The G&W portfolio gained 9.73% in January, while the benchmark gained 3.87%.
*Returns are pre-tax, include franking credits, and assume dividends are reinvested. The SPAX2F0 is simply the total return of the S&P ASX200 Index adjusted to include any franking credits received. N.B. I do not account for cash in the portfolio. The net result so far is that my returns are somewhat overstated (though I am nearly always close to fully invested).
On an absolute basis, it was the portfolio's best-ever month. January was a continuation of a trend that started some months ago: many good things happened to my stocks, and nothing bad. This is unusual, has nothing to do with my abilities as a stock picker, and is unlikely to continue. During January, Spicers, one of my largest positions, announced that it had entered a scheme implementation agreement with Kokusai Pulp & Paper Co. Should the scheme proceed — which seems highly likely — Kokusai will acquire all Spicers shares at an estimated price of 7 cents each. The proposed scheme will involve a return of capital, which will attract a favourable tax treatment, and is scheduled to be implemented mid-year. My current intention is to hold my shares until then.
During the month, I received consideration from Lifull for my Mitula shares. This money was subsequently reinvested in four net-net stocks, which are all based overseas: Minco Gold Corp, Sulliden Mining Capital, Venn Life Sciences and Vical Inc. These stocks were selected on a quantitative basis: they all trade at a substantial discount to their net current assets minus total liabilities. If you are interested in learning more about net-net investing, I suggest you read this blog post from Socks and Stocks from some years back. (I am deeply indebted to Chris for writing this post and for helping me avoid some early mistakes.)
The net-net strategy has a number of attractive characteristics: it should provide exceptional returns over time; there is little to no risk of permanent capital loss; it is feasible for me to find and research companies while working full-time; it is firmly within my circle of competence; and a diversified portfolio should provide more liquidity than some of my current holdings.
I will purchase more net-nets in February, and plan to continue to add more stocks as funds become available. I intend to sell my net-net stocks after holding them for approximately one year. The early results have been promising: the four stocks I purchased have gained more than 10 per cent in aggregate since the first purchase on January 22. (Keep in mind they could have just as easily lost 10 per cent.)
There was not much movement otherwise, except for a further purchase of shares in OMN (now 10.18% of the portfolio), which is also a net-net. The portfolio now consists of 13 stocks.
August 3, 2017
|
January 31, 2019
|
Since July 1, 2018
|
Since Inception
|
Annualised
| |
G&W Portfolio*
|
1.0000
|
1.2900
|
21.22%
|
29.00%
|
18.56%
|
Benchmark (SPAX2F0)
|
61,250.80
|
67,739.78
|
-1.90%
|
10.59%
|
6.96%
|
*Returns are pre-tax, include franking credits, and assume dividends are reinvested. The SPAX2F0 is simply the total return of the S&P ASX200 Index adjusted to include any franking credits received. N.B. I do not account for cash in the portfolio. The net result so far is that my returns are somewhat overstated (though I am nearly always close to fully invested).
On an absolute basis, it was the portfolio's best-ever month. January was a continuation of a trend that started some months ago: many good things happened to my stocks, and nothing bad. This is unusual, has nothing to do with my abilities as a stock picker, and is unlikely to continue. During January, Spicers, one of my largest positions, announced that it had entered a scheme implementation agreement with Kokusai Pulp & Paper Co. Should the scheme proceed — which seems highly likely — Kokusai will acquire all Spicers shares at an estimated price of 7 cents each. The proposed scheme will involve a return of capital, which will attract a favourable tax treatment, and is scheduled to be implemented mid-year. My current intention is to hold my shares until then.
During the month, I received consideration from Lifull for my Mitula shares. This money was subsequently reinvested in four net-net stocks, which are all based overseas: Minco Gold Corp, Sulliden Mining Capital, Venn Life Sciences and Vical Inc. These stocks were selected on a quantitative basis: they all trade at a substantial discount to their net current assets minus total liabilities. If you are interested in learning more about net-net investing, I suggest you read this blog post from Socks and Stocks from some years back. (I am deeply indebted to Chris for writing this post and for helping me avoid some early mistakes.)
The net-net strategy has a number of attractive characteristics: it should provide exceptional returns over time; there is little to no risk of permanent capital loss; it is feasible for me to find and research companies while working full-time; it is firmly within my circle of competence; and a diversified portfolio should provide more liquidity than some of my current holdings.
I will purchase more net-nets in February, and plan to continue to add more stocks as funds become available. I intend to sell my net-net stocks after holding them for approximately one year. The early results have been promising: the four stocks I purchased have gained more than 10 per cent in aggregate since the first purchase on January 22. (Keep in mind they could have just as easily lost 10 per cent.)
There was not much movement otherwise, except for a further purchase of shares in OMN (now 10.18% of the portfolio), which is also a net-net. The portfolio now consists of 13 stocks.
