Half-year portfolio review, 2020 edition

The first half of 2020 was without a doubt the most action packed start of any year since I started this blog, but you would not know it if you would look at the table below. After hitting a low somewhere in March, both my portfolio and the global stock market staged a remarkable recovery, and I’m back in positive territory while the stock market isn’t that far behind. During the depths of the coronacrisis I was pleased with how my portfolio managed to withstand the carnage. At the lowest point I was down approximately 13% for the year while the MSCI All Country World Index almost hit the 30% mark. I have written many times that I expect to do relative well in periods of market stress, and it’s good to see that that was not just wishful thinking. March 2020 was a portfolio stress test unlike anything I have had experienced before.

Year Return* Benchmark** Difference
2012 18.44% 14.34% 4.10%
2013 53.37% 17.49% 35.88%
2014 30.11% 18.61% 11.50%
2015 24.23% 8.76% 15.47%
2016 64.97% 11.09% 53.88%
2017 29.04% 8.89% 20.15%
2018 13.07% -4.85% 17.92%
2019 32.34% 28.93% 3.41%
2020-H1 3.80% -6.31% 10.11%
Cumulative 870.77% 140.94% 729.83%
CAGR 30.66% 10.90% 19.76%

* Return in euro’s after transaction costs, net dividend withholding taxes and other expenses
** Benchmark is the MSCI ACWI (All Country World Index) net total return index in euro’s

While my portfolio managed to survive the crisis (so far) I have to admit that I didn’t really do that much to capitalize on the opportunities that (in hindsight) were available. I was a cautious buyer because I thought that the economic impact of the coronacrisis could be severe and it would be hard to predict how it would impact various companies. To be honest, that’s probably still true, even though it doesn’t look like it anymore.

But I couldn’t resist picking up some shares at the depth of the crisis, and as you can see in the graph below, especially the special situations bucket performed admirably. Mergers were trading at historic large spreads, and while plenty of deals got cancelled or renegotiated most worked out quite satisfactory in the end. The only stock that caught me with my pants down was Stein Mart (NASDAQ:SMRT). I had not read the fine print of the merger agreement sufficiently careful, otherwise I would have realized earlier that drawing down the revolver too far would cause a material adverse change, giving the buyer an easy out.

As you can see, most of my portfolio is still down for the year. The two main exceptions are Viemed Healthcare and Xpel, two stocks that I would classify as reasonable priced growth. The sea of red below consists mainly of classic value stocks, and it is not a coincidence those have all performed poorly. While the stocks I own are in general too small to be part of any index, it is quite remarkable how much value stocks are underperforming this year. The Vanguard Value ETF is for example down -15.55% year to date while their growth ETF is up 11.44%.

Does that makes sense? I really don’t know. You could make an argument about how lower interest rates make companies with their value further out in the future more valuable, or maybe the coronacrisis will be the final nail in the coffin for struggling companies. But as long as I continue to buy cheap companies with a solid balance sheet I think things should work out in the end. We will see what the second half of 2020 is going to bring!


Author has a position in most of the stocks mentioned in the overview

10 thoughts on “Half-year portfolio review, 2020 edition

  1. Maitri

    Congratulations on another superior performance!

    I think that you had said a couple of years ago that investing was a half-time job for you. Is that still the case.

    Also, any advice on efficiencies in places to look and methodologies.


    1. Alpha Vulture Post author

      Thanks, and guess that it still more or less true. I could spend more time, but I don’t think that working harder necessarily results in better performance. Prefer to keep my mind clear and wait for attractive investments, instead of trying to force something. But maybe I’m just lazy, that’s totally possible as well!

      And where to look: I think if you have been following my blog you have a better idea of what I’m doing than what I can explain in a couple of paragraphs.

    1. Alpha Vulture Post author


      And looked only briefly at the GILT/CMTL acquisition, couldn’t really pinpoint the risks. Seems to be some potential regulatory issues, and outside date is getting close as well?

        1. Alpha Vulture Post author

          Looking at it a bit more carefully, I don’t think the Russian approval itself is a huge risk, at least not if this would be scenario where both parties would still be interested in completing this deal. Russia is not a big part of GILT’s business, so some kind of divestment could have been an option. But of course now, if Russia doesn’t want to approve this, it will be a perfect reason to walk away from this deal. But I don’t really see a very good reason for Russia to say no, in the end it shouldn’t matter a whole lot for them if they get communications equipment from a US company or Israeli company. The US and Israel are cooperating so closely that from a security perspective it shouldn’t matter, it’s basically the same.

          But I think the bigger problem is that the regulatory process might drag on beyond the termination date of the merger agreement, making it easy for the buyer to walk away.

          And talking about walking away, I can see them trying to do that even if the Russian approval arrives on time. The merger agreement seems to be fairy tight with excluding acts of god and natural disasters as a MAE (but no specific Corona carve-out), but GILT seems to be hit quite hard by the coronavirus, and someone could probably make a case that they are disproportionated affected compared to other companies in the same industries. Personally, I think that would be a bit of stretch, but they certainly could try.


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