My usual end of year review, up 62%. This compares to about 24% for the FTSE All Share and 9% for the NASDAQ. To put performance in context since ’08 I have slightly beaten the NASDAQ if you don’t consider Russia a total wipe out or am about 30% behind if you value Russian frozen holdings at zero. Whilst this is a little disappointing, in the future, with more time put into it I think I can do far better. We are also probably towards the end of a long tech bull market / potential bubble. Once this unwinds my portfolio, which is entirely non tech will hopefully outperform significantly.
Somewhat frustratingly many of my stock specific ideas didn’t do that well, whilst big sector / thematic bets did better. Primarily stocks like Gold Mining (+134%) / Silver Mining (+123%) / Copper mining ETFs (+56%) did very well. My stock specific ideas – such as Kurdistan Oilers (roughly flat), renewable Investment trusts did not do so well. There were exceptions, AEP (Anglo Asian Plantations (+124%), Anglo Asian Resources (+129%) but still far too many did were flat / dragged the average down. Performance has been so dispersed that even moderately successful positions IGO – lithium miner (+41%), Uranium Miners (+24%) don’t feel as successful…. Usual performance charts are below:
The gain is something like 15-20 years of my usual annual expenditure. The total pot size (ex Russia) is around 50x my spending. As I am 46 I will be quitting (part time) employment shortly once I have a few other things sorted out, and, hopefully there is a bit more stability in the world. Not quite as secure as this sounds – as I spend mostly on basics and am very low cost – recent inflation in food / energy really spikes the budget.. I would quite like to see how this particular commodities rally / breakdown of fiat money plays out, most likely this is just a commodity rally but a breakdown can’t be ruled out.
Trading has probably paid a role in the overall performance, I switched from gold to gold miners in April and Silver / leveraged Silver in October / up until now. The theory being that once Gold / Silver rallies if miners don’t keep up (and they haven’t), eventually they will. This has broadly worked for Gold but Silver has time to catch up. The move in Silver has shocked me (see image below). Silver Miners are up c152% in 2025 whilst silver is up 139%, one would expect, due to operating leverage miners would be up far more. Its not going to be 1-1 and will take time for miners to reflect a higher silver price…
This sort of move is difficult to manage and given the tendency of commodities to have large runs up followed by equally swift collapses I have to sell some / switch some away from metal to miners and, ultimately out of commodities…
Stock level performance and weights are below, this isn’t quite taken at year end so figures may have moved somewhat…
Far too many holdings for the time I have available – but with risks associated with mining / many of my stocks I have to diversify. I would like to cut back the number of holdings quite significantly. ALF / WCW will likely go in the new year through liquidation as will Chinese stocks when I find better opportunities.
Sector / country weights are below:
Weights in metals remain very high and higher than I would like, even after selling down, the speed of the rise and fact I can’t find things to switch into means weights have risen a touch. Gold and Silver Mining are at 20% (mostly ETF’s). 8% Gold / Silver metal, I have significantly cut the 3x leveraged Silver as it rose, which is now 0.8% / 2.4% (depending how you want to look at it). My position is possibly a bit more exposed than it looks, lots of the other metals / miners are moving in highly correlated ways so in any pull back I don’t want to be over exposed. The overall natural resources weight is 45% so very much at my limit.
Russian stocks remain frozen (not shown above), these are about an additional 25% of the portfolio value, or 12 years spending. I managed to get a little out via Cyprus / Kazakhstan but 95%+ remains blocked. With the announcement that the EU wasn’t going to seize Russian funds in Euroclear I am increasingly confident that I will get some/ most of my money back. Prices are as per IB – so haven’t been updated in a while, but looking at this and the dividends I have supposedly accrued its more or less right. I would expect Russian share prices to rise significantly when the war ends.
It’s not all natural resource stock driven – China helped a lot – though I have cut back – I think invasion / blockade of Taiwan likely and don’t want a repeat of my Russian frozen funds experience. I haven’t been able to find an easy / cheap / effective way to hedge this risk. Plan to switch out my remaining holdings at the first sign something is going to happen and cut weights as I find other holdings.
The most disappointing holdings were my Kurdistan oilers GENL / GKP – they rose on pipeline reopening then rapidly fell back. As ever buy the rumour sell the news is wise advice. To me this doesn’t make a lot of sense, revenue / profit will rise given the opening, though a falling oil price doesn’t help. Holding on as I anticipate in a year or two even with weak oil prices years of potential low-cost production / expansion shouldn’t be on a single digit PE. On GENL they have refused to export on the terms of the Kurdistan govt – as a lot of money is owed – suspect a deal will be done or they will jump on board if the government actually honours its agreements.
Another area of weakness was various UK renewables trusts – trading at large discounts – FSFL / HEIT. None has done well though they have had periods of good performance runs. There has been various talk of removing their various subsidies / windfall taxes, particularly if Reform win the next election / moving them to (lower) inflation indexation via CPI rather than RPI. Considering selling but need to do more work / await for the right price. Chances of a major negative have increased. Double digit yields are still being paid so not a disaster and the weight is very small.
Some UK holding have done well, JUP/ PHNX / VOD, still I wonder how far these have to run and if there might not be better opportunities out there. I will hold on for now but these are safe (ish) cash parks that are outside of natural resources.
One perpetual disappointment is Walker Cripps – where the major shareholder has offered to buy out the rest at 14p per share (£6m), even though the accounts have net book assets of £12m – in reality much more as this subtracts all lease values and assigns nothing to the value of the asset management business itself. Pretty disgusting really. I would much rather the government regulate this sort of action rather than equality and diversity / environmental BS. They of course won’t as the entire system is irredeemably corrupt.
I was disappointed by KMR (Kenmare Resources -28%), weak Ilmenite pricing, delays in capex projects and delays on a renewal with the Mozambique government have hit the share price. Its still 0.3x book, $1.5bn invested in this – for a current market cap of about $300 million and about $300m worth of distributions. They did have a very weak offer of 530p in March vs a current share price of £2.47. It may make sense to add to this as for an acquirer they buy lots of assets for far less than it cost to build them. If Kenmare stop investing – and they should as each $1 invested is valued at $0.30 by the market they can easily pay very substantial dividends of potentially 30-50%+ of the current market cap – or thereabouts (subject to production).
I have far too much cash – 12% is a sign of how hard I am finding it to come up with good ideas. One I have had is to open more local brokerage accounts, the next most likely target being Peru / Latin America more generally. Logistically this is proving to be a challenge, they love their bureaucracy. It’s also not great from a tax point of view but if I can get good enough ideas in it won’t matter.
Recently added position in B&M this is a UK value retailer, going through slightly difficult times. Many of its competitors (Wilko / Poundland and similar) have gone out of business or are struggling. They have a new CEO and plan to launch more low-cost ranges / optimise to get back on track. I think this is possible – many in the UK are struggling from high inflation / very low pay rises and major supermarkets Tesco/ Sainsburys / Asda/ Morrisons are very expensive compared to Lidl / Aldi / Iceland (somewhat). There is a space for other low-price competitors if they can get the model right. Discount retailers in the US – Dollar General (+82% this year) / Dollar Tree (+62% this year) show what can happen in a similar winner takes all economy. This has been written up twice on value investors club here and here.
The balance sheet on BME is a little more strained than I would like, but I think its manageable, debt of £859m, about £60-£70m finance costs over the year vs EBIT of £591m. The CEO recently bought a pretty substantial amount of shares. Sometimes its required as a condition of employment – but doesn’t look to be in this case (P94 of the Annual report).
Other new ideas in the year were adding more to CMCX – CMC markets. Their business is doing well in itself, also spreadbetting is one way UK citizens can avoid (for now) increasingly burdensome capital gains tax. Instead of buying a share you bet on the future price – it’s therefore classed as gambling and is tax free. There will come a time to get out as this sort of loophole will be closed once the government gets desperate enough and/or enough people start using it. I am amazed this is not more widely used. Guess this is down to the fact the sort of people who have money to invest tend to be more conservative and don’t like the leverage that spreadbetting offers, or it’s gambling links.
Plans for the new year are more emerging markets / esoteric ideas. There may be some opportunity to short tech / potentially AI, though historically I haven’t done well on this sort of trade. I am very concerned not to let this year’s gains dissipate, but equally they could have a good bit further to run. For years a lot of capex investment has gone into tech rather than real goods. Equally, if crypto / tech falls money could go back into real economy stocks. Oil is another interesting one – historically it has risen after gold has gone on a run, and its also been underinvested in. I have looked, but can’t find much in the way of decent opportunities. As ever, comments / new ideas appreciated.
