Friday, March 17, 2006

AA Value Fund

I opened my first brokerage account at Charles Schwab while I was attending MIT in 1995. I will never forget walking into a Schwab branch and seeing two young kids, supposedly there to greet potential customers, glued to their monitors trading options on tech stocks. It was the beginning of a euphoric period that did not end well. I have to confess that I was caught in the ‘irrational exuberance’ of the moment also. An investment club I co-founded in 1996 had a return of 6 times invested capital before giving up all the gains and more once the technology bubble burst. Needless to say times have changed. So have my investment discipline and philosophy.

From time to time I will update you on my performance as I continue to hone my skills as a value investor. Since the beginning of 2003 and through the end of 2005, my ‘value fund’ has returned a CAGR (Compound Annual Growth Rate) of approximately 46% vs. S&P 500's 13%. This performance does not include any additional capital contributions to the account. I prefer not to turn Margin of Safety into a stock picking showcase, so I am not going to get into the rationale behind each holding and how the individual investments performed. As you may have noticed, I prefer to talk about general themes with a few sprinklings of ideas you may find interesting. If you are interested in learning more about my individual picks, you can visit Ivey's Super Investors.

To give you an idea of typical past and current holdings in my value fund since inception, here is a list in no particular order: American Real Estate Partners (NYSE: ACP), Sears Holdings (Nasdaq: SHLD), Petrobras (NYSE: PBR), Smith International (NYSE: SII), Morningstar (Nasdaq: MORN), NYSE Group (NYSE: NYX), Pier 1 (NYSE: PIR), Intel (Nasdaq: INTC), Cisco (Nasdaq: CSCO) and Amazon (Nasdaq: AMZN). Here is what the journey has been like so far.

1 comment:

Moose said...

nice chart chief :)