Wednesday, February 8, 2017

Exit from "big oil"

I decided to exit from Chevron and Statoil.

I felt Chevron was ripe to be sold and Statoil was tossed out in the same decision making process.

This means that the only direct stake left in oil & gas industry is Fred Olsen Energy - a position, which has been also trimmed downwards.

Overall these moves mean it will be just matter of time that we exit from the whole sector.

Proceeds have been diverted mostly to small-to-medium publicly-listed companies in Finland in multiple sectors.


Wednesday, January 25, 2017

Blog update


This blog has recently reached 100,000 pageviews. Thanks for all readers!

Few changes in the blog:

I have decided to remove the list of all positions that used to appear beside the blog entries. The main reason for doing this is that I do not want to disclose positions in individual small Finnish companies.

Some of the small cap companies trade in extremely small average daily volumes so accumulating (or getting rid of) positions that are significant compared to the daily volume will take a while. Also, there is a possibility for fairly easy identification in case we would hold positions in multiple small cap companies (which may have less than thousand shareholders).

Finnish book entry law & system is such that all positions in publicly-traded shares by Finnish citizens are public. Only book-entry shares owned by foreign (non-Finnish) shareholders may be nominee registered.

To stay in alignement with policy required from Seeking Alpha contributors (and Seeking Alpha -certified blog), I continue to disclose any positions we have related to an article / post that will be published given the post is specifically about a company/ETF that we hold.


Friday, January 6, 2017

Allocations for 2017

At the start of the year 2017 our portfolio was allocated as follows:

Stocks 98,1%
Gold 1,6%
Cash 0,3%

No bonds. We simply substitute bonds with quality dividend payers in our portfolio.


Geographical Allocation (stocks):

Europe 53,3%
North America 35,6%
Emerging markets 11,0%

Actually, place of incorporation is pretty meaningless for most corporations we have invested in.
Most operate and sell globally.


Sector Allocation (stocks) - in order of weight in portfolio:

Information Technology (significantly overweight compared to even split across all chosen sectors)


Other
Oil & Gas Production
Low Emission Power Generation
Forest Industry
Health Care
Metal Industry
Mining & Exploration (significantly underweight compared to even split across all chosen sectors)


Top 5 positions - in order of weight in portfolio:

Siili Solutions (Finland)
Berkshire Hathaway (USA)
Fortum (Finland)
UPM (Finland)
Nokia (Finland)


21,0% of all stock positions are done via ETFs.
None of those positions made it to top 5 though.

Sunday, January 1, 2017

Portfolio performance 2009-2016


Let's review how our portfolio fared in the year 2016 against passive index investing.

Our "benchmark investment" is an imaginary passive ETF that closely tracks the performance of MSCI all country world (ACWI) index in euros.

First half of 2016 was absolute horror show (vs. index and in absolute terms even more so) and we were behind index most of the year - until December came along and several of our positions gained manyfold compared to index so we ended up beating our benchmark in the past year.

The result for the year 2016 was our portfolio 14,9% vs. benchmark investment 10%.

Note: "Difference" column uses exact values as input rather than figures rounded to 1 decimal that are displayed.

The "beat" is mostly due to our positions in U.S that fared very well.

Euro continued it's decline agains USD from 1,086 to 1,054, which created small headwind for us as our portfolio is significantly more titled to Europe than the ACWI index.

Cumulative gains of our portfolio (blue line) vs. benchmark investment (red line). 31.12.2008 = 100.

It's continues to be amazing how closely we overall track the benchmark given that our portfolio has very different region & sector allocations compared to ACWI index.

While I would naturally like to beat the benchmark we have set for ourselves, the performance so far isn't that bad given that over 70% of the actively managed investments funds fail keep up long term (10 years) with their benchmark index (according to Morningstar - as I wrote last year for 2015 review).

To be fair, I don't track our performance purely against the index (below), so we are trailing cumulatively the pure index to some degree. If you want to know more about our "bechmark investment" against we track and the way above comparisons are calculated, please read the latter part of portfolio performance update from 2014.
 


 Our benchmark index 2009-2016 (based on data from MSCI All Country World Index; Net; Euros)


Friday, December 9, 2016

Avoid costs

Actively managed stock funds charge yearly fees of 1-3%. Some take management fees even north of 4%. Yet, most of them fail to beat their benchmark index.

It's easy to think yearly cost of 1-2% does not matter much.
Big mistake.

The difference between paying 2% of yearly management fees vs. none is 189.000 in lost capital gains over 30 years for 100.000 initial investment with annual 5% gain. See below.



The difference gets even more staggering if just one parameter is changed. With annual gain of 10% you would miss gains of 739.000.


In long run, it's not the profits alone that matter - also cost of holding matters a great deal!