Yearly Archives: 2021

2020 end-of-year review, breaking the +1000% barrier

After a rocky start, 2020 turned out to be a pretty great year financially. My portfolio returned 19.31% which is more than the MSCI All Country World Index for the 9th year in a row and it also brings the cumulative return to 1015.82%. I think this is an absolutely amazing result, and I did not expect to achieve it when I started investing and I do not expect that I will be able to repeat it going forward. A more than 30% annualized return is just not realistic in the long-run. It helped of course that the past decade was a good one for investors in general, with the MSCI All Country World Index growing by 11.86% annualized. I am also doubtful that passive investors will be able to replicate that return in the next decade, but who knows? Probably more likely than me achieving more than 30% annualized again over such a long time span.

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 19.31% 6.65% 12.66%
Cumulative 1015.82% 174.27% 841.55%
CAGR 30.74% 11.86% 18.87%

* 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

As you can see in the graph below, a driving force behind the performance of the portfolio was my bucket of special situations such as mergers, liquidations and bankruptcies. But it is somewhat arbitrary what I put in the bucket. My disastrous investment in the Bristol-Myers contingent value rights has its own separate spot, but it could easily have hidden away in that category as well. Somehow the rights are actually not the biggest loser of the year, that is my foreign currency exposure. I expect that most of my readers are located in the US, and probably did not notice it much, but because the dollar lost significant value versus the euro my portfolio was facing a strong headwind. In euros the ACWI was up 6.65%, but measured in dollars the index was up 16.25%. The impact on my own portfolio was comparable with a more than 8% currency translation loss. I usually own very few (if any) stocks that are part of the index, but because of its somewhat similar global equity exposure it is a surprisingly decent benchmark.


Besides the special situations bucket, a very strong contributor was my position in Xpel. It is quite amazing how much a single stock can do for your portfolio when it goes up more than 250% in a single year. I sold a few shares in December, but it remains one of my largest positions (it is only being beaten by my PDLI position). I own a lot of classic value stocks, but my performance for the last couple of years would have looked very differently if I would have owned nothing else. In the previous years HemaCare was a true high-flyer, and now Xpel. It just shows that there is quite a bit of luck involved in generating returns. Passing on a single idea, or making one bet that does not turn out as expected, and your results can look totally different.

To conclude this post, I want to wish my readers a happy and healthy 2021. May this year be better in every single aspect than last year!

Disclosure

Author is long most of the stuff in the performance attribution graph