Portfolio overview: Happy with "underperformance"
Good absolute returns are something to be cherished. An overview of the most important holdings and my regional allocation in the stock market.
I hope everyone has recovered somewhat from reading all the year-end reviews. Given that I try to write for an audience of one. I decided it is still a good idea to write down a review for the year 2024. It helps to clarify my thoughts.
In this portfolio overview, I will discuss the following:
Top positions
Relative performance
Portfolio goals
Portfolio construction
Personal musings on taking risks
Conclusion
1. Top positions
HAL Trust: Relatively new position initiated in 2024. Well-managed holding with a history of value creation. Trading at a deep discount to my estimated value of the sum of the parts. This discount is mostly created due to the lacking appreciation for the full acquisition of Boskalis. A lot of holdings have performed poorly in recent years which led me to increase my allocation to holdings by buying HAL Trust. Like the focus on marine assets and the fortress balance sheet.
Hornbach Holding: Very old position but increased the position at the end of 2023 and again in late 2024. Like their strong competitive position, especially outside Germany. My thesis: In the long term DIY in the markets Hornbach operates will look more like the US and become less competitive. Stock is trading at a deep discount to underlying value with a lot of hidden value in the real estate.
Bollore: An old position I added to in 2024. This stock is discussed at length here on Substack. My thesis: smart capital allocation, I like the largest asset (UMG) and a significant discount to assets. Wondering why I did not buy Odet. Might write an article on Bollore in 2025. Already many great reviews on Bollore out on Substack.
Berskhire Hathaway: Used to be my largest position. Sold 50% in 2024. Still the stock which helped my performance the most in 2024. Likely to be sold completely in 2025. Like the defensive nature of Berkshire Hathaway and its insurance exposure.
Bloomsbury: Invested the profits of my Dutch publishing stock in Bloomsbury. It performed decently. The expected growth in the future is somewhat disappointing. A position I might sell or cut the position size. I like the industry and management but valuation might be a little higher than I’m comfortable with.
dragging my feet in selling stocks that are working. This might be caused by selling my shares in Heijmans too soon.
Top performers
Berkshire Hathaway continues to deliver. Now not that attractive anymore. Sold some and might exit the position in 2025.
Centurion. Great stock that performed well. Should have bought earlier and more. Still really happy I did buy after it had run up. This is something I got better at. I got the idea from Value Zoomer.
Fonterra. Well-performing value investment. The leader in advantaged NZ milk was selling too cheaply. No position anymore.
Sold Heijmans too early. Stock performance was good but the stock almost doubled after I sold. Strong recovery in the Dutch housing market helped Heijmans. Risky acquisition paid off. Probably should have sold 50% instead of everything.
Losers
Tessenderlo has been disappointing. I like management and ongoing share buybacks. The business has been hit with tough headwinds though. The company has a strong balance sheet and I’m convinced the company will strongly get to the other side of the cycle. Happy that is the only company in the portfolio that is hit in such a fashion by a cyclical downturn. I would probably not buy given the current situation. The question is if I should sell.
Banco del Bajio shows a small loss. Given the market a loss is quite bad. I think performance was roughly in line with my expectations. The stock has run up 13% YTD. A high quality bank with good growth prospects for 5.2 times earnings and a 9% dividend yield is something I like to keep in the portfolio.
Takeuchi is a Japanese producer of small excavators. Stock has performed well but I bought more just before the steep drop in Japanese shares. I was getting greedy. That buy was probably the biggest mistake in 2024. Company is still performing well especially given the somewhat challenging macro backdrop.
KSB one of my favorite stocks. Bought more and the stock is up 9% YTD. Below 8 times earnings for a leading producer of pumps and valves. Balance sheet is strong and the increased focus on services will help margins.
Regeneron had quite a ride from up high to down low. Recent results are good. The company benefited from a popular trend with GLP drugs. There are some worries about pricing with EYLEA.
I still like the company and some healthcare exposure. The big question mark with Regeneron is still the result of all the investments in new drug development. I still believe in the high quality of their drug development process.
2. Relative performance
15% is good. I still think looking at absolute returns is most important. There are options to invest outside the stock market. Even with the general market being quite elevated I decided to keep almost all of our savings outside of our home in the stock market. This was a good decision. Trailing VT & SPY is not great though. I like the European market since I know it the best but investing over 50% in Europe did not deliver in 2024. Value was also not a factor that delivered in 2024 with great returns for AI stocks.
The portfolio is still ahead since inception and 2025 has YTD a good start.
3. Portfolio goals
Annual compounding returns above 12% without speculating too much.
4. Country weight
Europe has a high weighting with 47.30% plus 7.37% (HAL) leading to 54.67%. This is a significant over-allocation compared to the VT (world index). I like to keep this position over 50%. Asia has 17% weighting. This is still quite low. I would like to increase exposure in Japan and some additional exposure to the ASEAN region.
Given the elevated prices in the US decreasing exposure more is an option. I do like to keep some exposure in North America though. Not counting HAL the exposure to North America is only 20%. Given that I will probably cut my exposure in Berkshire Hathaway I’m looking for other North American options. If someone has good ideas please let me know.
I like to have some exposure to Oceania and South America. Not going to be my focus this year. Given the small allocations, it only takes one good idea to double my exposure to these regions.
5. Personal musings on taking risks
Recent results are more important when you keep adding to a portfolio. Not investing new savings though risk missing gains. I would argue that waiting to invest savings can be a good strategy. It limits the risk of quitting when you are down and have invested most.
Every personal situation is different. In the case of our family, we took some risks moving from the Netherlands to New Zealand and back. All the potential risks did not pan out so far. In addition to the savings in the stock market, we have a home in the Netherlands. The mortgage is slowly and steadily paid down. This in combination with increasing home prices significantly decreased the risk in that department.
Lastly, the additional savings added to the brokerage account plus the positive performance of the stock market. Decreased our still outstanding student debt as a percentage of total investments. This decreases the hidden leverage we have in the portfolio.
Lower risk in our home, jobs and student debt leverage lead me to conclude that new savings can be added fully to additional investments. While doing this risk still decreases by lowering leverage in our home and in our investment portfolio.
Conclusion
Performance in 2024 was satisfactory but not great. Missed some opportunities for better performance. Pretty happy though that I avoided some big losers and clearly outperformed the European indices. Financially 2024 was a good year. Best of luck to all for the remainder of 2025!
There are always people getting richer than you and this is not a tragedy
Charlie Munger
Disclaimer: These are my ideas and not personal investment advice. I might own shares discussed and can sell those shares at all times. I don’t know your financial situation. Do your due diligence and do not blindly follow an article on the internet.
I am wondering - is 5 to 7% your normal position size?
Large cap American value stock that I own is Comcast. Good valuation with two important catalysts for growth: opening of the Epic Universe park in May and spin off of the cable business later this year.