Portfolio Review 2011-2015

Dear reader,

in this article I discuss my investment results from 2011 to 2015. At the end of this article is a table appended showing my past and current positions of my portfolio.

Table Legend
The yellow area visualizes my (past) holdings with current market prices. The green area represents my sold position. "Avg Days" represents the number of days the position is holded. "Abs Perf" is the absolute performance of that position. "Weight Perf" is the absolute contribution of that position to my overall portfolio. "Perf p. a." is the annualized performance of that position.

I can not provide year on year data, which limits the interpretation of my personal track record. First because it was impossible for me as private investor to separate my private cash holdings (insurance against general life risk) from my portfolio cash holdings (ammunition for new opportunities). Second as I began value investing in 2011 I did not deploy my "free" cash all at once, but only gradually over time. This is a drag to my performance in the early years but I cannot say to what degree, because of the first argument. Third I have cash in- and outflows through savings and through other private company investments (start ups :-). Note to myself: I need book keeping to be able to provide reliable numbers.

My current portfolio has returned 20.3% last year valued at market prices. My bank says I have compounded my stocks at 22.4% in 2014. The major drags where Barrick Gold and SMT Scharf brought in 2014, which hopefully play out in 2015 and 2016. Without these new positions I think a 30% return would have been possible.

My investments in Microsoft, Oracle and Reply nearly doubled on average within 2 years (42% annualized return). These bets where set up in 2013 as old tech stocks and Reply where valued cheaply. I will re-evaluate all 3 positions in the coming weeks to decide which ones I will sell and which I keep. The beauty of buy and hold is compounding on company level and the tax liability on my side (tax have to be paid after selling the stock). If a stock is higher priced as its intrinsic value + tax (Microsoft, Oracle) or fairly priced but no moat (Reply), I will sell it. 

Nestle is my save haven, my performance yardstick and my long term holding (I plan for 30+ years holding period). Why performance yard stick? Nestle is in my opinion a risk free asset (it survived 2 world wars & the great depression), it is a solid compounder at 6 - 10% p. a. and a dividend machine. I see my self in a similar position. First rule as a private investor is not to lose any money. Second rule as private investor is to never forget the first rule! Third rule as a private investor is to have the freedom to live from my holdings without consuming their substance after 30 years of saving and compounding. Forth rule is that I compound my savings at 6 to 10% yearly, which will lead to a nice sum in 30 years. Every percent above that will make the sum nicer but it is not necessary for a free and humble life.

Discussion of closed position
"Time is the friend of a great business and the enemy of mediocre" - W. Buffett

One major drag of buy and hold is to sell too early! 2 factors speak against ever selling: (1) compounding through growth within a moat and (2) payment of the tax liability after selling. If a great company has not reached its growth limit than the company can compound its excess capital for further growth. If growth limits are reached the great business can return large amounts of capital to its shareholder. If you have to pay a profit tax because you sold a great business at a profit, the money you received less tax will buy you less of the same great business. Thus selling a great business because the stock price went up by 50% is stupid. A sell is only rational if (3) the stock price > intrinsic value + tax on profits or another opportunity can deploy the capital at an higher rate.

I should tattoo the above paragraph on my arm! I brought Berkshire in 2011 at 56€ per share and sold it at 86€ in 2013 making 29.8% p. a. over the holding period. I sold because Berkshire was above 1.4 P/B. At that time I had enough excess capital for new opportunities. I could have left the capital deployed and let it compound by (expected) 15-20% p. a. I knew Berkshire is a great business, so why did I sold? Berkshires fair value is about 1.3-1.5 P/B and I thought 1.4 P/B is fair value, so I sold. I missed the point (3), that for a quality business the price has to be largely over priced before it is rational to sell. A sell at fair or even slightly over valued price will cause taxes on profits while the business is still compounding capital. So the business is likely to out-grow its slight over priced stock, while you have to pay the taxes after the selling. Not a very clever decision I made. 1 Berkshire share brought at 56 € in 2011 would be 131 € in 2015 which would have compounded at 29% p. a. versus 20% of my overall portfolio.

Vice versa if the business is a mediocre one, selling at fair value, even slightly under valued is absolutely rational! You have to pay the taxes after selling too, but the mediocre business will not out-grow its fair price, so you do not miss the growth there. As I sold Rhoen Klinikum at fair value it was the right choice. Brought at 15€ per share in 2012 its priced at 22.6€  in 2015 which would have compounded at 18% p. a. Because I sold it in 2014 at 23.5€, I could compound the investment at 34.9% p. a.



Current Holdings Weight Avg BuyPrice Buy Date Current Date Avg Days Market Price Abs Perf Weight Perf Perf p. a.
Sold Date Avg Days SoldPrice Sold AbsPerf Sold WeightPerf Sold Perf p. a.
870450 [1]
20.00% 12.10 € 2014-03-01 2015-02-09 348 10.99 € -9.18% 18.16% -9.60%

MICROSOFT DL-,00000625
10.00% 22.33 € 2013-04-18 2015-02-09 665 37.40 € 67.48% 16.75% 32.72%

10.00% 45.90 € 2012-05-16 2015-02-09 1002 67.89 € 47.89% 14.79% 15.32%

10.00% 24.64 € 2013-07-26 2015-02-09 566 37.79 € 53.37% 15.34% 31.76%

REPLY S.P.A. EO 0,52
10.00% 25.70 € 2013-02-18 2015-02-09 724 67.69 € 163.33% 26.33% 62.93%

10.00% 15.09 € 2014-11-17 2015-02-09 87 14.67 € -2.77% 9.72% -11.11%

Cash 30.00%



131.10% 120.34%

Closed Holdings

BERKSH. H.B NEW DL-,00333 9.63% 56.10 € 2011-11-04 2015-02-09 1193 131.16 € 133.80% 22.51% 29.67%
2013-06-26 600 86.19 € 53.64% 14.80% 29.85%
RHOEN-KLINIKUM O.N. 10.00% 15.11 € 2012-09-05 2015-02-09 887 22.60 € 49.57% 14.96% 18.02%
2014-02-24 537 23.49 € 55.46% 15.55% 34.97%


37.47% 123.85%

30.34% 132.41%


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