Author Topic: Investment Portfolio - Grossbaum  (Read 3674 times)

Grossbaum

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Investment Portfolio - Grossbaum
« on: October 18, 2019, 02:38:32 PM »
I am going to start putting out a quarterly note providing details about a hypothetical investment portfolio that I think will do well over time (unfortunately my firm doesn't allow me to directly invest in individual securities, otherwise this is how I would invest my portfolio).

The goal is to try and somewhat "formalize" an investment track record for myself - such that if in a few years, I start an investment management company, I can provide some details on how I have done in this hypothetical portfolio over the past few years.

The inception date of this "portfolio" is March 14th, so I have been tracking it for 2 full quarters now. I hope that by making it "public" and putting my investing ability somewhat on the line, it will help me to treat this portfolio as seriously as if it were my own money that was invested in these securities.

This won't be of much interest to most readers and I hesitate to even post it, but perhaps if there is interest in any of these securities it can start a discussion (although most already have their own threads).


stahleyp

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Re: Investment Portfolio - Grossbaum
« Reply #1 on: October 20, 2019, 01:32:42 PM »
I doubt that having a hypothetical portfolio will be much of a selling point.

If you're good, raising funds isn't that difficult. Raising the right kind of funds and having the right investor base is the bigger hurdle.
Paul

Grossbaum

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Re: Investment Portfolio - Grossbaum
« Reply #2 on: January 01, 2020, 12:11:27 PM »
Portfolio update for Q4.

2019 Returns
Portfolio +22.8%
S&P 500 +16.8%
(from March 14 inception)

Sold NLSN after strategic alternatives concluded without a sale (either of the whole company or a segment). Instead there will be a spinoff of the "Global Media Business" (Buy segment). The original thesis was that NLSN was a moderately undervalued company with a potential catalyst from the strategic alternatives. I was hoping the discounted valuation would protect the share price if there was no sale as a result of the strategic review. That did not turn out to be the case (from the price I purchased at). I plan to keep an eye on the spin docs.

Sold CISN after a buyout offer from a private equity firm.

Bought Legacy Housing (LEGH) on the thesis that it is a moderately valued, manufactured home builder and lender run by a strong management team that has the ability to responsibly grow the business - perhaps significantly.

Increased position in OZK and CWH.

Grossbaum

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Re: Investment Portfolio - Grossbaum
« Reply #3 on: April 01, 2020, 07:00:04 AM »
Portfolio update for Q1.

Q1 2020 Returns
Portfolio -36.5%
S&P500TR -19.6%

Since Inception
Portfolio -22.0%
S&P500TR -6.1%

That was unpleasant. No transactions in the quarter. I believe the holdings are attractive at current prices, which may or may not prove to be true. I wasn't able to swap into more attractive things as prices fell.

Grossbaum

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Re: Investment Portfolio - Grossbaum
« Reply #4 on: April 01, 2020, 12:56:24 PM »
Quick correction. There were a few small transactions early in the quarter:

Sold USB and WBA and purchased First National (FN.TO), thinking that First National was a more attractive opportunity.

First National (FN) is a conservatively run company that originates and services mortgages in Canada. It is the largest non bank lender. I believe I was purchasing shares at 12x earnings ($3 EPS, $37.90 price). If you combine the 8% earnings yield (at purchase price) with 6% earnings growth you would get 14% annual growth in value, assuming no increase in multiple.

Full post link here https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/fn-to-first-national-financial/msg394954/#msg394954

Grossbaum

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Re: Investment Portfolio - Grossbaum
« Reply #5 on: June 30, 2020, 07:44:00 PM »
Portfolio update for Q2.

Q2 2020 Returns
Portfolio 47.3%
S&P500TR 20.5%

Since Inception
Portfolio 11.7%
S&P500TR 13.2%

During the quarter I added to First National Financial (FN). I believe the company will manage through the downturn and profitability will increase coming out the other side, as competitors back away from the market and spreads widen. This dynamic took place during the Great Recession.

I initiated a position in Marathon Petroleum (MPC) during the quarter. I believe the combined value of MPC's three businesses (Refining, Retail, & Midstream) are worth more than the market is giving it credit for at the moment. The separation or sale of the Retail business may cause the market to revalue MPC. Initial write up here: https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/mpc-marathon-petroleum/msg420041/#msg420041

I sold AAPL and bought the above securities as I think they will provide more attractive forward returns.



valueinvestor

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Re: Investment Portfolio - Grossbaum
« Reply #6 on: June 30, 2020, 11:13:38 PM »
Did you buy CWH on the bottom? Even though I've been watching Marcus and CWH for years, I've completely blanked out and didn't remember this was a stock. If so - great call.

I'm still kicking myself for CWH and Wayfair.

I think you'll do well long term!
« Last Edit: June 30, 2020, 11:24:01 PM by valueinvestor »

Maple Fun

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Re: Investment Portfolio - Grossbaum
« Reply #7 on: July 01, 2020, 01:04:53 AM »
Congrats on Q2! Like your posts!

Grossbaum

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Re: Investment Portfolio - Grossbaum
« Reply #8 on: July 02, 2020, 08:02:12 AM »
@valueinvestor - Thanks. I bought CWH at ~$13 in March 2019 and added at ~$9 in August 2019 - so it's been a bit of a wild ride. Obviously sales increase due to a pandemic wasn't part of the thesis, so that was lucky. My thinking was that, before the Gander Mountain gamble, CWH was able to earn about $420m of operating income in 2017 with about 115 RV locations and 1.8m Good Sam members. Now, post Gander Mountain experiment, CWH has about 157 RV locations and 2.2m Good Sam members. Granted 2017 was a very strong year for RV industry sales, but I was thinking a normalized operating income number going forward might be $420m or higher. At the current price of $27/sh, $420m of EBIT would be about a 8.2x EV/EBIT multiple. I might be over estimating normalized operating income. CWH operating margins in 2017 were almost 8% and perhaps those levels will be hard to reach in the future. I guess we'll see.

@Maple Fun - Thanks for the comment

valueinvestor

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Re: Investment Portfolio - Grossbaum
« Reply #9 on: July 02, 2020, 06:53:50 PM »
That's awesome. It's hard to buy down, feels like catching a falling knife.