Review of 2016 + 33%

Posted on by rjmahan

2016 is almost over so I thought I would go through what worked, what didnt and my plans for 2017.

+33% is OK – FTSE100 is up 14%, 250 up 3% AIM all share 14%.  Peak to trough draw-downs across these are about 10% where as my portfolio (OK measured monthly) was only down 5% from peak at its worst.

My review of 2015 is interesting putting this in context.  I anticipated that TRB and SIHL would do well but not that I would come up with other good ideas or that TJI would do well.

Good Ideas –

  • Tejoori + 200+%.  Wish I hadn’t trimmed to manage my size in early 2015.  Needed to manage risk a bit though.  Still have a very good chunk…  Think it can do another 25% in 2017 but its getting close to time to sell – 6% portfolio weight.  Ironically last year I was thinking of getting out of ultra micro-caps – changed my mind on that one.  Increasingly uncertain whether I should keep holding – watch this space…
  • Alternative liquidity fund – +88%(approx) if you include cash paid out, share price appreciation and move in GBP/USD.  Wish all investments went like this.  Still is 5.7% portfolio weight.
  • Tribal +140%.  Very much an according to plan investment – interesting to see how 2017 will go for this one.  I think its still cheap but there are convincing arguments the other way… 5.7% portfolio weight.
  • Walker Cripps – think this might take a while – might go back in if price falls – still a decent investment and is illiquid so would only take big holder to throw in the towel…
  • SMIN +50% – went well – again not sure I did right thing by selling up.

Other things have tended to be flat or down – I put these in the neutral column

  • Symphony International +20% (though it doesn’t feel that way – hence me putting in the flat column) it paid 10c a share divi in April.  This is a heavy portfolio weight -10%. I will hold this until the end of 2017 – then it has been 3 years tying up capital for a 41% return (including dividends)  To some this would be a good return but not to me.  I need more than this.  If there is a wind up vote this could increase significantly in price  I believe this is due in 2017…. I may add before this on weakness.
  • Rasmala – This is my biggest single position, an 11% portfolio weight – and it has done nothing.  It has hardly traded since late October. I will give it at least another year, if not two in the absence of further information.
  • DCI – Dolphin Capital Investors too new to comment on 7.8% weight.
  • TAU – Tau Capital again too new – 2% portfolio weight.
  • PIL – Produce investments Too new – 6.5% portfolio weight.
  • DUPD – hasnt done much – again will wait – 3% weight
  • Fondul Proprietatea – this again has paid a dividend but the discount hasn’t narrowed despite a good investment manager trying their best – will hold, might be a good candidate for a trim at the end of 2017 if nothing has happened still… 11% portfolio weight – possibly in need of a trim…
  • Terra Catalyst Fund 6.7% portfolio weight.  I need to review this to make sure I still know what I think I know – potentially has good upside.
  • Stagecoach – down 14%. Could easily recover – 5% yield – limited debt – nice attractive asset for someone….6.3% portfolio weight.
  • Ecofin power and water – lost a few percent – terrible trading and timing on my part… other people following my post made money!

Unposted Ideas – few things I never got round to posting on…

  • Italian Property Funds – I have bought a bit (6% weight) of immobiliare dinamico (QFID) and fund alpha (QFAL). They are trading roughly at half NAV and I think will move to liquidate over the next few years, ideally sooner.  They also lower my GBP exposure – which I like from a portfolio perspective.
  • Better Capital 2012 (BC12), this announced a sale of a portfolio company, cancellation of shares and a return of cash which I think derisks the company.  It is trading at about half NAV and seems pretty lowly geared.  NAV seems accurate looking at it and they have sold other assets at NAV.  Unfortunately I wasn’t able to get many shares at all when I bought these so I only have a 2.5% portfolio weight.
  • Marks and Spencer – bought it, thought it was cheap, still hold a little.

Bad Ideas / changed mind / losses

  • Stanley Gibbons – in two minds about this one still – lots of potential, NAV is a bit too inventory heavy though – only a small loss.
  • Emergent Capital – my misunderstanding – it was a good loss – taking it quickly made it -12% rather than -60%+ – if I had waited, at some point this will be a good risk reward to get back in.
  • Fox minerals – down 25% – still think can easily turn next year so am holding on. May be a candidate for additional capital.
  • Vertu – could still do well – not sure I want to be in big ticket, cyclical items in the UK, even though it does look cheap.
  • Appliances online – frustrating – overrated but I am going to reinstate my don’t short dotcoms rule…
  • RHM – so this was delisted – the underlying asset still exists.  I have assumed in my figures this has a value of 0.  It was quite a big holding – if we assume it is worth half what I paid for it performance goes up to +37%
  • Polo – still holding minuscule amount of this – 1.2% of portfolio.  Bit of a stub – I don’t want to sell as its trading well below NAV, equally I don’t want to add – I am down 50% on this.  Will hold on.  I don’t feel too bad for this in the time since I bought resources have taken a pounding and recovered – so a loss should be expected.
  • Ffyfes – sold out then it gets taken out at a 50% premium by the Japanese.  Not much I can do about this, reasons for exiting were sound.

Other things to think about – Brexit and Trump strengthened the USD so this had a positive effect on a good chunk of the portfolio.  Its quite a big appreciation too – 20%.  Same with GBP weakness against Euro – c12%.  Hard to calculate impact this had some things which should have been affected didn’t move – RMA, others such as TJI and SIHL did…  On other things currency didn’t affect me as much as I thought it would as I held via a spreadbet….

Next year – aim is to increase portfolio concentration.  I am annoyed it has gotten to 16 holdings – time for a strict(er) one in one out policy and adding to existing holdings.

Target is a 30-40% return again.  I would like more but when markets are hitting all time highs after a long bull (ish) market it isn’t the time to lever up or aim to shoot the lights out… I look forward to when that day will come.  I currently hold 5% cash..  I often leverage up to 20% although not at present.

Am considering doing level 2 of CFA and returning to working in investment management as a profession if I can get the right spot.  The money potentially available dwarfs what I can make in the next few years risking my own funds, even making 30-40%.  In addition I can hopefully learn from talented individuals and focus on it 100% rather than having a part time job as well as doing this…  Anyone have anything available feel free to let me know.

Prediction is that performance will be driven by RMA, SIHL TRB and DCI next year.

Published by rjmahan

19 thoughts on “Review of 2016 + 33%”

  1. Well done with the return, and thanks for sharing. I note you are looking to go more concentrated, and in relation to this see you have some rather small portfolio weights (and some that would have started small given the large gains), and some much bigger. What is your thought process regarding choosing a weighting, or is it largely impacted by what is available at the right price?

    Happy new year, but you may have been a bit keen on the title!

    1. Fixed title – I need a proof reader.

      I just dont have faith I need to put 10% of my portfolio in many ideas. They are OK but not great.

      Nothing that has come up like it did last year that I wanted to put 20% in. Liquidity / availability at a price I like is sometimes a factor, but not usually. I have just had a look through and there isn’t much I want to add to at present. Only RMA – and I am holding myself back on that..

      Its a really important thing to think about – but no easy answers I’m afraid.

    1. Hi Robert,

      Thanks for the comment.

      I haven’t heard anything about there being more to the story. Yes DCI has a long downward history. In my experience that has often been a positive indicator – ALF, TJI, TRB were all seriously down before I bought and all did well.

      That’s the problem with fraud – if its a successful fraud, it doesn’t look like fraud…

      DCI have reputable auditors and valuers – I am a bit concerned about sales heavily below NAV but I am prepared to wait this one out for now.

  4. I’ve been nibbling away at DUPD. The shares are down to 13p now. The company is liquidating and has approx 5p net cash and 29p of property assets.The results are due shortly.

    I’ve also picked up a few TJI. The company are being vague with the amount of cash to be returned but with net cash approx 64 cents and the shares at 35 cents to buy the risk/reward looks good.

    Have you spotted any decent value opportunities recently Rob. I’m finding it difficult with the FTSE being at record highs.

    1. Yes I hold DUPD – they paid cash back so I show a small profit – dont belive all the property assets are real. I agree

      TJI are being vague. I hold a lot from way back. I was lucky enough to sell some at 40c then buy them back at 33 this week! I suspect most of the cash will be returned, delisting (which they also talk about) and keeping running doesnt make a lot of sense to me…

      I am finding value hard to find, you could have a look at PVCS – possible return if they win their lawsuit. Also I have shorted EUR/CZK – I might do a post on that soon… Its quite an obvious but seems a low risk trade…

    2. I like Life Settlement exposures and other run off type investments. bought some EEA recently.

      1. Check out EMG in the US – too risky for me I’ve been burnt on it a touch but has settlement exposures… Massive NAV discount but very high risk….

  5. Regarding TJI, Delisting and holding onto some of the cash does make sense if the guys in control can buy the shares in the open market of everyone selling out their remaining holding at rock bottom prices before delisting. I’m not sure if this is legal though?

      1. Not sure why its on the boundary of legality.. just depends on how they are going to best serve investors interests buy doing this. I started accumulating a stake in Point York shares a year ago, and soon after they announced a buy back to distribute some of their cash.

      2. No I was responding to Doug it is legal to hold on to the cash – market is concerned they wont give it back or will steal it in some way, hence discount.

        Dougs scenario of holding back cash buying shares low then cashing out high is unlikely, not in line with directors duties to shareholders. I wouldnt say its impossible though…

        They should act in shareholders interests – history shows this is often not the case…

      3. I think the comments on EMG are how I came upon this blog, there was something I didn’t like about the fund, I could have a look at my notes again. I’m not keen on any debt in these funds, and they need to be really well tuned to create enough cash ongoing, to be able to pay premiums.

  6. * That should say Pointon York ( it was an eSIPP type provider that the directors de-listed years ago, but had cash on the balance sheet. and crucially no restrictions on the transfer of shares. All to often what one sees is a delisting along with a change to the Articles, that restricts transfers and hence further locks in holders.

    1. I accept what you are saying. I have also had perfectly solvent businesses that have delisted and not paid a penny… RMG – big, solvent shareholding in Asian company – never seen a penny. I also hold Renn universal growth where a big holding remains unsold – still can dream I will see some eventually though….

      Its an inevitable part of the game but something I am going to avoid – I need my money to turn round come back from an idea then into the next – opportunity cost of delistings are too high for me to risk – even if I get money back with a decent return after a few years…

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