2011 results

[hyten1]

down 6%

[DCG]

You should take a look into wiki invest. They use your brokerage information and calculate your track record. Check if your brokerage is supported. If not you have to create your own in excel.

 

Wow..that site is great. I've been looking for something like that for years! Thanks so much.

 

Looks like I was up 9.5% for 2011.

[racemize]

You should take a look into wiki invest. They use your brokerage information and calculate your track record. Check if your brokerage is supported. If not you have to create your own in excel.

 

Wow..that site is great. I've been looking for something like that for years! Thanks so much.

 

Looks like I was up 9.5% for 2011.

 

This site is pretty great, except that it imported all my terrible 401k performance (no real options for investment), so now I can't see what my stock portfolio performance was...  Almost good =/.

[alertmeipp]

RBC again got left out at the cold! No one will integrate with them.

[racemize]

Just added time weighted gains to my tracking spreadsheet after looking at wikinvest.  Apparently, it was even better than my IRR:

 

Underlying Gain: 4.83%

IRR: 12.79%

Time Weighted: 17.41% 12.43%

 

Edit: Actually, no, it was just about the same (sign error in formula).

 

It seems like IRR is a better metric than time weighted though.  Is there any reason to use time weighted versus IRR for performance?

[stahleyp]

Ucc,

 

Congrats, that's a great 7 year return after tax. I am not surprised.

 

As a Canadian investor in US equities, I use the S&P 500 returns in $CND as a benchmark which, due to the rise of the $CND over the last decade, has done worse than the S&P 500 as normally measured in $US. So I figure your relative returns are even better than you suggest.

 

(My main account is a registered tax-free one where my 11 year returns are around 24 to 25% - but this is before f/x fees where I have gotten killed except in the last year or so as they have just introduced a $US settlement option.)

 

In any case, congratulations.

 

Wow that is super strong for both of you guys. Hope I can do that well someday. :)

[Baoxiaodao]

Ucc,

 

Congrats, that's a great 7 year return after tax. I am not surprised.

 

As a Canadian investor in US equities, I use the S&P 500 returns in $CND as a benchmark which, due to the rise of the $CND over the last decade, has done worse than the S&P 500 as normally measured in $US. So I figure your relative returns are even better than you suggest.

 

(My main account is a registered tax-free one where my 11 year returns are around 24 to 25% - but this is before f/x fees where I have gotten killed except in the last year or so as they have just introduced a $US settlement option.)

 

In any case, congratulations.

 

I looked at the way UCC invested and was wondering why such a result worth any congratulations without further understanding of the risks. Things could go either way. A few good bets can make a certain year's return shiny, but inherently, this is a levered and risky strategy. I did not mean to criticize, but certainly we should not encourage amateurs replicate UCC's strategy.

 

I am very curious as to how UCC yourself thinking about the strategy. How do you think of your return on a risk-adjusted(again I borrow from Howard marks) basis? How do you manage your risk? Many of your positions can go to zero. How do you handle the volatility mentally?

 

Thanks in advance for the answers!

[Uccmal]

Hi Baoxiaodao, I don't know Howard Marks methodology.  I can only describe what I do.  In straight dollar returns, non notional, it may not seem as risky.  To provide context, I have a full time job, not in the investment industry.  So, there is little correlation between career risk, and investment risk. 

 

I have a certain amount of money in RRSPs, and a pension. The RRSPs are self directed and there are no options allowed in them. 

 

As for the dollar value breakdown of common stock versus leaps it ranges around 15-20% in leaps versus common stock holdings.  I haven't included the Tarp warrants in this calculation. 

 

The leaps I have right now consist of GE, wfc, BAC, jpm, and bby.  They are a mix of Jan. 2013s and Jan. 2014s.  I only buy leaps when I have analyzed the underlying company and determined that it meets my definition of a value investment based on the common stock.  If I am willing to buy the common stock as an investment, only then do I consider the leaps.  I will only buy leaps that trade in dozens or hundreds of contracts per day.  This excludes all small caps, and all leaps on Canadian exchanges.  I have had bad experiences with illiquid leaps in the past. 

 

In Sep/oct/nov I started to roll over my leap positions from 2013s to 2014s opportunistically.  This year for the first time I took major losses on some of these positions.  I was in rimm and bailed out completely - I didn't see it coming back until at least the end of next year.  I have not advanced the GE leaps.  The company is not at enough of a discount to make it worthwhile.  The jpm and wfc, and about half the bby leaps are positions I initiated this fall as 2014s.  The BAC is a mix.  As soon as the 2013s BACs come back into the money I will start reducing the position. 

 

That is sort of the general strategy.  I don't write puts anymore, having been killed virtually very time.  I have pretty much stopped buying puts for now.  Markets are cheap, and puts lose value quickly unless markets tank.  Part of the reason I Took so much of a haircut this year is the large amount I have in leaps.  I normally wouldn't have anywhere near this amount.  The only other time was in the spring of 2009.  The stocks I have as leaps are by my analysis extremely cheap.  Excepting bby they are also all financials.  There is a bit of counter intuition going on.  If BAC goes in the tank the beneficiaries will likely be jpm and wfc.  If BAC succeeds there will be no effect on wfc and jpm.  GE benefits every time someone needs capital or wants to sell a good asset at a crappy price which is happening alot in Euroland these days. 

 

The leaps are assymetric investments.  The downside is zero, which is the same as common stock.  The upside is huge.  I control for market risk these days by holding a 40% position in ffh.  As stocks rebound I will convert some leaps to common to catch rising dividends, others I will sell, and I will not renew positions unless there is a sizable discount on the common. 

 

I have about 7 years of experience with options and have refined the strategy to be quite successful. It is similar to Greenblatt or FFH itself.  I only report my most recent 7 years because before that I was putting in money from the outside.  I stopped that 7 years ago when it no longer moved the needle.  Also, my earlier results were not as good.  This is a long game, and I think about risk every single day. 

 

Generally I think the 10000 hour rule applies.  I have probably spent at least that amount of time over 15 years learning value investing, and I still make new mistakes every year.  Unfortunately for me, I learn by actually doing, and trying things. 

 

 

 

[Baoxiaodao]

Hi Baoxiaodao, I don't know Howard Marks methodology.  I can only describe what I do.  In straight dollar returns, non notional, it may not seem as risky.  To provide context, I have a full time job, not in the investment industry.  So, there is little correlation between career risk, and investment risk. 

 

I have a certain amount of money in RRSPs, and a pension. The RRSPs are self directed and there are no options allowed in them. 

 

As for the dollar value breakdown of common stock versus leaps it ranges around 15-20% in leaps versus common stock holdings.  I haven't included the Tarp warrants in this calculation. 

 

The leaps I have right now consist of GE, wfc, BAC, jpm, and bby.  They are a mix of Jan. 2013s and Jan. 2014s.  I only buy leaps when I have analyzed the underlying company and determined that it meets my definition of a value investment based on the common stock.  If I am willing to buy the common stock as an investment, only then do I consider the leaps.  I will only buy leaps that trade in dozens or hundreds of contracts per day.  This excludes all small caps, and all leaps on Canadian exchanges.  I have had bad experiences with illiquid leaps in the past. 

 

In Sep/oct/nov I started to roll over my leap positions from 2013s to 2014s opportunistically.  This year for the first time I took major losses on some of these positions.  I was in rimm and bailed out completely - I didn't see it coming back until at least the end of next year.  I have not advanced the GE leaps.  The company is not at enough of a discount to make it worthwhile.  The jpm and wfc, and about half the bby leaps are positions I initiated this fall as 2014s.  The BAC is a mix.  As soon as the 2013s BACs come back into the money I will start reducing the position. 

 

That is sort of the general strategy.  I don't write puts anymore, having been killed virtually very time.  I have pretty much stopped buying puts for now.  Markets are cheap, and puts lose value quickly unless markets tank.  Part of the reason I Took so much of a haircut this year is the large amount I have in leaps.  I normally wouldn't have anywhere near this amount.  The only other time was in the spring of 2009.  The stocks I have as leaps are by my analysis extremely cheap.  Excepting bby they are also all financials.  There is a bit of counter intuition going on.  If BAC goes in the tank the beneficiaries will likely be jpm and wfc.  If BAC succeeds there will be no effect on wfc and jpm.  GE benefits every time someone needs capital or wants to sell a good asset at a crappy price which is happening alot in Euroland these days. 

 

The leaps are assymetric investments.  The downside is zero, which is the same as common stock.  The upside is huge.  I control for market risk these days by holding a 40% position in ffh.  As stocks rebound I will convert some leaps to common to catch rising dividends, others I will sell, and I will not renew positions unless there is a sizable discount on the common. 

 

I have about 7 years of experience with options and have refined the strategy to be quite successful. It is similar to Greenblatt or FFH itself.  I only report my most recent 7 years because before that I was putting in money from the outside.  I stopped that 7 years ago when it no longer moved the needle.  Also, my earlier results were not as good.  This is a long game, and I think about risk every single day. 

 

Generally I think the 10000 hour rule applies.  I have probably spent at least that amount of time over 15 years learning value investing, and I still make new mistakes every year.  Unfortunately for me, I learn by actually doing, and trying things.

 

Well, that is a hell of information. Thanks! Can you please talk about your common stock holdings? Can you also talk more about your strategy trading options? I would really like to learn from you.

 

It took me 10 years to catch on with value investing, so I totally understand your feelings. Keep going!

 

 

 

[twacowfca]

Hi Baoxiaodao, I don't know Howard Marks methodology.  I can only describe what I do.  In straight dollar returns, non notional, it may not seem as risky.  To provide context, I have a full time job, not in the investment industry.  So, there is little correlation between career risk, and investment risk. 

 

I have a certain amount of money in RRSPs, and a pension. The RRSPs are self directed and there are no options allowed in them. 

 

As for the dollar value breakdown of common stock versus leaps it ranges around 15-20% in leaps versus common stock holdings.  I haven't included the Tarp warrants in this calculation. 

 

The leaps I have right now consist of GE, wfc, BAC, jpm, and bby.  They are a mix of Jan. 2013s and Jan. 2014s.  I only buy leaps when I have analyzed the underlying company and determined that it meets my definition of a value investment based on the common stock.  If I am willing to buy the common stock as an investment, only then do I consider the leaps.  I will only buy leaps that trade in dozens or hundreds of contracts per day.  This excludes all small caps, and all leaps on Canadian exchanges.  I have had bad experiences with illiquid leaps in the past. 

 

In Sep/oct/nov I started to roll over my leap positions from 2013s to 2014s opportunistically.  This year for the first time I took major losses on some of these positions.  I was in rimm and bailed out completely - I didn't see it coming back until at least the end of next year.  I have not advanced the GE leaps.  The company is not at enough of a discount to make it worthwhile.  The jpm and wfc, and about half the bby leaps are positions I initiated this fall as 2014s.  The BAC is a mix.  As soon as the 2013s BACs come back into the money I will start reducing the position. 

 

That is sort of the general strategy.  I don't write puts anymore, having been killed virtually very time.  I have pretty much stopped buying puts for now.  Markets are cheap, and puts lose value quickly unless markets tank.  Part of the reason I Took so much of a haircut this year is the large amount I have in leaps.  I normally wouldn't have anywhere near this amount.  The only other time was in the spring of 2009.  The stocks I have as leaps are by my analysis extremely cheap.  Excepting bby they are also all financials.  There is a bit of counter intuition going on.  If BAC goes in the tank the beneficiaries will likely be jpm and wfc.  If BAC succeeds there will be no effect on wfc and jpm.  GE benefits every time someone needs capital or wants to sell a good asset at a crappy price which is happening alot in Euroland these days. 

 

The leaps are assymetric investments.  The downside is zero, which is the same as common stock.  The upside is huge.  I control for market risk these days by holding a 40% position in ffh.  As stocks rebound I will convert some leaps to common to catch rising dividends, others I will sell, and I will not renew positions unless there is a sizable discount on the common. 

 

I have about 7 years of experience with options and have refined the strategy to be quite successful. It is similar to Greenblatt or FFH itself.  I only report my most recent 7 years because before that I was putting in money from the outside.  I stopped that 7 years ago when it no longer moved the needle.  Also, my earlier results were not as good.  This is a long game, and I think about risk every single day. 

 

Generally I think the 10000 hour rule applies.  I have probably spent at least that amount of time over 15 years learning value investing, and HrI still make new mistakes every year.  Unfortunately for me, I learn by actually doing, and trying things.

 

Well, that is a hell of information. Thanks! Can you please talk about your common stock holdings? Can you also talk more about your strategy trading options? I would really like to learn from you.

 

It took me 10 years to catch on with value investing, so I totally understand your feelings. Keep going!

 

 

I think your strategy is excellent.  It's a barbell shape with asymmetric long payoff potential from leaps at one end, counterbalanced with a long position in FFH at the other end of the barbell which should be negatively correlated with market risk.  This strategy should help you live to fight another day if the market and the value of the leaps turns against you.  :)

 

It's similar to what we do:  we have BRK and FFH at one end of our barbell and long dated. non recourse. total return derivatives on LRE. plus shorter term speculative situations on the other end of the barbell.

[nwoodman]

Generally I think the 10000 hour rule applies.  I have probably spent at least that amount of time over 15 years learning value investing, and I still make new mistakes every year.  Unfortunately for me, I learn by actually doing, and trying things.

 

Great post. This really struck a chord!  LRE was was a winner for me also . Loews and Berkshire were a drag.  Haven't had the time to calculate the IRR but looking back over the 6years of allocating my company's excess funds we are up a paltry 1% in AUD terms. The 30% increase in the AUD has been a drag.  Looking forward to some regression to the mean on the currency front

[Cardboard]

Uccmal,

 

"The RRSPs are self directed and there are no options allowed in them. 

 

If you are interested, you can buy calls, puts and sell covered calls and even do synthetic puts in your RRSP. You just have to file the needed paper work with your brokerage firm.

 

Cardboard

[Uccmal]

Ha Cardboard, I didn't need to learn this... Lol.  I think I'll leave these accounts as they are.  Btw, I still owe you for all I learned about FFH from you back in the dark days.  I recall following your commentary here and on the yahoo board.  You and Bsilly.

 

Baoxiaodao,  I'll have to get back to you tonight on the common stocks query.  Thanks...

 

 

 

 

 

 

[Ross812]

Down 16% this year overall. This was not the my best year overall, but I really like what I own and my the price I paid so I'm hoping for a good 2012!

[Myth465]

Up 4% versus index that's down 75%. (I decided to index myself to RIMM)

 

So my relative performance has been truly outstanding.

 

LOL

[cwericb]

I have two portfolios. One self directed, the other “professionally” managed through RBC Dominion Securities and Foyston, Gordon & Payne.

 

Despite some bad timing (FTR) and some gambles (RIM and TRE), my self directed portfolio was up 3%. My “professionally” managed portfolio was down 15%.

 

I could put that negative 15% down to being aggressive, but when markets were doing better last Spring my self directed portfolio was up 6-7% while the other was only up 2-3% (at best). Unfortunately they manage 2/3 of my holdings.

 

My financial adviser says I need to give it more time. That reminds me of the old Credit Union TV commercial where this gent comes on screen and says, “For years I went to my broker (pause) And the only thing that got broker was me.”

 

 

 

[SharperDingaan]

 

Uccmal, twacowfca: We do something similar. Cash/margin on one-end, 3-4 equities on the other. Synthetic hedging instead of options, capital withdrawals instead of FI, & we deliberately do not work in the investment industry. Amusingly, we've also had the LEAP experience.

 

SD

[cwericb]

"you're smart and experienced enough to reverse engineer what they did to go -15%. you seem nonchalant about OP managing your money, having a bad year. they are not all smart. many are just good salesmen. they can be intimidating to the lay person. Were it me I would be sitting down with them, for hours if need be, and figuring out Exactly how they lost 15% of my capital. how much are they charging? what is the turnover of the portfolio? lost of questions"

 

I have done most of what you suggest and I think the time is coming when I will have the confidence and time to manage my own investments, but for now I pretty well have to rely on someone else to do so. It also spreads the risk of my doing something really stupid :)

 

At this point I am taking the position that I will give them a little more time, (but not much more). It is is something like the mutual fund that advertises how well it did last year. It doesn't mean that they will have a great year next year and the fund that didn't do as well may have a better chance of gains in the next year. Some of the money is invested with pretty good fund managers like Sprott and Chou so I will give them a little longer but it still ticks me off that with all their expertise, resources and information that a rank amature like myself can outperform them in both good and bad markets.

[gaf63]

Up 14.5% for all accounts, reg. + Roth IRA and cash acct., 

Main holdings , FFH and SSW, big mistake in not selling LVLT when it was up in mid 2's,

biggest mistake: buying it in the first place

[Uccmal]

cwericb, Just an Fyi, you can move mutual fund holdings you want to keep, such as Sprott and Chou into your own discount account.  A phone call and a few forms should do it.  The receiving entity will do the work for you. 

[ERICOPOLY]

big mistake in not selling LVLT when it was up in mid 2's,

biggest mistake: buying it in the first place

 

Hah!  I'm just waiting for some poster who shall remain unnamed to jump all over you for that one!

[nielfiel]

Irr of 12.8%, with an underlying gain of 4.9%. This was my first full year of investing, and I think it went pretty well.  Incidentally, does everyone use irr to measure performance?

 

You should use IRR if you have control of contributions and withdrawals.  If you do not have control of contributions and withdrawals (hedge/mutual fund managers) you should use time weighted rate of return.

 

Down 23% this year.  40% of assets were invested in Fairholme Funds.  Ouch.

[Santayana]

big mistake in not selling LVLT when it was up in mid 2's,

biggest mistake: buying it in the first place

 

Hah!  I'm just waiting for some poster who shall remain unnamed to jump all over you for that one!

 

I'm still happy I bought when it was around $1.....but definitely would have had a better year had I sold in July. 

Overall I was down around 5%.    Had some SSW calls that expired in November which ended up being around the low of the year and right before the tender offer announcement.  I really thought the div increase last spring would put a floor on the price around $15.  Serves me right for trying to predict what Mr. Market would do in the relatively short term.

[Uccmal]

Hi baoxiaodao, 

 

Common stock holdings in approximate size order:

ffh

 

ssw ~ 15%, will be tendering some early next week - credit jeast, Irwin Michael - 3+ yrs

 

others <10%

cfx:t. - had for 2.5 yrs.  sell some when it reaches16-17, buy back below 12

ylo.pr.d - perpetual preferreds - face value 25- position will be covered by dividens within 1.5 years.

credit to ubuy2wron, ffhwatcher, and rstuzu.

rbs.pr.p - rbs perpetual prefs. dividend in suspension until April - no sign dividend will not be restarted - credit dcollon

mtl - maturing position assured dividend.

bac and wfc tarp warrants

wfc common

mfc common - stuck in RSPs - dont want to sell at a loss

bce - bought after merger blowout - double in 3 yrs with dividend

bby common - small pos.

 

A smattering of other tiny positions.  There is nothing above the board has not discussed.

 

This years results were so bad due at least 50% to RIM.  One of my major goals is to practice patience when buying.  I am starting to learn that cheap stocks dont require immediate action and can often be had for cheaper after the knife has fallen.  Virtually all of my major mistakes have been from acting too fast. 

 

Nothing fancy except the leaps. 

 

 

 

 

 

[Uccmal]

hi twacofca,  can you elaborate a bit on the LRE total return swaps:

 

Assume you guys use a full service broker

 

Is there active trading with quotes or are they only available by appointment?

 

Who are counterparty to these?

 

Do you buy the swap, write the swap etc.

 

Thanks, uccmal