So how'd this happen? Well, if I had to guess, I'd say it was some combination of luck and temperament (with luck getting the lion's share of the credit). As you'll recall, I came into 2012 with just 5 companies (AIG, BAC, JEF, LUK, and SHLD). During the year I completely sold AIG, and from time to time tweaked my SHLD position. Otherwise, I basically just sat on my ass for 12 months.
In terms of what drove performance, AIG and BAC (both TARP warrants) were the major contributors. Between 12/31/2011 and when I sold in April, AIG/WS went from $5.51 to $12.65 (not bad for 5 months!). BAC/WS, which I still hold, started the year at $2.02 and finished at $5.42.
As for 2013, it should be another interesting year. LUK and JEF are scheduled to merge in Q1, which will leave me with only 3 companies (excluding spin offs, which are not a meaningful % of my portfolio). In terms of position sizing, this is easily the most concentrated I've ever been. However, with 42% of my portfolio in cash, I think I can handle a little company-specific risk. Also, I get pretty nervous with the market trading around multi-year highs, and cash helps me sleep better at night!
Lastly, my expectations are still high for Sears. I think Eddie taking over as CEO is interesting, and my hope is we'll see more asset sales and/or corporate transactions as a result. Who knows, if Sears really does become the next Berkshire, maybe more people will start reading my blog!
Anyway, here's a quick summary of 2012:
- I started the year with $138,179, and in June I withdrew $10K from my account. I ended the year with $213,090. That's $84.9K of straight appreciation.
- My IRR for 2012 was 63.3% vs. 15.2% for the S&P (assumes dividends reinvested and $10K had been withdrawn from my "Hypothetical S&P" portfolio, thus keeping the comparison to be apples-to-apples).
Below are the following: 7 year performance summary, waterfall graph, holdings summary, and quarter-to-quarter bridge (all values are as-of 12/31/2012, click to enlarge).
Questions? Comments? Email mevsemt@gmail.com
