Performance Review
Last year, we wrote about and recommended seven companies, three of which we later advised selling.
We track our overall performance in two ways.
The first—and most conservative—method compares each stock’s price appreciation from the day we published our recommendation against the performance of the S&P 500 or European stock index (depending on where the company is based), for the duration of the time we recommended it.
For example, we first recommended Hershey on February 26, 2024, when its price was $188.61, and the S&P 500 was at $505.99. By December 9, 2024, when we exited the position, Hershey had gained 4%, while the S&P 500 had gained 19.7%. This resulted in a relative underperformance for that stock of -16%.
We then calculate an equally weighted average of these relative performances. We use equal weighting because we did not specify position sizes at the time of our initial recommendations, and adjusting these retroactively seems inappropriate.
By this measure, our newsletter portfolio has gained by 8.8% vs the benchmark at 7.1%, which is a decent outperformance. We are not counting dividends in this calculation, which would further boost our gains.
The second method measures our actual performance. For stocks where we had a high level of conviction, we increased our positions as prices declined, reducing our average cost basis. We then weighted each stock’s return according to its position size and applied the same weighting method to the corresponding benchmark. The yellow columns indicate our cost basis and weights.
By this measure, our performance was 12.1% vs the benchmark at 5.2%—more than twice the market gains1. Again, this doesn’t include the benefit or any dividends received.
We’re currently satisfied with all our positions. Lantheus has shown particularly strong momentum over the past month, and Vinci and Verallia have also started to gain traction as investors turn more positive on European equities.
Here’s hoping the rest of the year is as fruitful…
The content provided by Reveles Research, LLC, including all materials on this website and in any other communication from its author, is strictly for informational and educational purposes. It is not intended to be, and should not be interpreted as, investment, legal, or any other type of advice. Readers are encouraged to conduct their own research and due diligence. It's important to remember that investment decisions should be tailored to an individual's specific financial situation, goals, and risk tolerance.
We recognize this is not an exact apples-to-apples comparison since we dollar-cost averaged into our positions, while our benchmark does not reflect similar incremental purchases. Given our resources, this is the simplest method for measuring relative performance; matching each of our trades to equivalent benchmark trades would be overly complex. If anything, this method likely overestimates the benchmark’s performance, as dollar-cost averaging during a bull market would typically raise the benchmark’s cost basis, thereby reducing its returns.