Many of us have been in this position. We love our money manager. He’s almost like a member of the family. We trusted him and gave him a pretty fair chunk of our capital. At first he did great but since the end of 2004; $10,000,000 in principal has shrunk to just $4,309,820 including all dividends received. Ouch. It would have been even worse if I’d agreed to reinvest those payouts using dollar cost averaging.
Mystery Portfolio – Results Dec. 31, 2004 – Aug. 7, 2012
I’m not an industry expert but it seems like the businesses I own aren’t looking so good. My money manager friend showed me these composite figures {from all the separate businesses} to help me understand why he has stayed with these so long. The numbers are all on a per- share basis for easy understanding. See what you think.
Gross revenues increased reasonably but cash flow and EPS both declined. Dividends went up strictly because the payout ratio increased. The moderate cumulative gain in book value might not truly have been meaningful as 74% of the figure represents intangibles.
I asked if perhaps it had just been a really bad 7.5 years. When we checked; it turned out that the DJIA had gained over 22% and the NDAQ-100 actually surged by 66.96% - excluding all dividends.
What really irked me was that my portfolio went down with the broad indices in 2008-09 but never recovered, even 3.5 years later.
My buddy says he’s sticking with these less-than-stellar companies because he knows and respects the CEOs. I’d rather be bailing out and moving on to healthier, growing companies. What would you do?
Disclosure: No positions in any stocks mentioned
SPOILER ALERT:
If you’re still wondering… my money manager is an obscure guy named Warren Buffett. The ‘portfolio’ consisted of all Washington Post’s [WPO] many divisions.
Newspapers and for-profit education are two industries that appear to be in permanent decline. Perhaps we’ve reached the time when personal loyalty from Mr. Buffett towards WPO management needs to be overridden by concern for Berkshire Hathaway’s [BRKa] shareholders. Berkshire Hathaway currently owns about 27% of WPO.
Mystery Portfolio – Results Dec. 31, 2004 – Aug. 7, 2012
I’m not an industry expert but it seems like the businesses I own aren’t looking so good. My money manager friend showed me these composite figures {from all the separate businesses} to help me understand why he has stayed with these so long. The numbers are all on a per- share basis for easy understanding. See what you think.
Gross revenues increased reasonably but cash flow and EPS both declined. Dividends went up strictly because the payout ratio increased. The moderate cumulative gain in book value might not truly have been meaningful as 74% of the figure represents intangibles.
I asked if perhaps it had just been a really bad 7.5 years. When we checked; it turned out that the DJIA had gained over 22% and the NDAQ-100 actually surged by 66.96% - excluding all dividends.
| YE 2004 | Aug. 7, 2012 | % Change* | |
| DIA ETF | $107.51 | $131.38 | 22.20% |
| QQQ ETF | 39.92 | 66.65 | 66.96% |
| * Excluding Dividends |
What really irked me was that my portfolio went down with the broad indices in 2008-09 but never recovered, even 3.5 years later.
My buddy says he’s sticking with these less-than-stellar companies because he knows and respects the CEOs. I’d rather be bailing out and moving on to healthier, growing companies. What would you do?
Disclosure: No positions in any stocks mentioned
SPOILER ALERT:
If you’re still wondering… my money manager is an obscure guy named Warren Buffett. The ‘portfolio’ consisted of all Washington Post’s [WPO] many divisions.
Newspapers and for-profit education are two industries that appear to be in permanent decline. Perhaps we’ve reached the time when personal loyalty from Mr. Buffett towards WPO management needs to be overridden by concern for Berkshire Hathaway’s [BRKa] shareholders. Berkshire Hathaway currently owns about 27% of WPO.
