The blog is on life support, but the annual tradition of a performance review is one I would not want to withhold from my readers. I know you are all curious, even though it is pointless to compare yourself to a random person on the internet. In 2025, the portfolio produced the worst return since the inception of this blog, but I can hardly complain. Fourteen years of double-digit positive returns has exceeded all my expectations from when I started this blog. It is also inevitable that at some point I will encounter a year that I truly can complain about, but this year is not yet it. Hopefully, that is still far away in the future!
| 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% |
| 2024 | 31.20% | 25.90% | 5.30% |
| 2025 | 10.17% | 8.33% | 1.84% |
| Cumulative | 2511.42% | 421.64% | 2089.78% |
| CAGR | 26.24% | 12.52% | 13.72% |
* 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
In the performance attribution graph below, the special situations bucket managed to take its usual number one spot, but with the smallest margin since I started compiling these graphs. Garrett Motion was, and still is, one of my biggest positions, and combined with good operating results it really provided a big contribution to this year’s results.
All the way at the bottom, we find the impact of currency movements, which explains why this year felt a bit like swimming against the tide. I have a lot of exposure to US companies, and the US dollar lost a significant amount compared to the euro this quarter. The actual impact is probably even bigger than the graph shows, because for some brokers it is not feasible to calculate the impact of currency movements exactly. Together with some other positions, they are grouped together in the “misc. positions” basket, which provided a negative contribution to the portfolio despite containing, on average, profitable trades.
A lof of the names in the list above should be familiar to my readers. Next year, United Development Funding and PharmChem will no longer reappear because both have been acquired, but I still hold positions in all the other stocks. This year’s newcomer – Wise plc – is not making a good first impression by claiming a spot at the bottom. Wise is a fintech that specializes in global money transfers. I have been a happy customer for years before initiating a position at the start of 2025.
Wise’s business is difficult to replicate. They operate in 160 countries, support 40 currencies, hold over 65 licenses worldwide, and have six direct connections to local payment systems. In regions without direct connections, they partner with local banks. What sets Wise apart is their focus on improving their product. Cost savings are passed directly to customers, to the point where my Wise cash balances now earn better interest rates than at Interactive Brokers. This customer-centric approach drives extremely high satisfaction, enabling Wise to pursue a growth strategy largely fueled by word-of-mouth referrals.
Since their IPO in London in 2021, Wise’s revenues have soared from £421 million to £1.278 billion, while net income has surged from £31 million to £387 million. The stock, with a P/E-ratio of 24, isn’t exactly cheap. But as long as they continue improving their product, it’s hard to envision a scenario where their customer base doesn’t keep growing – bringing higher revenues and earnings along with it. At the moment, however, the market is somewhat skeptical. The company continues to invest heavily in growth, putting pressure on earnings and margins. Next year the company plans to change its listing from the UK to the US in the hope to achieve a higher valuation multiple, but personally I don’t see that as a material change. It will still be the same business with exactly the same fundamental value.
I hope my readers had a good 2025 as well, and I would like to wish everybody a happy, healthy and prosperous 2026!
Disclosure
Author is long most of the stuff mentioned in the performance attribution graph
This is a refreshingly honest year-end review, especially the acknowledgment that even strong long-term strategies can have underwhelming years. A 10% return in a tough environment still reflects disciplined portfolio management. The long-term CAGR really puts short-term volatility into perspective.
Thanks for the update. Always interested in your new picks, especially when they are “out of your comfort zone”.
How do you think about Wise’s (lower) underlying earnings vs reported earnings?
Underlying is calculated as if they return all interest above the first 1% back to customers, which is their stated goal. In reaility, they are “not able” to pay this out to all customers, which boosts reported (= actual) earnings.
““We expect our reported profit before tax to continue to be higher than underlying profit before tax as long as the effective interest rate we achieve on customer balances is greater than 1%.”
I think it is positive in the sense that it shows what kind of company they are, and how they want to treat their customers. Economically speaking, I don’t think it is too important that their adjusted earnings are lower than reported earnings. It shows that they have the earnings power, and they can choose to either use it to improve their product (creating presumably more earnings in the long-term), or improve current cashflow.
As always, I love reading your reviews. I’m glad to see that the special situations bucket has been working out for you. It’s been the same for me this year as well. Special situations outperformed everything else by a bit.
Good to hear!
These are still amazing results! Great work once again…
Thanks!