Dragons and Snakes
The year of the Dragon lived up to the prediction of 'good financial luck'. The portfolio delivered strong results, led by triple digit performance from three Canadian/U.S. small/microcaps.
Happy New Year everyone!
Goodbye year of the Dragon. Hello year of the Snake.
The Chinese Zodiac horoscope prediction was spot on for the year of the Dragon. It was indeed a year of ‘good financial luck’. If the predictions hold up, then the year of the Snake - 2025 - looks to become a consolidation year with 'very stable wealth'.
This post goes through the winners and losers of 2024, and has the updated HK (sub)portfolio going into 2025. HK stocks represent about 14% of my overall portfolio. Cash stands at 20% of the total portfolio.
I will publish the complete portfolio in an upcoming post for Founders. The last portfolio post is » here.
Table of Contents
Results
Hong Kong (sub)portfolio
Disclaimer
1. Results
The overall portfolio 🏷️ finished up 26% in Euro’s. The breakdown was 6% (predominantly dividend) income, and 20% price/fx.
Canada and U.S. microcaps led the price gains. Hong Kong stocks delivered 24%. Four stocks contributed about 3% each to the portfolio performance; ClearPoint Neuro, Halyk Bank, Sintana Energy and CoreCard.
Local currency performance (including dividends)
Gentoo Media (fka Gaming Innovation Group) spun-of GiG Software. The -4% on Gentoo Media compares Gentoo + GiG Software with the 2023 year-end price of Gaming Innovation Group.
The portfolio did not suffer huge losses in 2024. The biggest losers cost about 0.6% each in portfolio performance. Dolphin Drilling was my biggest % mistake, exiting with a 48% loss for the year. Another reminder to be very careful with capital intensive businesses without recurring revenues…especially when there is debt involved. An even greater mistake looks to have been exiting Biorem too early. Luckily that mistake was mitigated with strong results from the other Canadian names. Besides the microcap and Hong Kong stocks additions, I am quite satisfied with the timely exit of 80% of my tanker exposure. Tanker stocks soured in the back half of the year. The exit saved several %-points of performance.
Quite a number of holdings delivered ‘boring’ results in 2024. The portfolio result could have easily been up dramatically more without them, and instead, putting more weight in the new 2024 stock additions. I could also have run down my 20% cash position for that matter. I am, however, more focused on long-term capital preservation and creation than profit maximization in any particular year. With new positions it typically takes time for me to build comfort with the risks involved. Usually, I prefer to hold on to stocks I know better (and defer the capital gains tax), over shifting a lot of weight to the new ‘sexy’ thing. The portfolio did a CAGR of 14% since the end of 2007, and 22% in the past lucky 7 years. That is more than fast enough for me. Buffett famously said that Nobody want to get rich slow… well, there may be exceptions…
More important than one year’s result… I have been pleased about the progress in adding several names that look very promising well into the future. I think I added another couple of names that can deliver (sustainable) double digit % dividend income on my cost price. In total, I believe about 30% of the current portfolio is at that level, or not too far off. On top of that, several of the microcaps look like they can compound solid returns for many years to come given their solid growth outlooks and small market caps relative to the size of the prize.