Sunday, January 03, 2021

2020 Year End Review

What a year! That’s an understatement. If you told me that we’ll be engulfed in this pandemic, I would have been happy with a down 20% return for the year. Looking back, I should have been much more aggressive in acquiring shares during the down draft in February and March. Instead I just nibbled on some Mastercard and Visa, which I did manage to buy near their lows, but it simply was not enough to make a difference. I maintained a cash hold of ~ 15% through the year until the Airbnb ipo came along. I deployed some cash into Airbnb. Other than that, I maintained my usual long term holdings and participated in the merger arb game. Surprisingly I managed to generate a total return of 32.81%, which I can really thank Apple.

Early in the year, Qiagen was in play once again with Thermo Fisher making an offer. I sold half my position when Qiagen traded above the offer price, which was a mistake. Looking back, I should have held on to my entire stake. I was afraid that Qiagen would plummet if Thermo Fisher walked. Thermo Fisher did not offer a big bump in price and walked. Qiagen held steady and continued its steady ascent.

It was actually a fairy active year for merger arb plays. The merger arbs contributed to ~ 7% of my overall gains, which generated some nice positive alpha. I was involved in Aimmune Therapeutics, Forescout Technologies, Immunomedics, Jumei International, Mellanox, Momenta, Myokardiac, SORL Auto Parts, Stemline Therapeutics and Tiffany. I would say majority of these merger arb plays were executed via Short Puts. I really like using options with these high probability plays. I am still in Tiffany via Short Puts and looking for this deal to close by the end of the week.

As I mentioned earlier, I finally initiated a new position and that was in Airbnb (~4% position with an average price of ~ $137). I am looking to add to this position in the low $100s. I am definitely holding this for the long term as I see this company disrupting the travel industry and accelerating its growth. I seldom go for these high flyers, but Airbnb has proved that it can survive through this pandemic. Time will tell, but I like the odds of this company growing significantly over time. You really have to be patient and hold for the long term to see the big gains.

So what do I expect for the New Year? I hope to see some of my laggards in 2020 step up such as Alibaba, Mastercard, Visa, Sanofi and Constellation Brands. Honestly, if I can generate 10%+ in 2021, I’ll be very pleased.

That’s all I have... Have a Very Healthy and Prosperous New Year!


2020 Performance = +32.81% with the running monthly returns as follows:

January +2.7%
February -6.8%
March -9.9%
April +12.3%
May +6.6%
June +3.8%
July +6.1%
August +11.8%
September -4.2%
October -6.7%
November +10.8%
December +5.5%

Annual performance for the past nine years is as follows:

2012 +61%
2013 +44.61%
2014 +29.47%
2015 +33.48%
2016 +14.61%
2017 +42.12%
2018 -4.11%
2019 +40.17%
2020 +32.81%

CAGR from 2012 to 2020 = 31.43%