Category Archives: Portfolio

2025 end-of-year portfolio review

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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

2024 end-of-year portfolio review

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The performance review of 2023 is still featured on the blog’s front page, yet it’s already time to reflect on 2024. Over the past year, global stock markets marched relentlessly higher, driven by tech and AI stocks in the U.S. Despite having no exposure to AI, the portfolio not only kept pace with the MSCI All Country World Index but managed to outperform it once again. As the track record continues to grow, the power of compounding has become increasingly evident. While 2024’s performance was not significantly better than average, the absolute return was higher than the combined returns of the blog’s first six years – and those years included some of my best results! As investors, we are well-acquainted with the principles of compounding and exponential growth, yet it’s still remarkable to witness them in action.

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%
Cumulative 2270.45% 381.53% 1888.92%
CAGR 27.57% 12.85% 14.72%

* 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

As is visible in the performance attribution graph below, special situations were a driving force behind the performance of the portfolio. This isn’t a unique phenomenon, but this year the impact was even bigger than normal. One trade was especially successful, contributing 676bps to the overal performance. The impact of currency movements was also quite meaningful this year with a 341bps contribution, and in reality that number should be higher. I hold my investments in multiple brokerage accounts, and Interactive Brokers is the only broker that provides usable reports to determine the impact of currency movements. As a result, some positions include currency gains, while others don’t. And then there are some brokers that have such horrible reporting that contributing performance to individual positions is not feasible. That’s why last year I introduced the “misc. positions” item to deal with that. It is not a sneaky way to hide positions I’d prefer not to disclose, although I can’t guarantee I won’t use it for that purpose in the future.

Performance attribution graph 2024Another name at the top of the chart is United Development Funding IV. I’ve written about this fund before, and its story is far too complex to summarize briefly. However, with four former executives in jail and the SEC having revoked the stock’s registration statement, it’s safe to say this investment comes with some hair on it. Last year, NexPoint Advisors ran a proxy campaign to replace the current trustees, who remain tied to the jailed executives. Just before the first annual meeting in a decade, the company announced a deal to be acquired by Ready Capital (NYSE:RC) for up to $5.89 per share. While the timing of this deal raises questions – and it’s likely more favorable to insiders than it should – it still represents a substantial improvement over the previous status quo. Before the deal’s announcement, the stock last traded at $2.22 on ctt-auctions.com. Its most recent trade was at $3.75, and if the merger with Ready Capital closes
in 2025, there could be additional upside.

Although the final chapter of United Development Funding IV story has yet to be written, this appears to be another case of the old adage: good things come to those who buy (very) cheap. I began buying the stock in 2019 and 2020. Back then, I estimated the book value to be around $13 per share, though with considerable uncertainty since the company hadn’t published financials since 2015. Since my initial investment, the fund has distributed $1.50/share in dividends, reducing my cost basis to almost nothing. While the deal with Ready Capital values the fund at a steep discount to its current book value of $9.47/share, it’s clear this will result in a more than satisfactory internal rate of return.

I hope my readers had a good 2024 as well, and I would like to wish everybody a happy, healthy and prosperous 2025!

Disclosure

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

Sio Gene Therapies announces first liquidation distribution

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Almost a year ago I wrote about the pending liquidation of Sio Gene Therapies (OTCMKTS:SIOX) with the expectation that a first liquidation distribution would be made in a couple of months. It took a lot more time than initially estimated, apparently because it was more time consuming than expected to liquidate some of the foreign subsidiaries. But the long wait was worth it, because today we finally got a press release with a small surprise to the upside. The initial liquidation distribution will be $0.435/share while the company originally provided a range between $0.38 and $0.42/share. My guess is that we can thank the current interest rate environment for this bump in combination with the delay.

A key part of the investment thesis in Sio Gene Therapies was the expectation that after the initial liquidation distribution we could expect one or more additional distributions. The company is keeping $7.2 million as a contingency reserve, and in the initial proxy statement the possibility of distributing this money to shareholders wasn’t even mentioned. This could add up to $0.10/share, and in the latest press release at least they write something about distributing excess cash (subject to uncertainties inherent in winding up the business). Might take a couple of years or more, but I expect to get something at some point.

Disclosure

Author is long Sio Gene Therapies

2023 end-of-year portfolio review

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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

ALJ Regional Holdings merger completed

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A bit less than two months ago I wrote about the ALJ Regional Holdings going private transaction. The merger closed at the end of last month, but because of some confusing language in the merger documents people where not totally sure if accredited investors would get cash, or would be forced to accept the stock option. I thought it would basically impossible for the company to take this route, because issuing unregistered shares to non-accredited investors could get them in a lot of trouble. Today my broker put the corporate action in their system, and that makes it crystal clear that, if you do nothing, you indeed get the cash option:

Holders electing for the Stock election, Option 2, must complete the Verification Request Form and send back to IBKR for submission to the agent. Once the Verification Request Form has been received by the Information Agent, New ALJ will instruct a third-party accredited investor verification service, VerifyInvestor.com, to initiate the verification process. Holders will receive an electronic communication from the Verification Provider at the email address provided on the Verification Request Form containing instructions to follow in order to complete the verification process. In addition, the Verification Provider or New ALJ’s other representatives or agents may further reach out to confirm whether such investor would qualify as a sophisticated investor in New ALJ’s sole discretion.

Once the verification process is complete, and you receive the confirmation to move forward with the stock election, IBKR will be able to submit the tender electronically via DTC. IBKR cannot tender the shares without receiving the approval from the verification process.

It will probably take till the end of this month for the merger payout to hit my account, but I think we can safely call this trade a success.

Disclosure

Author has no idea if he is still long or not. The shares are still visible in my account, but since the merger closed I guess I technically don’t own them anymore?