No. of Recommendations: 19
Hi everyone,

I've been meaning to write this post for a week and finally have some time this morning to do so. (Plus, I couldn't mention one of these companies until today, anyway.)

The MUE portfolio celebrated its 4-year anniversary a week ago and it's doing all right. Not great, not terrible, but all right.

September and October were brutal months for the portfolio as it slipped to trailing the S&P 500 since inception from a pretty handy beat at the end of August. The portfolio also trails the S&P 500 this year so far. Here are some numbers (all data through 10/31/2014, unless noted):

MUE S&P
2011: (16.27%) 2.11%
2012: 22.73% 16.00%
2013: 60.16% 32.39%
2014: 1.09% 11.33% (YTD)


NAV High: 18.727 (+87.27% since inception) 17.84% CAGR on 8/27/14
5.33 pts ahead S&P since inception as of that date

Furthest ahead of S&P was 9.64 points since inception,
but for some reason I failed to note the date. I believe it was
sometime last July or August.

Furthest behind S&P was 19.84 pts at the end of March 2013.


Rolling 3-year periods, ending 10/31/XXXX:
------MUE------ ------S&P------
Return CAGR Return CAGR
2013: 53.77% 15.42% 56.99% 16.22%
2014: 89.91% 23.84% 71.82% 19.77%


Returns since inception:
MUE: 73.93% and 14.84% CAGR
S&P: 84.10% and 16.48% CAGR


Position data:
20 open positions
16 winners (57.85% average)
4 losers (-28.44% average)

Best: NFLX at 242.16% total return
Worst: RIG at -47.28% total return

Largest 3 positions among current holdings:
NFLX at 15.43% of portfolio (242.16% total return)
WDC at 10.60% of portfolio (126.77% total return)
AAPL at 7.67% of portfolio ( 60.09% total return)

Smallest 3 position among current holdings:
BPI at 1.44% of portfolio (-28.02% total return)
HTZ at 1.89% of portfolio ( 18.81% total return)
RIG at 1.93% of portfolio (-47.28% total return)

Most money invested:
AAPL at $3,777.98 ( 60.09% total return)
WDC at $3,687.27 (126.77% total return)
NFLX at $3,558.55 (242.16% total return)

Least money invested:
DDS at $ 889.32 (114.06% total return)
HTZ at $1,254.56 ( 18.81% total return)
WWAV at $1,548.56 (116.38% total return)

Multi-baggers:
NFLX at 242.16% total return
WDC at 126.77% total return
WWAV at 116.38% total return
DDS at 114.06% total return

66 active purchases
89 total purchases
51 in the green
38 beating the S&P
Vs. the S&P 500:
+430.78 pts maximum (NFLX)
-140.51 pts minimum (BPI)
+6.49 pts on average

Voluntary sold positions (data through shorter of yearly anniversary of sell date or 11/7/14):
OSK at 45.1% loss since bought
+1 year: 14.1% loss since bought
+2 year: 50.9% gain since bought
+3 year: 23.4% gain since bought
NTP at 24.5% and 18.8% loss since bought
+1 year: 23.4% loss and 10.7% gain since bought
+2 year: 16.2% loss and 21.6% gain since bought
+3 year: 3.7% gain and 14.9% loss (2.33 years) since bought
SVU at 64.8%, 68.0%, and 46.5% loss since bought
+1 year: 11.5%, 1.2%, and 69.6% gain since bought
+2 year: 24.1%, 12.7%, and 88.8% gain since bought
+2.17 year: 15.6%, 5.0%, 75.8% gain since bought
DNDN at 68.7% and 67.8% loss since bought
+1 year: 86.7% and 86.3% loss since bought
+1.17 year: 90.8% and 90.6% loss since bought
DF at 10.4% gain and 43.4% loss since bought
+9 months: 10.5% and 54.1% loss since bought
WNR at 163.9%, 110.5%, 143.4%, 252.3%, and 12.7% gain since bought
+3 months: 190.1%, 131.4%, 167.6%, 287.3%, 23.9% gain since bought

Well, that was sobering.

I've discussed before on this board how the early requirements of purchases and my desire to step into positions while trying to set the size of each by my estimate of the risk hurt early returns (2011 was not a good year for the portfolio). I'm still paying the price for those early decisions.

However, by sticking to my process, I was able to overcome that bad start and pull ahead of the S&P 500, as well as move up from dead last in the rankings of those of us participating in this project to settle solidly in second place (though I was within a hair of taking first place for a while -- you reading this, Joe? Juggernaut! :-) ).

I'm pretty happy with the current position of the portfolio, though I've been itching to sell Transocean (RIG) for a while. Looking at my history of voluntary sells (five at losses, one at a gain) and what's happened subsequently tells me that my record there isn't too good, with only two right decisions out of six, judging by latest numbers compared to when I bought the companies. Even my one sell after strong gains turns out to have been wrong (so far) and the companies I invested those gains into (NFLX, TRN, and MBLY) have turned out to be worse from that point through today than WNR (those 3 are down an average of 18.3% since being purchased, while WNR is up 9.9% since the sell). Given that kind of record, I should probably keep Transocean...

I do maintain that I sold NTP for the right reasons (too big a position for the risk, and then realization that I really didn't understand the business or like its industry), and that's been justified as it has stopped being a chip manufacturer and is now into real estate (trying to do something with the land it had bought and developed while it was still a chip manufacturer). Plus it tells me that I really don't want to be invested in companies that are price takers, not price setters. It had to accept the prices Apple was willing to pay for its chips and couldn't handle it. Apple merely moved to a different supplier. So I'll bump up my success on selling to 3 of 6 instead of 2 of 6. :-)

I've had two companies that were purchased away from me: Ceradyne, CRDN, and PowerOne, PWER. They were bought by 3M and ABB, respectively. Both of those were bought at a gain for the portfolio (just barely for PWER, but I'm confident it would have recovered, especially given the success in solar SCTY is experiencing).


One of the desires by the powers that be for this program was to help analysts find companies outside of the Fool universe and maybe to bring some of them into active recommendations by one or more services. I've had some success there, I believe.

Of the 28 companies this portfolio has held, AAPL, BPI, SVU, and NFLX were already in the Fool universe when I bought them. GME had been kicked out, but I bought it anyway and have done decently with it (30.36% return through 11/7/14 for the position). Two of my picks have made it into Stock Advisor (GNRC and WWAV), one is in Options (BKS), one is in Special Ops (HTZ, though I didn't pitch it to that), and one I found independently of Rule Breakers, though I wasn't the first to pitch it there (SCTY).


Overall, I've learned a great deal about what works for me and have become a better investor because of this program. Fool management happens to agree, which is a good thing. :-) I'll keep running it as long as I feel I can adequately handle it (though I know I've been remiss in keeping tabs on them at time -- my biggest regret was not buying more Textron, TXT, when it was down). I still write in my journal about possibilities to add as I run across them, so I'm still looking.

And, yes. I'm still content with my last purchase of Netflix at $481.49 a share. :-)

Cheers,
Jim
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