This post is about my “Fun Fund.” I am going to discuss the performance of this actively managed investment account in the first quarter of 2022 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 tracking more closely than my other investments) are located on this page.
Q1 2022
In Q1, this account was down (5.59%). This performance was worse than the SPY, and QVAL, which were down (4.61%) and (1.45%)%, respectively. RPV was up (!?) 6.27%. QQQ was down (8.76%). The Gotham Enhanced 500 ETF (GSPY) was down (3.57%). All those figures are from Koyfin and are 12/31/21 through 03/31/22 total returns.
“Attribution”
What’s that? You want to know how I was able to assemble a portfolio that is so mediocre? Well, you’re likely to regret asking that, because here’s a chart with my holdings and their performance last quarter:
The largest position is WFC at ~15%. SMG and BAC are also at ~10%. In 2022, I have been buying a little more CMCSA and EBAY. I also added a little $DFH.
I did (almost) nothing
In 2022, I have done almost zero to the portfolio. I have been buying a little more CMCSA and EBAY.
I also just added a little $DFH. It is not a 5% position. I understand that builders are due for a little turbulence and headwinds but I think there will be a strong home building market for the foreseeable future. If not, I like $DFH’s model of giving up some profitability in boom times by optioning land rather than placing it on the balance sheet.
The proximate cause of running the position up to 5% is probably the excellent annual letter published by DFH founder and CEO Patrick Zalupski.
In the letter, Zalupski talks about how he came across this “asset-light” model (necessity, later learning about $NVR). He also talks about how he manages the company. Favoring aligned incentives and relationships used to drive an entrepreneurial culture rather than attempts to codify management procedures. He highlighted his own alignment, noting that he owns about 65% of the company. Zalupski said while he has raised capital repeatedly he has not done so to sell his stock. He talked about capital allocation and the use of internal business unit competition to help drive those decisions. Finally, he walked through an example of the capital allocation analysis DFH undertook when constructing a headquarters and ultimately deciding to engage in a sale-leaseback of the property. All in all a really great letter.
FIN
In conclusion, I took a modest L versus the SPY last quarter. But at least I beat the QQQ . Thanks for reading!