In 2016, WertArt returned 15.9% outpacing the benchmark (+8.5%) despite taking far less risk with 23% in cash over the period. The fourth quarter added nicely to this performance with the portfolio value increasing by 6.3% against an increase of 5.6% for the benchmark.
Since inception in January 2014, WertArt generated 36.9% against 38.8% for the benchmark. Over this period the relative underperformance stems from the large allocation to cash (on average 33% over the last three years). Consequently, from a portfolio management perspective the decision to hold a large pile of cash was a costly mistake over this period. On the other hand, title selection was good. Out of 41 investments (realized and unrealized) made so far, 31 contributed positively while 10 investments had a negative impact on performance.
The table below provides an overview of WertArt’s quarterly and annual performance since inception:
Like every year, I provide the contribution of each investment. The table below shows the contribution of each investment to portfolio performance in 2016:
In 2016, by far the largest contributor to performance was A&O Johansen. This is an investment which I have been holding since the beginning of WertArt and I also increased the position twice. Last year, management made some bold steps including repurchasing 54% of share capital and conducting strategic acquisitions to bolster the company’s market position in Denmark. From my perspective, chances are high that these management decisions will continue to increase the company’s intrinsic value over the next years. Despite last year’s 85% share price increase, I believe that shares of the company are still attractively priced. Consequently, for the time being I decided to keep the relatively large allocation to this investment unchanged.
An overview of the portfolio’s largest ten positions can be found in the following table:
Over the last twelve months, the portfolio has become more concentrated with the largest ten investments representing 50.2% at the end of 2016 compared to 42.6% at the end of 2015.
A detailed overview of the portfolio as of yearend 2016 can be found below:
Last but not least for full transparency, I am providing the quarterly portfolio cash streams in the table below:
The content contained on this site represents only the opinions of its author(s). I may hold a position in securities mentioned on this site. In no way should anything on this website be considered investment advice and should never be relied on in making an investment decision. As always please do your own research!