2022 was a in absolute phrases fairly unhealthy, in relative phrases nonetheless very fortunate. The Worth & Alternative portfolio misplaced -3,9 % (together with dividends, no taxes, AOC fund as of 30.09.) towards -16,7% for the Benchmark (Eurostoxx50(25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%), all efficiency indices together with Dividends).
Hyperlinks to earlier Efficiency critiques could be discovered on the Efficiency Web page of the weblog. Another funds that I observe have carried out as follows in 2020:
Companions Fund TGV: -33,6% (30.12.)
Profitlich/Schmidlin: -19,2% (30.12.)
Squad European Convictions -14,1% (30.12.)
Ennismore European Smaller Cos (30.12.) +3,8% (in EUR)
Frankfurter Aktienfonds für Stiftungen (30.12.) -17,3%
Greiff Particular State of affairs (30.12.) -3,5%
Squad Aguja Particular State of affairs (30.12.) -19,2%
Paladin One (30.12.) -19,1%
A lot of the “Lengthy solely funds” within the peer Group had been clustered collectively close to the benchmark in a decent vary of -14% to -19%. The one constructive peer was Ennismore, which is an extended/quick funds.
TGV Companions, which is a part of the portfolio, was the weakest fund this 12 months after being the most effective funds final 12 months. In any case, a one 12 months efficiency is barely a snapshot, way more essential are long run monitor data.
Over the 12 years from 12/31/2010 to 12/31/2022, the portfolio gained +336% towards +120% for the Benchmark (Eurostoxx50(25%), Eurostoxx small 200 (25%), DAX (30%), MDAX (20%), all efficiency indices together with Dividends).. In CAGR numbers this interprets into 13,1% p.a. for the portfolio vs. 6,8% p.a. for the Benchmark. As a graph this seems as follows:
Present portfolio / Portfolio transactions
In 2022, portfolio exercise was fairly busy as already talked about within the 23 Investments for 2023 put up. New positions had been: Nabaltec, Photo voltaic, DCC, Royal Unibrew, Gaztransport, ABO Wind, Rockwool, Sto SE and Recticel.
Out and in in 2022 went 7C Solarparken, Energiekontor, PNE Wind, Belimo, Steico, Va-q-tec, Kingspan, Exmar and 3U Holdings. Apart from Exmar and 3U (particular conditions), the others had been a part of “basket trades” that by nature are extra quick time period oriented.
In 2022, I bought ABB, Euronext, NKT, Nexans, FBD, Richemont, Washtec, Zur Rose, Bare Wines, Play Magnus and Aker Horizons. The present portfolio per 31.12.2022 could be seen as all the time on the portfolio web page.
Some Portfolio statistics
The weighted holding interval as of 31.12.2022 has been 3,7 years and is inside my goal of 3-5 years. The 10 largest positions account for round 56% (53%) of the portfolio, the largest 20 for round 87% (82%).
Allocation by nation (ex Funds):
Allocation by foreign money(ex funds):
From a rustic / foreign money perspective, that is clearly a European portfolio, inside Europe it seems comparatively diversified.
“Lively share” vs “do nothing”
The “Do nothing” strategy, i.e. simply letting the Portfolio run from 31.12.2021 and accumulate dividends would have solely resulted in a efficiency of -10,6%, so my “lively contribution” in 2022 was once more fairly good.
The principle cause for this had been had been new or non permanent positions equivalent to Exmar, Gaztransport and particularly the “Freedom Vitality” basket which added round 200-300 bps. Additionally an early exit from Zur Rose and Washtec clarify a part of the distinction. That is now the second 12 months in a row the place the “lively share” was very vital.
So no less than for me, being lively in my portfolio appears so as to add worth that offsets the tax impression I’ve at a private degree in comparison with “do nothing”. Nonetheless I don’t anticipate thtis to proceed to such an extent.
Month-to-month Efficiency 2022
As up to now, the relative outperformance was principally made in months when the Benchmark didn’t do nicely. The portfolio seems much less risky because the benchmark. A part of that is the typical money allocation of round 10%, but in addition a timelag between the extra liquid benchmarks and the commonly much less liquid shares that I personal.
For example each, in August and December, it took a while till my portfolio positions reacted on the nice earlier month within the indices.
The relative outperformance in 2022 was unsustainably excessive and a mix of a few fortunate components that I’ll talk about within the subsequent paraghraphs. 2022 was the third destructive 12 months for each, the Benchmark in addition to the portfolio. Curiously, 2022 was the worst 12 months since 2011 for the benchmark however solely the third worst for the portfolio.
Errors made in 2022
The most important errors in 2022 was clearly to not promote or scale back Bare Wines earlier as outlined in a seperate “put up mortem” put up. One other mistake was to not observe upon my 2021 Efficiency evaluate concept:
The one concept that I’m considering is to purchase “very far out of the cash places” on the “nothing will ever go incorrect” shares like Google, Microsoft or Apple. As a result of one thing may go incorrect in some unspecified time in the future in time.
What went nicely in 2022
As in 2021, I used to be ready so as to add a few “respectable firms at respectable costs” that I can hopefully personal for a few years, equivalent to Nabaltec, Abo Wind, Royal Unibrew, Photo voltaic and DCC.
As well as, I used to be capable of establish two very attention-grabbing particular conditions with Exmar and 3U. Nonetheless, particularly with regard to Exmar, I used to be very fortunate with timing. Additionally the “Freedom Vitality” baset labored nicely. Right here I used to be fortunate to have appeared already at renewables earlier than, so I may pull the set off shortly.
Lastly, I managed to stay extra affected person when a inventory goes up, for instance with Meier&Tobler, the place I managed to carry on for a for much longer time then I might have a few years in the past.
What I’ve realized in 2022
My manner of inventory choosing ends in a portfolio that may do comparatively nicely in most environments, but when fundamentals change, it actually is sensible to have a look at these positions one after the other and “weed out” these positions that actually may endure. As talked about, I added a extra structured half 12 months evaluate that I plan to do as nicely in 2023.
Each, with Zur Rose and Bare Wines I additionally realized that with extra speculative shares, it doesn’t repay to attend for a flip round.
Outlook & Technique 2023
If I look via my annual efficiency critiques, the outlook and technique is sort of all the time the identical: Keep Cautiously optimistic and proceed to do what I’ve been doing and attempt to enhance step by step.
For 2023 I believe it is crucial to not fall into the lure to assume that some “Tech fallen Angels” are low-cost as a result of they’ve fallen by -80% or extra. If historical past (Dot.com) is any information, many of those enterprise is not going to survive of their present kind. For these few who will change into respectable and even nice companies, it may take a very long time till their share costs will recuperate.
Curiously, lots of in the present day’s “progress traders” have by no means skilled an extended time period the place even superb shares have been undervalued for a while. There nonetheless appears to be lots of FOMO out there and everyone seems to be on the lookout for the large 2023 bounce again in “progress shares” when inflations goes down and the FED eases. There may be clearly an opportunity that this may occur and we’ll see durations of quickly rising costs for “shitcos” however general, I believe one must be very cautious with these fallen Angels.
For the present Tech Favorites, I see three main points:
1.) The “Blue Ocean” interval is over. For some years, particularly all the large firms like Google, Amazon, Microsoft,Apple, Meta and Co. may develop alongside one another with out stepping on every others toes. That is now over. Apple kicking Meta into the kneecap with privateness settings was most definitely solely the beginning, extra of those conflicts are to be anticipated. To me, many areas (particularly promoting and E-Commerce) seem like Pink Oceans.
2.) Regulation will proceed to extend. With growing regulation, the previous excessive rising tech firms will look increasingly like Utilities or TelCos. Assuming that behemoths like Microsoft, Google or Apple will develop at 20% charges for a few years is unrealistic.
3.) Tech enterprise is peoples enterprise.
For a lot of tech companies, the “story” is extraordinarily essential to justify the valuation, so Administration, who’s telling the story can command excessive and generally extrem salaries. The identical goes for his or her Tech guys in addition to different essential individuals like Product guys and so forth. To me, many tech enterprise look fairly simlar to funding banking companies or different individuals companies the place to workers are capable of extract the vast majority of the worth creation in some way. Traders ignored this as they thought that “inventory based mostly compensation” shouldn’t be an expense, however I assume no less than a few of them have realized that leason and this downside is not going to go away.
My very own focus will stay on Vitality, Vitality effectivity, Decarbonisation. Electrification and so forth. as these are very lengthy working traits. In addtion, I believe wanting into the laborious hit sectors in Europe as an example within the chemical trade may make sense. As within the earlier years, I do assume it’s important to maintain an open thoughts and search for alternatives after they come up. Some monetary firms as an example may additionally see higher instances.
For the long run, the inrease within the threat free price of no less than 300 bps during the last 12 months has clearly elevated the anticipated long run nominal return on shares. The large query in fact is, how persistent inflation shall be and the way actual returns will seem like. A number of market members appear to be tremendous excited that they may obtain constructive rates of interest going ahead, nonetheless when it comes to “actual returns” the state of affairs for mounted revenue traders is worse then ever.
Within the mid to long run, the one safety towards inflation are “actual belongings” and particularly shares in companies that may go on value will increase.
As a Ultimate goodie, beneath you’ll discover a hyperlink to a tune from Jimmy Cliff that I discover fairly becoming for 2022:
The more durable they arrive, the more durable they fall, every person.