This post is about my “Fun Fund.” I am going to discuss the performance of this actively managed investment account in the recently ended first quarter of 2021 and share some thoughts on a few positions.
As a reminder, most of the prior posts about this account (which is really just a small Roth IRA that I am messing around with) are located on this page.
Q1 2021
The first quarter of 2021 wrapped up a couple of weeks ago. I have not been feeling interested in posting lately, hence the delay. I think it is just covid, work, etc…burnout. Hopefully, I can shake this off over the next several weeks and things warm up and covid vaccines continue to roll out. I wanted to update my cash compensation post, do a post about Brian Roberts of Comcast , and do one about companies that pay special dividends (I am just wondering if they might signal abnormally rational, capital-allocation, outliers…it’s just such a weird thing to do if you are just following the normal management incentives).
Anyway, this account was up 18.56%. This return was in spite of carrying about 25% of the account in cash for most of the quarter.
This performance was better than the SPY , and QVAL (up 6.35% and 16.38%, respectively). RPV was up even more in Q4, flexing in at 21.02%.
Most of my stocks were up between 12% and 30% (Wells MF-ing let’s Far-go) during the quarter. ViacomCBS ($VIAC) was up about 70% during the quarter at the point that I decided to sell half of my position (in the 60’s). I took my entire original cost basis out of the position. I felt pretty dumb as the stock continued to rip to $100. But I feel pretty good about it now that the stock has cratered to ~$38. I might run it back up to a 10% at cost position if it keeps selling off. My original cost basis was mid 30’s. If it gets back to $12, I’m doing a cash-out refi of the mortgage and loading up.
I am also adding another “legacy media” position in the account. It’s a more diversified company but I am sort of enamored of legacy media assets right now as the options for distributions and monetization of their catalogs, contacts, and know how are exploding. They get to scale their spend across multiple distribution channels and certain content allows them to continue to monetize really across the consumer’s lifetime.
Meanwhile, most are priced as if it is certain that they will fail to adapt. I like the odds that they fare at least as well as the music labels have done via streaming. Basically, I think they are pretty good businesses that might be getting really good and are priced like they are going away pretty soon. I will probably get into this more at some point.
I bought just a little bit more of another (new) big bank during the quarter. I’m not full up on it yet, so I will defer discussing it until later. I would also like to buy more $USB on weakness. I’ve got about 30% of the account in big U.S. banks.
Most of them have dominant consumer deposit franchises. I focus a lot more on that side of the balance sheet (taking a page/chapter from Buffett). It’s much harder to totally disconnect from reality looking at that side of the ledger, versus the loan loss guesstimates, which can take years to play out.
I also had a pretty huge cash position ~25% during this quarter (it was higher for a bit after selling the $VIAC). I have some ideas where I want to deploy this, but they are kind of higher quality names which have been trading at higher valuations than I’m willing to pay for them (like $DIS or $GOOG…also wouldn’t mind getting another CPG company).
I really need to get most of that cash invested (of course that’s how you are going to feel in a bull market when you are anything other than fully invested), but I am still considering implementing a kind of “coffee can” strategy in this portfolio (I haven’t firmly committed to that). I can definitely feel the impact of that decision in focusing me on being selective and favoring cash generative, quality companies. I am also favoring dividend paying (and growing) stocks, as I think that might really help me psychologically to stand pat. I can at least toggle the DRIP on and off, so I feel like I’m doing something.
FIN
In conclusion, I smoked the SPY last quarter, but let us not forget that I got clowned over the entirety of 2020. The cash in the portfolio continues to be an anchor. Swing you bum!