2016 Performance

It’s time to reflect on my performance for 2016. The year started off a bit weak, did well mid-way through the year and under performed as the year ended. My net gain for the year was 14.61%, which slightly beat the major indexes (S&P 500 = +11.96%, DOW = +13.42% and NASDAQ = +7.50%). I give myself a grade of a C for my 2016 performance. I executed some poor trades as the year ended, which adversely affected the performance results. I also see these as sloppy trades as I tried to generate additional returns, but did not totally consider the potential risks such as Tronc (Ticker: TRNC) and Rite-Aid (Ticker: RAD).

Overall the Special Situations / Merger Arb plays definitely helped my portfolio as my major long holdings essentially under performed the market. My three largest long holdings and the 2016 returns of each are as follows: Constellation Brands (Ticker: STZ) (+7.63%), Visa (Ticker: V) (+0.60%) and Apple (Ticker: AAPL) (+10%). I still plan on holding these for a while as they all generate substantial free cash flow, which in the long run should support higher stock prices.

I am entering the New Year with the following Special Situation / Merger Arb Plays: WaferGen Bio-systems (Ticker: WGBS) (~ 9% position), Actelion Pharmaceuticals (Ticker: ALIOY) (~14% position) and Kate Spade (Ticker: KATE) (~8% position). WaferGen is the most intriguing one as the takeout price is based on 2017 revenues and I anticipate hearing some preliminary Q4 numbers soon. Actelion looks like is has a good chance of getting taken out by J&J (Ticker: JNJ) or Sanofi (Ticker: SNY) so there will definitively be some news flow on this deal by the end of January. Finally, Kate Spade has put itself up for sale and I’m looking for a price in the low to mid 20’s.

Looking back at the past five years of performance results, I start to wonder when it would be a good time to transition a good chunk of my portfolio to an index strategy. At times, managing an active the portfolio can get quite hectic. For now, I still really enjoy actively managing my portfolio, but I can see myself transition to an index portfolio at some point. When? Maybe when I retire?

2016 Performance Year to Date = +14.61% with the running monthly returns as follows:

January -5.47%
February -3.50%
March +7.51%
April +0.84%
May +6.34%
June -2.6%
July +12.2%
August +6.57%
September +1.94%
October -5.49%
November -1.59%
December -1.3%

Annual performance for the past five years is as follows:

2012 +61%
2013 +44.61%
2014 +29.47%
2015 +33.48%
2016 +14.61%