Olesen Value Fund January letter

We earned 0.5% after fees in Jan vs. -3.0% for the MSCI All-Country World Index and -3.5% for the S&P 500.

We benefitted from our fairly conservative stance as well as continued strong performance
of the stock I described in the Q4 letter which started rising dramatically after an equity offering late last year.

Olesen Value Fund

During Jan, I sold our remaining shares in Topps Tiles, as the price had performed exceptionally well in recent weeks and now reflected approx. fair value. This £280 mil. market cap company is the UK’s dominant retailer of tiles and related products. Contrary to my expectations, sales and margins have failed to rebound after their considerable decline early in the recession, but at least the company has gained market share and remained profitable all along. The stock price now reflects a substantial, though not a full, future rebound in profits. The fund earned a 17.6% annualized IRR on this investment over its 3½-year avg. holding period compared to 9.6% for global equities and 10.0% for UK equities (incl. dividends) over the same time period.

During the month, I also bought a few additional shares of the company I described in last month’s update at prices that correspond to approx. 8.5x adj. trailing earnings.

Finally, in late Jan and early Feb, I increased our position a little in two other existing investments when the prices weakened during the market sell-off, and I am watching closely for more opportunities to profit from dislocations caused by the recent market jitters.