These are the 7th-quarter results of the fund with an update of what I’m currently tracking and doing.
Results
2021 Q4 results
October 1st
December 31st
$ change
% change
Firefly Capital
$381,002.99
$393,190.66
+$12,187.67
+3.2%
S&P 500
$4,306.24
$4,766.18
+$458.64
+10.6%
Difference
-7.4%
Year-over-year results
December 31, 2020
December31, 2021
$ change
% change
Firefly Capital(normalized)
$136.26
$152.17
+$15.92
+11.68%
S&P 500
$3,756.07
$4,766.18
+$1,010.11
+26.89%
Difference
-15.21%
* We are currently at around $238,340 in cash.
In the thick of it
While I believe the performance of the last quarter shouldn’t be considered in the long run, it is true that we are still trailing the S&P 500. It’s hard to see the 500-foot view of what we’re doing but I believe we’re actually in a great position. Only time will tell.
This quarter I invested even more heavily, perhaps too heavily, into a position as it has continued to crater. As explained in the previous update, this is our strategy. The underlying earnings of this holding(company) are still very strong despite what could be described as extreme fear in the market, largely on the national and industrial plane. As Will Danoff, another great fund manager, has so succinctly said,“I view my philosophy as being stocks follow earnings per share.”
I am very pleased to be in this position, though I believe I have two mistakes to learn from:
I entered a position too large too fast, which means that as it dropped in price I had less capital than I would have liked to purchase at a discounted rate.
This led to the other outcome: focusing more heavily than I would like into a single company.
While the likes of Charlie Munger and Nick Sleep(another investor who did famously well) have succeeded by holding 3 positions, over the long run, in stocks, I am still a bit uneasy having such a heavy concentration, despite my extreme confidence in the company. This has huge potential but one must always protect against huge loss at the same time. Considering this company has dropped over 17% in the last quarter, the fact that we are still up is a good sign. A recovery from this company will thereby boost the value of the fund considerably.
What’s coming next
Fund Update
I have been wrong so many times on the date of the completion of the fund formation that I am hesitant to give you yet another timeline. This month I have initated the process on the final two aspects of the fund and were blocked in part by FINRA(Financial Industry Regulatory Authority) being closed over the holidays.
I also switched council to a new team that is both local and much more experienced in the field, changed brokerage firms to the best in the industry, and have a new bank that specializes in fund management lined up.
Learning and researching more
An additional commitment I have made to myself and to you is to increase my rate of learning and time dedicated to researching companies. I am actively looking for professional changes that allow me this time. I have met more industry professionals, am researching more areas, and spending time increasing the tools that increase my efficiency and efficacy.
“In my whole life, I have known no wise people(over a broad subject matter area) who didn’t read all the time—none, zero. You’d be amazed at how much Warren reads—and at how much I read. My children laugh at me. They think I’m a book with a couple of legs sticking out.”
Results
In the thick of it
What’s coming next
In the news…