After the great returns in 2013 (+39,7% for the European portfolio and +43,2% in North-America) the markets started the year at a generally overvalued level. It was a very difficult time for value investors to beat the market indices. Nevertheless, our European portfolio and US portfolio have done very well and grown by 7 and 7,1%.
The European portfolio managed to beat the STOXX600 for a 5th consecutive year. Here’s the overview of the last 5 years:
The return in 2014 was +7% compared to +4,4% for the STOXX600. The biggest contributors to this profit were made by positions in Montupet, La Doria and Staffline. The biggest losses were incurred on Afren, Trinity Mirror and Eniro.
North American portfolio
The North American portfolio finished the year with a rally to end just ahead of the European portfolio, with a performance of 7.1% TWR. It had a stronger Mr. Market to beat, as the S&P500 grew by 11.8%. Here’s the performance during the last 5 years:
The top 3 performers this year were Hawaiian Holdings, Handy & Harman Ltd and Vecima Networks. The biggest losses were incurred on positions in ITT Educational Services, Macro Enterprises and Joy Global.
In comparison with the market indices and competing value investing newsletters, the portfolios have done very well. This demonstrates that the models don’t just perform well in academic researches, but that they can be implemented by small investors and provide consistently market beating returns over longer periods of time.
Strategy in 2015
In 2015 we will continue on the same path. We will bring the portfolios to a manageable level of no more than 20 stocks, making them easier to clone. We will stick to the same models and most importantly, we will continue to provide unbiased stock recommendations. Our competitors too often recommend stocks in which a related fund owns positions, hoping to increase the performance of that fund. Our newsletter has always steered away from this malpractice. We’re independent and we intend to keep it this way!