Results and thoughts of 2017

Time for the yearly summary. There might not be much content here, but in investments consistency is key. Therefore this habit will be kept alive.

Results this year was +38% in SEK. Add 2-3% for cryptocurrency gains on the side. The SIXPRX which is the main benchmark was up 9%.

 

Process Successes

– trying to participate in inefficient markets: This has been a hallmark since starting to invest in illiquid micro caps. Continued this year with Cryptocurrencies. There is clearly more irrationality and tradeable patterns in this type of space.

– Hedging. I lowered the risk a lot and made some money by hedging. I.e. selling short Electrolux, Tesla, Snap. Also Vestas but there I didn’t have conviction to hold and exited +- 0 after which the downward trend began promptly. Also adding to a select few yield type instruments I believe decreased risk, although at a pretty big opportunity cost. Still I think it’s worth it for peace of mind.

– allocating on a % range to asset classes. I knew this from reading, but knowing the emotional side happened this year with Bitcoin. Before deciding on this strategy I sold of a quite large position after a +50% gain and only kept 10% of said position. If I had used the %range strategy to this of 2-4% allocation to cryptocurrencies that I later adopted it would have added something like 10% to the return figure.

 

Process Mistakes

– too slow/weak rebalancing of positions. I want to train myself to sell aggressively when conditions warrant it, although if it means not being able to execute at quite the current price. I.e. after house-rally in Stillfront, XBrane get overstretched. It is of course never totally apparent that it’s overstretched but you can get an indication thinking about: What more does the company have capacity to deliver after this? Is the pace of positive news likely to increase or decrease? How big part is positive now? The other side of the coin is to allocate at scale to obviously cheap positions. I think I’m slightly better at this, but also feel like it could be improved and has become a bit too cautious because of the increased size of the portfolio.

– too much focus on IPOs. They have definitely added to returns, but probably not commensurate to the amount spent. The strategy of selling after 3 days on a positive opening seems to work decently well. Unless it is up +80% when profit is taken immidiately. Sell out slightly negative openings right away.

– hedging with weak conviction. I feel like options work better than the. miniskirt/minilongs which I don’t truly understand how they work. Options are expensive to trade but my results have been much better. Will see if someone offers more options than Avanza / Nordnet for shorting i.e. Tesla.

Learning

– Had time for two physical presentations this year – XBrane and DDM. Will try for a few next year as well. It can add or detract from conviction in a good way. I think in XBranes case it on the balance added to conviction while DDM was neutral/slightly negative (update Nov 2018: being to this presentation made it easier to sell this after mgmt changes, which turned out being a good move).

Portfolio update

  • Largest positions: DDM, Ferronordic Machines. XBrane, Storebrand, Catena Media, Stillfront, Storytel.

 

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