It has been quite a while since I last posted and December will go down as my second most inactive month this year since September. I have been planning this post for a while but wanted to see what my performance since inception where the VH fund would close this year. The VH fund for 2011 was down around 16% (since May) slightly outperforming the FTSE 250 (red line) and underperforming the All-Share (green line) by about 6%. I have done something of a wrap-up for 2011 already.
To summarize, although the performance was generally disappointing I think my mistakes were caused simply by going for returns without thinking about risk. Although I gave the example of GRG in the original post, Dart Group and Robert Wiseman Dairies are probably more practical examples as the downside was actually tested in reality. To be clear, the problem was not in buying the businesses, I would still be happier buying Dart (LON:DTG) or Robert Wiseman Dairies (LON:RWD) at a 10% earnings yield than something with more growth priced in at 8%. Rather, the problem was not seeing that given the general view of the sectors they are in, the structure of the business, and general investor sentiment that I should have been looking to get a slightly higher yield than I went in for. As I said though, I am still perfectly happy to hold both them down 25% or so.
One thing I didn't directly mention in that post but would be good to run through quickly before I give my expectations for 2012 are my positions in Switzerland and my forays in long USTs/short equities. To recap, my move into Swiss exporters was on the back of the SNB peg and my long position in 20yr+ USTs was in anticipation of Operation Twist. On the former position, it has worked out well registering a gain pretty much since I put it on. On the latter point, I was correct but did not sell out at the point of maximum optimism which was just after Twist was announced (although they have retested the high this month). I still made a decent gain, esp. compared to my value positions, but this prompted my move into a short equities position in…
