Investment results for 2012, our first year, were good on an absolute and a relative basis when compared to the Standard & Poor 500. Calendar year and annualized results are presented below.
The investments are made at the time the investment idea is posted. Because the portfolio was built over the course of the year it resulted in an average portfolio life of 240 days. The “2012 Calendar Year Results” compare the portfolio’s 240 day results to the S&P500 365 day results. The “Annualized Results” compares the portfolio on a consistent 365 day basis to the S&P500.
We need to keep in mind the results benefited from last year’s market rally where the S&P500 total return including dividends was over 15%. A rising tide lifts all boats and one year is too short to draw any conclusions. Our focus must be on the long term because investments often require 3-5 years to come to fruition. Good investors understand negative returns can wreak the compounding equation; another reason the real test is over the long term and through down markets.
Our winners are Brookfield Asset Management, American Capital LTD, Brookfield Infrastructure, American International Group, Genworth Financial Inc. Our one loser was SuperValu and it was a bomb. We sold it out.
None of the portfolio investments reached intrinsic value so there is room to appreciate further. In some cases the intrinsic value increased and still provides a sufficient margin of safety for additional investment if desired.
With the above caveats, the portfolio did well. I’ll take 28.9% annualized returns anytime because it is not likely we will get these kinds of returns every year. So let’s enjoy the results for a moment and then get back to work for 2013.
Long: BAM, ACAS, BIP, AIG, AIG warrants, GNW, BREP