End of 2024 Portfolio Performance, Holdings, and General Discussion | +51.8% in 2024
Portfolio performance, stock writeup performance, updated holdings, and general portfolio management musings + newsletter updates!
Disclosure: This is not financial advice. Conduct extensive research and consult a financial advisor before making any investment decision. All investments, including those referenced in this article, may result in financial loss. I hold a beneficial ownership position in all stocks outlined in this article (unless otherwise stated), therefore I am inherently biased in favor of these companies. One should view this article, and all companies discussed herein, through that lens. I may buy or sell any securities mentioned in this article at any time and without any warning - please be careful everyone, and manage risk responsibly.
Hello all, and happy new year! 2024 has been quite an eventful year with a lot of fun and interesting little situations that I’ve enjoyed seeing play out, such as the mini-quantum bubble, the eventful return of Keith Gill A.K.A. Roaring Kitty (I was always wondering if that guy would make a comeback…), the rise of AI, and many other political and financial situations that’ve been interesting to witness.
Investing wise, 2024 was a great year for me and I learned a lot, but I can’t help but feel like my success will be relatively short-lived heading into 2025. Most of the stocks I’ve owned during this year did well, but they did well mostly due to multiple expansion - in other words, my business analysis was probably solid enough for the market (given that many others came to buy the same stocks after I did) but there hasn’t yet been enough time for these companies to perform so well on their own. Broad-based sentiment could shift at any time and my performance would likely get wrecked - that’s happened to a small extent this December and I am continually worrying that 2025 will bring more of the same. Anyways, let’s not think about that too much right now - it’s time to analyze this year’s performance:
2024 Portfolio Performance | +51.8% to S&P 500 return of +23.3%
I benchmark against SPY (S&P 500) as the gold-standard ETF, IWM (small cap ETF) because 50% of my portfolio has been invested in small caps this year, and Berkshire Hathaway (BRK.B) as a neat little gag, mostly. If Berkshire’s AUM was the same as mine, I’m sure they would be beating me pretty handily.
During 2024, my portfolio achieved money-weighted returns of 62.05% and adjusted time-weighted returns of 51.8%. For the adjustment, I add 4% to the displayed TWR value to offset a 4% drawdown when I first started my IBKR account on January 4th, with just $10 in the account. The 4% drawdown was from a single stock as a tester deposit.
I feel as though MWR is the most accurate metric for me as I’ve both deposited and withdrawn a significant amount of funds through the course of this year, but I’m headlining this report with the TWR value because it’s the more conservative of the two and is probably better for comparison - my portfolio is on the smaller side, not nearly at the point it could cover living expenses so I’ve just been withdrawing funds pretty opportunistically, but TWR is a better performance value for mature portfolios so I’m going with it. My current portfolio value is nearly 2x my net deposits.
During 2024, I received around 1% of my ending portfolio value in dividends and I paid commissions and fees equal to that amount. Side note, my realized PnL on IBKR shares is >3x the amount of commissions I’ve payed them this year, so that’s pretty sweet. It’s just like I said in the IBKR Deep Dive, buying your broker can be quite profitable!
Currently, around 16% of my portfolio value is floating in unrealized PnL and 29% is redeployed realized PnL. I have a cash balance of 8.6%.
My Sharpe ratio for the year is 1.77, I saw a max drawdown of 13.8%, and as for beta, I haven’t done the exact weighted calculations but around half the stocks I’ve owned during the year have higher beta than the market, with the other half having slightly lower beta. I’d say I definitely had higher overall beta than the market this year - that is something I’d like to work on around security selection going forward. I’d rather have lower beta with more consistent returns than the appearance of good returns due to heightened volatility.
I think it’s worth noting that I’ve had no exposure to mega-cap stocks this year, and pretty light exposure to large caps. I owned Waste Management (WM) at around a $60Bn valuation in the front half of the year, but I sold it a while ago. The other large-cap I’ve owned consistently has been IBKR, beginning at around a $50Bn valuation.
The S&P 500 might be up 23% this year, but the lion’s share of those returns have come from the higher weighted mega-cap Magnificent 7 stocks such as Apple, Meta, Google, Nvidia, and Amazon. I have not touched a single one of these companies this year, so I will give myself a pat on the back for achieving these returns without any exposure to these few massive stocks that carried the whole market during the year.
The Top 12 Best and Worst Performing Stocks I’ve Owned This Year:
*This includes both realized and unrealized gains/losses - in many cases, positions have been trimmed or otherwise traded around such that the PnL displayed here may not be the same as the positions current PnL - cost basis fluctuations are a bitch from an aesthetics standpoint.
So - I had a lot of small winners, some big winners, and a lot of small losers. My turnover is probably too high but that’s another issue altogether (I’m not paying a very high tax rate so it’s less of an issue for me). I definitely did a bit of gambling… buying ideas I didn’t fully understand such as 3231 Winston Corp., BLDE Blade Air Mobility, and even NYCB (I tried to go dumpster diving, bad idea - I don’t know very much about banks). Thankfully, most of the big losers were at a small allocation. Ideally I’d like to do less of this going forward, or at the least, put more effort into these low allocation “gambles.” Maybe conducting some actual research into little trades like these could improve my odds, we’ll see.
The largest loser at a close-to-sizeable allocation has been CalNano (CNO), which was the subject of Deep Dive #4. Obviously, not great performance from my cost basis. I have no idea how long I might even keep holding it. I still think their business case very well could play out, but the risks are very extreme around customer concentration. ASO and CROX were two other losing stocks for me that I went over in the Q3 portfolio update.
I still think CROX could be appealing here and I had started a writeup, but the idea didn’t feel right and the stock tanked on me, so I sold and let it go. I’m told by people who, presumably, have experience with broad consumer facing sectors like footwear that Crocs is over-selling shoes by a good amount. They had a massive pandemic boost but domestic growth has been lackluster recently, buoyed by growth in Asian markets like China. They also had the HEYDUDE acquisition which felt off to me, though it was FCF accretive if I remember correctly. Again, I have very limited experience with this stuff but the brand’s growth hasn’t been great last I checked, and I didn’t like the product either. I asked multiple people I know if they’d consider buying that sort of shoe and they said no. Maybe they could market it well, I don’t know.
The other side of this story is that Crocs themselves have an extreme degree of customization built in. They can print pretty much anything onto the rubber and collaborate with any brand. Shrek Crocs, Cars Crocs, any kids movie you can imagine. Pringles Crocs, 7-11 Crocs, Balenciaga Crocs. They can be made into slippers, boots, and probably more categories that I’m forgetting. The little widgets people can attach to Crocs are a neat little business, and the margins overall are great - Crocs are really just a solid piece of rubber with a few bits attached, so the manufacturing process is simplified. If I had to guess, I think that’s the secret to CROX’s 20%+ FCF margin.
Really, the idea was compelling to me because of that high margin, and the earnings multiple being somewhat depressed at 10x, with comps like NKE at 20x+ despite having lower growth and lower margins. Anyways, the trade went sour, my stomach went sour, and I sold for a loss. Maybe I’ll be able to get back in lower sometime down the road, we’ll see.
Now we move on to the fun part, the winners! My biggest winner at a reasonable allocation was Rocket Lab (RKLB), the subject of Deep Dive #2, at an average allocation of 5% with a return over 450% - this stock put up absolutely crazy numbers that I wasn’t expecting whatsoever.
I originally added RKLB at a cost basis of $5.04 at a 5% allocation (years ago for the record) but I traded the position around so much that the poor thing is only at a 10% allocation now, after a 400%+ run up… so I was horribly, awfully underweight, in hindsight. If I had weighted RKLB at 15-20% like any high conviction position and just left it alone, my portfolio would be up triple digits this year… so yeah, that’s a little painful. If you’d like to see a chart version of my pain, look no further:
Further commentary on RKLB: this is just me, but I do get worried about the R/R at this valuation. For me, at $5, the opportunity they could seize was too big and the likelihood of them realizing the opportunity was too high for such a depressed share price. That was basically my whole thesis - the other research I conducted (all 50 pages of it) just worked to support that thesis. But obviously after such a monumental run the R/R going forward is different.
Today, the company is trading around 35x TTM sales and they do operate in an asset intensive, (generally) low margin, lumpy revenue sector - all things I usually avoid in an investment. So, I’m declaring a Thesis Complete on RKLB here at $26. This doesn’t mean I’m going to sell all of my RKLB - really it just means that I’d like the trade to be considered wrapped up - the thesis I laid out was completed, after all. If you were following my trade purely as a speculative idea and you don’t have any other conviction, sell it here. At this point, my entire position has been de-risked as I’ve realized plenty of gains so far. I suggest anyone else holding the name to do the same, but obviously you don’t have to listen to me. Maybe I’m just mad I missed the majority of the run to $26… I’ll be kicking myself for that for a while, to say the least.
Past RKLB, I have a few other winners I’m proud of. One of those is IBKR, having returned 44% for me at the time of writing. I love this company to death. Maybe I’m a little too attached… but seriously, I think the business is fantastic and I’d like to never sell a single share. IBKR is just such a gem of a company in so many ways - the management is fantastic, truly standout in my opinion even if some of their decisions around capital allocation are contested by some market actors. They’ve achieved goofy levels of profitability and can grow the company very quickly and very efficiently. I bought at around 20x TTM earnings and added at 22x. It’s trading at 28x today, not even a year after my original buy.
The only big downside of my trade was the interest rates environment (lower rates are bad for IBKR) but as it turns out that hasn’t exactly mattered for the share price performance, at least short term, as I predicted in my original thesis. In my thinking, and we’ll have to see how this plays out over the next year, earnings growth will slow or flatline but I doubt it will decline. I think they’re likely to continue adding new accounts at great rates, especially if this mini market “mania” period continues for a while. I think there’s a good chance the recent and potentially future volatility could boost their commissions revenues as well.
Then there’s the simple re-rating that’s occurred. In many ways, IBKR has resembled one of those high quality compounder-cult stocks for many years now. One could argue (I nearly did) that such a high quality company with such impressive margins and growth could deserve a multiple well above peers - that’s more or less what the market’s done, so the trade worked really well in this market environment. We could see some downside heading into next year depending on overall market weakness, and the interest rates environment naturally. This company has run up a lot recently and the share price could see significant downside if rates are cut substantially in a recession. Given that I wasn’t counting on multiple expansion for my thesis here, I’m not going to declare a Thesis Complete just yet - that’ll probably take years to play out and ideally I get to own this company for a long while yet.
Another winner was Samsara (IOT). This company was always a little higher risk for me. And to be fair, the trade was less structured - I never laid out a full thesis or any risk factors, just a bunch of research. I’m still holding my IOT, just at a halved allocation from previously as the whole portfolio has come to be less concentrated. It’s been down a good bit since the last earnings report, but I trimmed plenty enough while it was up (as I suggested in my IOT mid-quarter update) that the returns have been solid enough. At this point, I’m pretty sure the position is now de-risked or close to it.
One of the latter additions to the portfolio was red violet (RDVT), a data broker specializing in niche data use-cases for markets like real estate and law enforcement. This is a company that I feel quite bullish about going forward - I’ll probably go into more detail during the next earnings update but I think this company can go a long way from a product standpoint, they’re growing pretty steadily at 20% YoY with crazy operating leverage (fixed cost model), and the valuation was pretty reasonable when I got in with a 0.67 PEG ratio.
Current Holdings
Here are all my current holdings - I’ve spoken on all of these so far besides ASTS and CSU. Those in the space investments community would already be familiar with ASTS, and I’ve spoken about them a small bit across my RKLB articles, but I think the proposition is an interesting one. I haven’t done a ton of research myself, but I’m quite familiar with their business case and I think the company looks rather cheap considering how much earnings power they could have after their constellation spools up - currently they trade at just 3x 2028 earnings estimates - those estimates aren’t definitive obviously, but the R/R just seems nice. I might do some more research and increase my allocation a decent bit, we’ll see.
CSU (added pretty recently) is one of those portfolio cornerstone stocks for me, much like IBKR. They acquire loads of smaller, niche software companies with very attractive hurdle rates through a unique strategic acquisition framework. The valuation is a little steep around 40x earnings, but this is one of those stocks that I think will probably always trade at some premium given how unique the opportunity is and the sense of mystique around the company today. Not to mention, they’ve grown sales by 20-30% per year for a decade at this point and the shares are running at a 34% 18-year CAGR - those returns might as well cure cancer. I’ve done a good bit of research but I will probably continue doing more in all honesty, just because I like the way they run things and I’d like to increase my conviction ahead of what I hope to be a long-term holding period.
Stock Writeup Performance
This is an equal weighted basket of all 6 stocks I wrote about this year - from BMI back in May to CNO in mid December. This basket assumes $16,666 (1/6 of $100,000) invested into each stock at the closing price on the trading day after my writeups were released. The overall basket is up 55.6%, though that’s thanks almost entirely to RKLB with it’s massive 278% return since my Deep Dive was released. Excluding RKLB, the returns actually look pretty middling and the basket wouldn’t have outperformed the S&P 500. Either way though, not bad performance all-in-all!
I’m really not sure what awaits me (or this blog) in 2025, but I’m excited to find out, continue learning about investing, research some kick-ass companies, and of course share my progress and research along the way! That’s a wrap on 2024, Welfare Capital signing off.