My most popular post of the year is invariably the annual performance review. It is pointless to compare yourself to a random person on the internet, but I get it, curiosity also gets the best of me when someone else is sharing results. In 2023 the portfolio produced a return of 10.47% which in absolute sense is pretty good, but at the same time it is setting some negative records. It’s a bit of a first-world problem when you can bitch about a double digit positive return, but besides being the lowest absolute return so far it is sadly also breaking my streak of beating the MSCI All County World Index every single year in a row. The key distinction between me and the index lies in my positive return the previous year, and if you don’t need to recover from a loss you start with a big head start. Taking 2022 as starting point the MSCI ACWI is up a meager 3.7% while my portfolio produced a 23.3% return. Like I said, first-world problems…
| Year | Return* | Benchmark** | Difference |
|---|---|---|---|
| 2012 | 18.44% | 15.01% | 3.43% |
| 2013 | 53.38% | 18.11% | 35.26% |
| 2014 | 30.11% | 19.23% | 10.88% |
| 2015 | 24.23% | 9.34% | 14.89% |
| 2016 | 64.97% | 11.73% | 53.24% |
| 2017 | 29.04% | 9.47% | 19.57% |
| 2018 | 13.07% | -4.34% | 17.41% |
| 2019 | 32.34% | 28.93% | 2.70% |
| 2020 | 19.31% | 7.18% | 12.13% |
| 2021 | 31.31% | 28.08% | 3.23% |
| 2022 | 11.63% | -12.58% | 24.21% |
| 2023 | 10.47% | 18.65% | -8.18% |
| Cumulative | 1706.73% | 282.47% | 1424.26% |
| CAGR | 27.27% | 11.83% | 15.45% |
* Return in euro’s after transaction costs, net dividend withholding taxes and other expenses
** Benchmark is the MSCI ACWI (All Country World Index) gross total return index in euro’s
Long-time followers of the blog will see a familiar picture in the performance attribution graph below, with the special situations bucket being the driving force behind the portfolio. But I will admit that sometimes the lines are a bit blurry between which stock goes where. The number two position in the list is Garrett Motion, that I bought as a special situation when it entered bankruptcy proceedings, but was promoted to a long-term value pick after a successful restructuring. On the other hand, one of the major contributors in the special situation bucket is a stock that was spun-off after a successfully completed merger arbitrage, and it would certainly make sense to reclassify it to a long-term position. And sometimes the line is already blurry from the start. I think most investors would see investing in spin-offs as special situation investing, but how long can you hold it and still see it that way?
Also noteworthy is that during the year a meaningful contribution was made by interest income. Not only because interest rates went up a lot and you finally get paid something on your idle cash balance, but also because my cash balance was unusually high. We are looking to buy a house, and while that search is ongoing I want to keep my options open. That presumably incurred a significant opportunity cost, but investment results aren’t always the most important in life. Or maybe never? With that philosophical question I want to conclude this post, and wish my readers a happy, healthy and prosperous 2024.
Disclosure
Author is long most of the stuff mentioned in the performance attribution graph
Only 27% CAGR now? Unsubscribed.
All the best for 2024!
Hehe 😀
Thanks, and same to you!
Can you name a couple special sits? CBD was one?
Was very tempted to participate in that one, but missed it…
The philosophical question is one I’ve been thinking about. I’ve been rushing to get to specific net worth numbers for most of my adult life and once I got there nothing magical really happened. I still enjoy the game of investing but I question the trade off of forfeiting my 20s in exchange for early retirement, in hindsight.
Like you said sort of a first world problem.
Not that this answer provides a real answer, but think you have to find a balance.
Dumb question: how do you find special situations? Are you searching SEC database for specific key words or is it less structured and more of an organic process.
Both. I have Google Alerts set-up for certain keywords, do regular searches in the SEC database, have some subscriptions to services that cover special situations and encounter random things on Twitter/blogs/etc
Any service you care to recommend?
I think specialsituationinvestments.com is good value for money.
Thank you for taking the time to respond.
Congratulations! I hope your success and this blog continue for many more years
On the house topic I myself took out a large chunk of my retirement investments and paid a lot of taxes to buy a house a few years ago. Negatively affected my investing for sure but family and life come first. I figured why am I saving this money for some decades into the future when it could really help us now
Thanks Dan, and hopefully the same for you!
Great consistent returns once again without a down year!
It’s the down year(s) that kills your overall return.
Thanks! Yours are also not too shabby I believe 🙂
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