About 2014

Saul, I am a bit curious about your 2014 results. Since this is quite recent, what were the key lessons from this result since your portfolio performance over a long period of time is quite extraordinary. Thanks, Chandy

Great question, Chandy. Let’s see.

First of all, BOFI, one of my larger positions went from $106 to $65 on all good news. I bought all the way down from $90 and part way back up. It’s back at $98.30 as I write, and one of my highest conviction stocks, but at the end of 2014 it was at $77 something. This was probably the biggest loss I suffered.

Second, The CEO of UBNT became more interested in micromanaging his NBA basketball team than running his company (as I see it) and the price dropped considerably.

I made some errors in ignoring my own criteria and principles and plunged on a few penny stocks (small positions, happily), which I soon got out of at losses.

I made another mistake investing in PFIE. Partly it got killed because of the collapsing oil market, but I should have known better: This was a little company with no history whose CFO and other officers had been involved in a couple of failed enterprises together before this one. Also (I think I remember, the CFO had been sued for malfeasance). Poor choice on my part.

I bought Avigilon at about $22 and had to sell it at $17.50. It’s at $14.60 now. I don’t really think of this one as a mistake. The CEO just decided he wanted to go to $500 million in sales, and to heck with profits. He’s doing it. As I said, I don’t see that as my fault. Just one of the things that happens. In addition, the Canadian dollar crashed against the dollar. That could be my fault as I know better than to invest any more than necessary in companies that denominate their earnings in foreign currency. (Yes, I am in CRTO).

Those are the ones I can think of.

The lesson is important. Everything I touch doesn’t turn to gold! I make mistakes too! Lots! (But the good decisions seem to end up outweighing the bad by a big margin.)

Hope this helps.

Saul

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Thanks Saul for your reply.

BOFI - I see drop in value as incidental because the thesis is still intact.

As for the rest, my takeaway from your experience is that if you stick to the process, great results can be achieved.

Thanks again for clear thinking and communication.

Best Regards,
Chandy

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Process can be more important than short term results. Because most stock movements are noise. Except when they aren’t.

But you better be sure of your process. I use more than one process in case I am really wrong about one of them.

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But you better be sure of your process. I use more than one process in case I am really wrong about one of them.

Sure. I think many experts (including yourself :-)) posting on this board are helping me refine my process.

Can you expand on why and when you use different processes?

Thanks,
Chandy