My Real Money Portfolio Returns
If I'm going to ask you to follow me into a net net stock strategy, it only makes sense for you to ask what my investment record is.
In 2014 I published an account of my own real money portfolio returns up until the start of 2014. You can read that article here . But, the broker I was using at the time didn't have good reporting tools and it was only after shifting my portfolio over to Interactive Brokers that I could give you a detailed, official, look at my portfolio returns.
The returns that you see below are net of fees but not taxes. Your taxes will change depending on the jurisdiction that you're investing in and how long you hold onto your net net stocks for.
This image is taken straight from Interactive Broker's reporting tool. Note that I changed the name of my account to hide the account number for security reasons. I also added the names of the benchmark indices to make the graph easier to read.
Since inception on February 7th, 2014, my portfolio has recorded a 168% gain versus the NASDAQ's 84% return. That's a 100% excess return over the market. On a compound basis, I've been able to nail down a CAGR of 28% versus 16.5% for the NASDAQ. That's an excess CAGR of 11.5%.
Over the same period, the RUSSELL 2000, arguably a more accurate benchmark since it only tracks small cap firms or smaller, returned 44%. That's a compound average return of 9.5%.
I also tracked the returns of American net nets from February 7th, 2014 to the end of June, 2017. While the periods aren’t directly comparable, the difference between my portfolio’s performance and American net net performance is MASSIVE. Over that time period, American net nets lost a total of -17%, for a compound annualized loss of -5.5%. These are adequately discounted net nets with average daily volume of $1,000. As you can see, it really pays to pick the best net nets possible!
My portfolio’s outperformance over the previous 4 years is nearly at my long term CAGR target of 30%. The difference is due to variance in return but as time drags on variance plays less and less of a role in my performance. The gap is also due to a major mistake I made a couple years back when I took tim away from my portfolio to build portions of Net Net Hunter. I’m glad that this effort has added significant value for Net Net Hunter members but leaving portions of my portfolio in Cash also really hurt returns. Over the long term the strategy’s performance (not to mention my ability) become much clearer.
If you’re managing over $10 million, then net net investing is probably not for you. But, if you’re a small investor struggling to earn great portfolio returns, you really have to join Net Net Hunter because the returns on offer are that good. Remember, I’m doing this to help small private investors earn great returns.
If you have absolutely no time to pick your own stocks or want somebody else to handle all of your investing, take a look at our full service investment letter at The Broken Leg.
Questions and Answers
Q: Your statement says "Hunter Fund". Do you run a hedge fund?
A: Hunter Fund is my own real money portfolio. It's not open to outside investment but that may change in the future.
Q: You said before that professionals couldn't use this strategy. How big is your portfolio?
A: Assets under investment is under $1 000 000 USD. I don't expect to be able to buy net nets easily if assets rise to over $10 or 20 million.
Q: Can you invest my money for me?
A: I am not currently accepting clients but you may be interested in www.brokenleginvesting.com, our full service investment letter.
Q: Have your returns only been this high due to excessive risk?
First of all, I don't look at "risk" the same way that academics and professionals look at risk. To me, risk is the chance of permanent loss of capital (probability of loss multiplied by the amount that could be lost), not volatility.
If you're sticky about academic risk, according to Interactive Brokers, my portfolio has been much less risky than the market on a number of different metrics. I'll post that here so you can take your pick.
Q: How much cash do you hold?
A: I try not to hold any cash at any point in time. Doing so will only reduce returns over the course of your life. This past year, due to focusing on implementing a major website upgrade for members, as much as 20% of my portfolio was in cash which cause returns to drag. At this point, all of that cash has been invested and I aim to keep my portfolio as cash free as possible going forward.
Q: Where do you find your net net stocks?
A: I find all of my net nets using our Net Net Hunter Shortlists. I exclude resource exploration firms, pharmaceutical companies, real estate companies, financial firms, and companies that have major operations in China. During 2016, most of the stocks in my portfolio were bought below 50% of NCAV, had no debt, had stable NCAV, had tiny market caps, and some even had PEs below 4x earnings.
Q: Do you invest in any other types of stocks?
A: My portfolio is 90% invested in international net net stocks. Investing in anything else would be a drag on my returns. Graham's net net stock strategy is the most proven high performance value strategy available for small investors.
Q: How can I get those same returns?
A: The first step would be signing up for Net Net Hunter membership. You can do so below.
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