Click the link for a detailed look at my investment portfolio ending August 2008. GIven that the entire market is down 15% YTD - our portfolio is down 7% this year. Overall we are outperforming the market, but still losing money. In mutual fund land, the goal is to outperform the market. But in hedge fund land, the goal is absolute zero - i.e. never lose money. That’s the goal - but for the time being I’m satisfied with our mid-line progress. Plus there will be a tender offer for part of our shares of Brasil Telecom later, which will enable us to cash out quite high on BTM (at about $42 per share).
- The Fairholme Group’s negative absolute performance is only modest, and they are still up against all their peers. They are heavily weighted toward Berkshire Hathaway and the insurance industry, and just about everyone forecasted a tough year for insurance including Buffet himself. But by reading through their annual reports in depth - we know that the fund is placing their bets accurately for stable long-term growth.
- T. Rowe Price’s Africa and Middle East Fund is, as to be expected, the rockiest part of my portfolio. In an age of globalization it only makes sense to allocate a small portion of your portfolio to emerging markets. The Fund is invested heavily in Arab construction companies and Arab banks, making me feel comfortable with the region long-term. If the Fund continues to drop in the fashion it has, I’m probably going to have to make a call to Chris Alderson and the team and understand what actually is going on.
- Hewlett Packard is a buy that I’m very confident of despite being down so much this year. The company is making stellar investments and recently purchased EDS, boding well for it’s long-term future. The best thing to do is to start buying at these lower levels. Hopefully they won’t botch the acquisition like they did with Compaq.
- Brasil Telecom was another emerging markets pick. After hitting about $36 per share from talk of a takeover and tender offer, the stock is off its lows. I’ll be receiving a tender offer for a few shares for $42/share, as mentioned above. Which makes us actually UP on this stock after the tender offer payout. The question is to hold on for long-term Brazilian telecom growth, or take our earnings off of a relatively risky table?
- Holding index funds long term is always a good idea. Make sure to invest in small amounts at regular intervals, and be disciplined about it.
I expect our portfolio to be sensitive to global economic issues and continue to suffer modestly, but will perform above the general markets in the next quarter or so.
