| Holding | Category | Business | Duration |
|---|---|---|---|
| Senvest Capital ( TSX: SEC ) | Canadian midcap | Investment Company | 6.5 yrs |
| Anthem ( ANTM ) | US large cap | Health insurance | 17 yrs |
| European Reliance ( ATH: EUPIC ) | Greek small cap | Life and Health insurance | 7.5 yrs |
| Kansas City Life ( KCLI ) | US small cap | Life insurance | 7 yrs |
| Riken Keiki ( TSE: 7734 ) | Japanese small cap | Manufacturing | 8.5 yrs |
| Investors Title Company ( ITIC ) | US small cap | Title Insurance | 7 yrs |
| Lewis Group ( JSE: LEW ) | South African midcap | Fumiture Retail | 6 yrs |
| IEH Corp ( IEHC ) | US microcap | Manufacturing | 8.5 yrs |
| Tachibana Eletech ( TSE: 8159 ) | Japanese small cap | Manufacturing Distributor | 8.5 yrs |
| Combined Motor Holdings ( JSE: CMH ) | South African small cap | Car Retail | 7 yrs |
| MIND C.T.I.Ltd ( MNDO ) | Israeli small cap | Billing Software | 1.5 yrs |
| Philip Morris Int ( PMI ) | US large cap | Tabacco | 21 yrs |
| Brimag Digital Age ( TLV: BRMG ) | Israeli small cap | Electronics Distributor/Retail | 1 yrs |
| Globrands ( TLV: GLRS ) | Israeli small cap | Tobacco | 1 yrs |
| Pacific Healthcare ( PFHO ) | US microcap | Worker's Compensation Management | 7 yrs |
| Altria ( MO ) | US large cap | Tobacco and alcohol | 1.5 yrs |
| Karelia Tobacco Company Inc. ( ATH: KARE ) | Greek small cap | Tobacco | 7 yrs |
| Clientele ( JSE: CLI ) | South African small cap | Insurance | 0.5 yrs |
| Nu-World Holdings ( JSE: CMH ) | South African small cap | Electronics Distributor/Retail | 1 yrs |
| Hamat Group ( TLV: HAMAT ) | Israeli small cap | Household Manufacturing | 0.5 yrs |
I also have a large short position on the S&P 500 index.
My portfolio has changed a lot since the start of COVID. I have closed or drastically reduced my positions of Seaboard, Mcrae Industries, Installux and the Bruce Fund. I've replaced these with several companies from more developing countries.
For several years, I believed the the US market was overpriced and I believe it now more than ever. Consequently, I believe that the equity gains of the future will come from developing countries such as China, Israel, South Africa. I invested in Alibaba (BABA), although it was not a big enough position to make the above list. I have had positions in South Africa for 7 years now, but it has only recently paid off.
Israel, on the other hand is a odd country. It is considered a developed country because its per capita GDP is US$42,000. But I still regard it as a developing country. The country has long been hobbled by hostility in a volatile region, but that is recently changing. Its population is growing by 2% annually. And many stocks in Israel appear to trade at multiples more typical of developing or stagnating countries. For example Globrands, the second largest tobacco distributor in Israel has a 13.5% dividend! And Brimag, another Israeli stock that I own, has a PE of 7.5 and a 9.7% dividend yield!
Looking at this portfolio, it is not surprising to know that I lagged the US market over the lifetime of this blog. Yes, I would have matched the S&P 500 if I didn't have the short. But the fact that my short was a hedge allowed me to go as long as I did. So my longs and short positions must be considered together in their entirely when evaluating my investment acumen.
Nine years ago I set out to apply Ben Graham's value principles with the goal of beating the "market". Over the last nine years, the S&P500 index returned 17.3% annually, with dividends reinvested. So, comparing to the US market, it appears I failed at my goal.
Basically, I suck.
After realizing this, I will no longer strive to beat the market. Instead, just getting a reasonable real return for my passive investment role is enough. By this I mean something like 5% return after inflation, taxes and fees.
So moving forward, this blog will reflect a very passive, conservative and long term view of things. It will be boring, but I will still write for a number of reasons. First and foremost, I write to improve my writing which helps me tremendously in my job and many other aspects of life. Secondly, I write to give back information and ideas from my long investment journey to the internet community. I have benefitted so much from information on all sorts of topics from other people on social media, internet forums, blogs and the like. They are almost always free, and I generally do not donate to charity. So, writing this blog is one way to give back some knowledge to the free internet community. And lastly, I write to help me think through my ideas.
Click here for last year's positions.
Interesting list! What a disappointment IEH has been. I'm not sure son is up to the CEO job.
ReplyDeleteHi,
DeleteOn the topic of IEH, I have a different opinion. The stock's disappointment
is because the company's inventory is in a mess and this problem started way before David Offerman took the helm.
I don't want to get into the details here. But the last five years or so has seen tremendous top-line growth but conspicously they don't have that much cashflow to show for it. Ostensibly, the gains from the good results are buried in the inventory. But I don't think anyone including mangement has an accurate picture of inventory. And until they figure it out this stock
will stagnate.
I enjoy your writing and benefit from it, so thank you for keeping it up. I would not consider lagging the S&P 500 to even remotely be a failure. If you have more faith in your own research and opinions you likely invested more money than you would have invested if you were simply blinding following an index, especially once you thought the market was overpriced. That, at least, is what I tell myself, and you allude to a similar opinion when you explain your short position. It is difficult to invest in an index that includes companies trading at P/E of 20-100, even when it goes higher year after year.
ReplyDelete
DeleteHi, thanks for the encouragement. I admit I was a bit frustrated. You also made a good point that I would have done much better if I was fully invested into my holdings without any hedging.
I would definitely be keen to get your thoughts on TRU-ZA. I would think that it's valuation would be in the same mould as CMH and LEW. Come to think of it CML might also be in that mould too.
ReplyDeletehi thanks for the suggestions. I took a quick look and I see some issues: the company yields 'only' 6.7%, and it's sales have stagnated recently, also, fyi, I have never noticed it before because the market cap doesn't fit my screener (it is usd$1 B)... I think I'll pass on it for now although I may take another look later.
DeleteI don't think you can beat yourself up about lagging the S&P 500, which has been powered by a handful of stocks. I am not 100% convinced about the merits of your S&P short position. It appears that the long names you own have been carefully picked to provide a margin of safety due to their compelling valuations. Does pairing these names with an overvalued index decrease your risk? I would argue that it increases it.
ReplyDeleteSecondly, you should take a deeper look at the so-called "expensive stocks". I believe that Microsoft, Google and Amazon are the railroad stocks of the 21st century and have a margin of safety built into them because the moats around their businesses are either impretenable or certainly stronger than any other publically traded stock.
I think every investor needs to evolve their style of investing instead of adhering to the same approach. I think financial performance metrics (particularly historical ones) are much less relevant than the investment community would have you believe. Companies that operate in a segment with a large market opportunity and have an ethos around putting their customer first will succeed. Costco has managed to stay as relevant as ever despite eCommerce killing off the retail industry. They have survived because they never lost sight of delivering the lowest prices for their customers. Its easy to dismiss the technology sector as being overvalued but when software companies are bought by private equity firms at multiples of revenue, we need to pay attention and carefully think through their rationale.
Your blogs are always a treasure trove of information. We only have one stock in common (Senvest) and it is awesome to read-up on international micro-caps stocks & their valuation multiples. Please keep posting your blogs & don't get too worked up about the S&P 500 returns.
ReplyDeletethanks, the encouragment really helps!
Delete