Within the first 6 months of 2025, the Worth & Alternative portfolio gained +5,8% (together with dividends, no taxes) towards a acquire of +15,6% for the Benchmark (Eurostoxx50 (25%), EuroStoxx small 200 (25%), DAX (30%), MDAX (20%), all TR indices).
Hyperlinks to earlier Efficiency critiques might be discovered on the Efficiency Web page of the weblog.
Efficiency overview:
As talked about in Q1, in relative phrases 2025 turned out to be a tricky 12 months. Regardless of my conventional obese in European shares, I didn’t have sufficient publicity to performing sectors (Financials, Protection) however as an alternative an excessive amount of publicity to weak sectors like Oil/Vitality associated (ATD, DCC), Alcohol (TFF) or building (Thermador, Samse and so forth.). I additionally had no expsoure to takeovers or purchase outs.
The one constructive information is that June was a comparatively good month, in relative phrases one of the best month since December 2023 and the primary few days in July appeared fairly good as nicely.
For the file, that is the month-to-month growth of the relative efficiency for 2025:
Transactions Q2:
The present portfolio might be seen as at all times on the Portfolio web page.
In Q2, I offered Royal Unibrew and the remainder of Hermle. Royal Unibrew has been a reasonably OK funding, returning round +40% over barely lower than 2,5 years. The primary purpose for promoting the place is that I see restricted upside in comparison with different investments.
As new positions, I added a 3% place in Fraport and a but undisclosed a 1,8% in German Holdco GESCO. I added to Jensen to make it a full place and I additionally added to Bombardier and Eurokai. In all circumstances, the working enterprise developed higher than anticipated. Sadly I added not enought to Bombardier (solely from 1% to to 2%) wanting on the latest information.
Common holding is 3,6 years, Money is at ~9,7% (vs. 4% at 12 months finish).
Remark: Simply hold going or mirror & adabt
As in lots of areas of life, if issues are working easily and efficiently, why must you change something ?
If a soccer group is profitable, the coach would possibly use the identical gamers and the identical tactic for each subsequent match.
However in fact, if issues don’t run so easily anymore, there may be at all times the query: Must you proceed to do the identical (and “hunker down) and hope for issues getting higher or must you make adjustments ?
In Soccer, the reply is normally: Make adjustments rapidly earlier than you get fired as a coach. Hunkering down as a coach normally doesn’t work out very nicely for the person coach. As a aspect comment: In soccer, if in any respect, firing coaches solely has quick time period constructive impact on common.
In investing nevertheless, it will probably make sense simply to proceed what you may have been doing as a result of the rationale for underperformance is perhaps solely non permanent or cyclical. Chasing the most recent tendencies or previous efficiency can truly be fairly dangerous.
Then again, even in investing, it may be very advisable to vary or refine the method with a view to enhance outcomes. A well-known instance is Warren Buffett shifting from “Graham” shares to GARP shares after teaming up with Charlie Munger. He truly ajdusted his method a second time by concentrating on full take-overs in comparison with minority positions.
With my portfolio now underperforming for the third 12 months in a row, I’ve been pondering for fairly a while if and what I ought to change.
My present assumption is that the general technique, which is to speculate primarily into nicely managed, strong firms with first rate prospects at average valuations with a sure give attention to small caps, remains to be legitimate in the long term.
Nonetheless, the way in which I execute the technique would possibly require a number of updates and upgrades as I recognized some recurring errors and weaknesses akin to:
- having a too intensive non-prioritized watchlist
Following my numerous A-Z journeys, my watchlist has grown to a number of hundred shares which I’m not actually in a position to cowl - not having a scientific solution to mix Qualitative and quantitative features
I’ve no clear rule to resolve if I can buy one thing that appears very low-cost however will not be so top quality vs. one thing that could be very top quality however not as low-cost - not having a scientific solution to measure present positions towards potential replacements
I don’t wish to change present positions every day however evaluating potential alternate options systematically frequently may be a worthwile train - promoting too early when shares carry out nicely
This can be a recurring concern over the previous 15 years since I write this nlog. It has gotten somewhat higher however I’ve no systematic solution to resolve on this. - not shopping for if a inventory on the watchlist good points momentum (typically ready for a less expensive value too lengthy)
In some way I’ve this psychological bias that I desire to purchase with a “low cost” in comparison with historic costs though that is clearly the mistaken perspective if for example the basics enhance considerably for a enterprise - Shopping for as an alternative underperforming shares solely to get stunned by worsening fundamentals
That is the flipside of the earlier put up. I typically purchase into falling inventory costs as a result of the inventory appears to be like cheaper, solely to search out out that “Mr. Market” truly had a degree. My “guess” on a restoration within the second half of 2024 was a prie instance for that. - cumbersome handbook processes when screening firms, particularly after I do my A-Z nation overview This train has yielded some nice new investments, however the course of is basically annoying and the rationale why I’ve not began a brand new collection.
Subsequently I’m presently engaged on a few enhancements that I can cluster into 3 classes:
- Enhance the screening course of, particularly on the qualitative aspect and mix it with the quantitative aspect (valuation)
- Scale back my watchlist to a manageable quantity of firms that I monitor extra intently and prioritize them higher
- Measure present positions vs. Watchlist portfolio on a recurring foundation
- Make use of AI instruments to keep away from cumbersome handbook analysis work
- Add Momentum as one issue into the choice course of as an alternative of utterly ignoring it
I’ll write extra about this within the coming weeks as most of that is “Work-in-progress”.
It clearly could be far too optimistic to imagine that these adjustments will change the efficiency in a single day, however I’m very optimistic that it will improve the percentages of higher efficiency (vs. the previous method) within the mid to long run. And it’s perhaps much more enjoyable.
Perhaps one closing comment: I’ll intentionally NOT use AI for writing the weblog. Why ? As a result of I absolutely subscribe to this staement from legendary “VC Thinker” Paul Graham:
Keep protected and funky & benefit from the summer season (in case you reside within the Northern hemisphere).