual growth rate.
* Return in euro’s after transaction costs, dividend withholding taxes and other expenses
** Benchmark is the MSCI ACWI (All Country World Index) net total return index in euro’s
As you can see in the performance attribution graph below, a large part of the return can be explained by just a couple of positions. Especially HemaCare has been a driving force behind my portfolio thanks to a 155% gain in share price. Conduril and Viemed Healthcare also contributed nicely, but the rest of the positions were a mixed bag with small losers and winners.
The contribution to the portfolio of the special situations with 259bps doesn’t look bad, but is actually a bit disappointing. In the first half of the year I had a couple of nice situations play out such as the Casa Ley CVRs (contributing 59bps), a BINDQ liquidation payment (contributing 67bps) and the Tejoori liquidation (contributing 86bps). Unfortunately lots of the gains inside the special situations bucket were offset by a couple of deals that went sideways. The biggest one was the Rosetta Genomics merger that failed spectacularly, causing a 207bps loss. Another (undisclosed) merger subtracted 87bps from the performance while some other deals also generated small losses. Hopefully things will turn around a bit in the second half of the year.
The composition of my portfolio doesn’t contain any big surprises. It’s a fairly standard (for me) split between long-term value stocks and special situations. The observant followers of this blog will notice that there are in the overview above a couple of positions I haven’t blogged about previously. One of them is Scheid Vineyards, a name you might have heard before. I used to own a single share just to keep track of the company, but after reading the latest letter to shareholders my interest was piqued again.
This year the company managed to rezone about 130 acres of farmland bordering the city of Greenfield into commercial and residential land. They are planning to sell this the coming years, and will probably realize a handsome profit on it. They also got their vineyards and winery appraised earlier this year for $190.5 million while the company has a market cap of just $80.4 million. There is a lot of debt that needs to be taken into account as well, but there are also other assets such as the 130 acres mentioned earlier, and a large wine inventory. All-in-all I believe that the intrinsic value of the company is more than twice the current price, which makes it a pretty sweet deal in my book.
Author is long everything in the portfolio overview