Sunday, January 25, 2015

Performance - A Lousy, Mixed Up, No Good Year

Last year was a lousy year for a lousy reason … and that reason is part of why it took me almost four weeks into this month to get this post written. My wife/partner of 22 years was diagnosed with advanced cancer in 2014 and suffice it to say that helping and supporting her took precedence for the last third of the year as she went through surgery, radiation, and chemo. For the last three months of the year, I wrote fewer pieces in each month than I typically do in two or three days, so you can imagine how much time I was spending paying close attention to the markets.

Anyways, on with the show...

I maintain two separate portfolios (“A” and “B”). Portfolio A is supposed to be a more actively managed portfolio with a greater focus on year-to-year returns. Portfolio B is supposed to be more about long-term opportunities; I don't care so much about the year-to-year performance of holdings so much as the potential/performance over three or more years.

Portfolio A did okay in 2014, beating the S&P 500 and Russell 3000 but lagging the Nasdaq. The biggest positive contributors were Alnylam (ALNY) and Neurocrine Biosciences (NBIX), followed by Multi-Color (LABL). Hurco (HURC) and the Wright Medical Group CVRs (WMGIZ) both did well but make up a relatively small part of the assets. ABB (ABB), First Cash Financial (FCFS) and FEMSA (FMX) were the biggest drags on performance; Cameron (CAM), Lundbeck (HLUYY), Weatherford (WFT), and Ultratech (UTEK) were all laggards, but less meaningful given their smaller allocation.

Portfolio B was a total mess, lagging all of the indexes I care about and doing just generally rotten on its own. I suppose I could blame some of it on a lack of attention in the last third of the year, but the numbers are what they are. Alnylam, Broadcom (BRCM), and EMC (EMC) were the most meaningful positive contributors, while Statoil (STO), Triangle Petroleum (TPLM), and FEMSA were the biggest losers in the mix.

On a combined basis, the results weren't nearly good enough. The three-year and five-year numbers are still decent, but hopefully I can get back to the sort of performance I expect on a year-in/year-out basis.

2014 Returns

Portfolio A: +14.2%
Portfolio B: + 11.5%
Combined Portfolios: +13.53%

S&P 500: +13.69%
Nasdaq: + 14.75%
Russell 3000: + 12.56%

Three-Year Returns (annualized)

Portfolio A: +24.1%
Portfolio B: +16.9%
Combined Portfolios: +21.3%

S&P 500: +20.4%Nasdaq: +23.6%Russell 3000: +20.5%

No comments: