- It provides a learning opportunity: to see what might have happened if decisions to sell were not made - also, to test one's reasoning on the basis of subsequent events.
- It sets up a mental space for reviewing the performance of the following year: is there any consistency in the pattern behind decision-making for gainers and decliners? (Note that I've stopped using the word "winners" as some companies take more than a few years for their value to be recognized in the market).
Performance for 2017
| Entity |
Wt
| Initial Price/ Purchase * Date | Price * Nov 6/17 | Gain/Loss since Jan 1/17 % | Gain/Loss** Since Purchase % |
|---|---|---|---|---|---|
Wheaton Precious Metals (WPM) (formerly Silver Wheaton)
|
H
|
12.37
2007-09-04
|
26.71
|
4.2
|
213.2
|
| Polaris Materials Corporation (PLS) SOLD |
L
|
10.70
2007-06-01
|
SOLD
2017-08-01 |
- 92
| |
| Cenovus (CVE) SOLD |
M
|
32.39
2010-07-27
|
SOLD
2017-08-24 |
- 69
| |
| North West Company (NWF) SOLD |
H
|
16.23
2009-05-07
|
SOLD
2017-08-11 |
30.37
| |
| Deere & Company (DE) SOLD |
H
|
88.07
2013-01-03
|
SOLD
2017-08-01 |
45.4
| |
| Rocky Mountain Dealerships (RME) SOLD |
H
|
11.89
2013-01-03
|
SOLD
2017-08-22 |
-6.4
| |
| Oaktree Capital Group (OAK) |
M
|
56.45
2013-10-28
|
43.75
|
24.5
|
-22.50
|
| Fairfax Financial Holdings (FFH) SOLD |
H
|
477.98
2014-3-25
|
SOLD
2017-03-08 |
30.5
| |
| Clean Seed Capital (CSX) |
M
|
.51
2015-01-07
|
0.47
|
30.7
|
-7.84
|
| Abitibi Royalties (RZZ) |
M
|
2.57
2015-11-20
|
8.05
|
-0.70
|
212.2
|
| Fairfax India Holdings Corp (FIH.U) |
H
|
10.42
2015-12-16
|
15.57
|
34.8
|
49.42
|
| CRH Medical Corp (CRH) SOLD |
M
|
4.43
2105-12-29
|
SOLD
2017-03-2 |
138.8
|
** Gain/Loss exclusive of dividends
Relative weightings of holdings in the portfolio when the position was first established:
H = >9%
M = 5-9%
L = <5%
I sold several positions for a variety of reasons:
- a sense that the markets were getting over extended;
- a belief that one never gets poor by taking profits;
- a belief that some sectors had poor prospects (e.g. oil and gas); and,
- a determination that some companies were poorly managed e.g. Polaris (the loss was taken as a lesson to be applied elsewhere ... the company consistently failed to achieve its milestones)
- a belief in the business model and company management e.g. Abitibi Royalties; and,
- a sense that the company's best years lay ahead as a result of its strategic positioning and it's superior products/services. I invested in nascent enterprises such as Clean Seed with a 5 - 10 time horizon and the view that it would take years for the company to realize its potential.
- Note that I have not included a figure for the performance of the portfolio as a whole. Figures such as this are only "relevant" for portfolios managed by those with clients. Why assess performance on such an arbitrary time period? There is no rationale other than for marketing reasons or determining annual bonuses for portfolio managers. Individual investors have the luxury of not having to adhere to this dictum. When assessing the performance of portfolios, I am more concerned with trends in the state of my "stash" as measured by the performance of its parts using weeks/months/years - whatever measure is most appropriate at the time for the long-term well-being of my portfolio.
- In examining the performance of positions after they were sold, I felt fairly pleased as most declined thereafter. However, I really blew the call for Deere as it made substantial gains thereafter ... but then again I still made a profit.
- I believe that it is possible to time the market and have read extensively on the subject, especially the writings of Howard Marks e.g. Mastering the Market Cycle. By trimming positions in 2017 and later on it 2018 for holdings not mentioned in the Financial Log Book, I missed most of the downturn in the market in 2018. It was a lesson learned from my experience in 2007/08. Unfortunately many large institutional investment managers do not have the luxury of being able to stage strategic retreats when market conditions are inimical, hence the dictum of "buy and hold".
- Note: the performance for Silver Wheaton is understated since the original purchase was made long before the start of the blog and the newsletter which it replaced. Also, it does not reflect additions to the original position once the stock started to roll.
Performance for 2018 and early 2019
| Entity |
Wt
|
Initial Price/ Purchase * Date | Price * Jan 11/19 |
Gain/Loss** Since Purchase % |
|---|---|---|---|---|
Wheaton
Precious Metals (WPM) (formerly Silver Wheaton)
|
H
|
12.37
2007-09-04
|
26.63
|
107.36
|
| Oaktree Capital Group (OAK) |
M
|
56.45
2013-10-28
|
40.83
|
-27.7
|
| Clean Seed Capital (CSX) |
M
|
.51
2015-01-07
|
0.4
|
-22.5
|
| Questor Technologies Inc. (QST) |
L
|
1.74
2015-05-22
|
4.19
|
140.8
|
| Abitibi Royalties (RZZ) |
M
|
2.57
2015-11-20
|
9.51
|
270
|
| Fairfax India Holdings Corp (FIH.U) |
H
|
10.42
2015-12-16
|
13.46
|
29.2
|
| CO2 Grow Inc. (GROW) |
L
|
.15
2018-12-18
|
0.23
|
40.6
|
*
Prices are quoted in the currency of the exchanges where
equities are listed. As a result the gain/loss is not an
accurate measure of the performance of the portfolio as the $US has
risen significantly against the $=Cdn since many US positions were
established.
**
Gain/Loss exclusive of dividends and increases to the original position.
Relative
weightings of holdings in the portfolio when the position was first
established:
H
= >9%
M
= 5-9%
L
= <5%
Introductory Remarks
In the last two years investing took a second seat to other interests e.g. a new piano and the wonders of B&B (Beethoven and Bach); more travel and time with friends and family. The flow of new ideas diminished and as a result, there were fewer new positions established. By the of 2018, almost 55 percent of my portfolio was in cash.
Since the end of the sailing, I have renewed the hunt for new investments, starting with a special focus on agriculture (see previous posts on potential companies and the state of the farm machinery manufacturing and distribution sector).
Agricultural Holdings
Clean Seed Capital is a nascent enterprise. Although it has achieved some noteworthy milestones (establishment of a manufacturing capability and a distribution network in Canada and the U.S., and increased awareness on the part of farmers) its progress has been dampened by the depressed state of the agricultural sector. The major test will be its ability to generate sales once farmers' incomes improve. There is the possibility that Clean Seed will be taken over by a larger company. The changing composition of the Board of Directors may be an indication of this.
CO2 GROW has been a nice surprise. I expect that the price of the stock will be volatile, especially given investors' attitudes to betting on the cannabis industry. In the "early days" first entrants had a clear competitive advantage due solely to their ability to get permits for production. With the entry of more competitors, the industry will be driven more by a quest for greater efficiency. If GROW secures regulatory approval for the use of its product on cannabis, investor interest will increase significantly. (In correspondence with management, I was informed that the company's technology would be applied only during the pre-flowering stage. Will this increase the odds of regulatory approval?
Precious Metals
Abitibi Royalties is a core holding for three reasons: quality of its management; a business model with the potential to generate tremendous flows of cash in the event that some of its properties are developed as operating mines (especially Abitibi's interests in Canadian Malarctic); and, the possibility that gold prices will increase.
Others
Fairfax India Holdings is another core holding for two main reasons: the quality of its management; and, the economic potential of India. The country has "better bones" than China: a more attractive demographic profile; an amazing ability to accommodate a bewildering variety of ethnicities, languages and religions; a democracy; a society governed by the rule of law; a new confidence and a trend in government which is more amenable to the growth of private enterprise. An aside: I've become interested in reading Indian newspapers: they are irreverent, opinionated, revel in the peccadillos of characters in the public limelight ... and at the same time, host some excellent thinkers who express themselves with elegance.
Questor Technologies is a wonderful company lead by an outstanding President. The depressed state of the oil and gas industry has soured investor sentiment but Questor has been there before and is well positioned to do well when things start to recover.
A Look Ahead
A climate of uncertainty dominates the markets:
- Major geopolitical shifts are underway: potential of Brexit; competition between China and the US; continued strife in the Middle East; the spectre of Russian interference; etc.
- For better or worse, Trump has had a very unsettling impact due to his unpredictability and impetuous pronouncements which have had to be walked back in the face of reality etc. The impact of his regime on agricultural exports and the farm machinery industry will be especially interesting to monitor. A relaxation of the trade war will not, of its own, clear the runway for a liftoff in agriculture stocks as there always remains the prospect of a meltdown in the broader economy. I am prepared to wait for the "all clear" signals and will likely ease my way into the market as opportunities present themselves. It's all about farm incomes and farmers' perception of the future.
- Some "safe haven" positions in precious metals will be maintained and with Abitibi, there is the prospect of notable gains if mine expansion at Malarctic involves areas where Abitibi has an interest.
From time to time, I will make short-term speculative bets on turns in the market through the use of leveraged reverse index funds. However, they will be used sparingly.
My cash position is now in the vicinity of 50 percent. I've learned to conserve my stash and employ it to good effect when valuations and opportunities are attractive ... and usually this is when market participants are most reluctant to invest.
I am also exploring the notion of "rebound kings" - companies that may do extremely well when things improve. In addition to outstanding leadership and products, a few characteristics may include: great financials with little debt; the ability to ramp up production quickly; great distribution networks; profitability at present. This will be explored over the coming months.
ps
If there are any discrepancies in the accounting in The Financial Log Book, it is the result of my distain for clerical/accounting-type work. In my early days I was given an aptitude test which presented one with a series of 60 questions and compared the results with answers provided by people who had been successful in various lines of work. I was not surprised when I recorded a score of 4 out of 60 for clerical work and policing. On the other hand, I was close to a score of 60 for the following occupations: minister, librarian and concert musician. How ever did I end up as a geographer and finally end my wage earning career in the research sector? Life and investing - an adventure.
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